(SE) If eCash is both
earned and consumed entirely online how can a state tax it? Does
the state even have a right to tax it?
(AK): Could the government tax all ecash
transactions at a flat rate, regardless of their purpose?
(DF) Putting aside the problem of detecting
ecash transactions, what modifications in the definition of
income, capital gains, and the like for tax purposes become
necessary if many taxpayers are transacting and keeping accounts
in a variety of private forms of ecash?
(DF) Suppose a particular private ecash is defined in a way that
makes its value, measured in dollars, highly variable. Does
holding it count as gambling? What if the money is deliberately
created for that purpose? One could, for example, run a lottery by
issuing a million units of ecash, each selling for a dollar, and
announcing that after a week, one unit would be randomly selected
and reevaluated to $950,000, while the rest would become
(SE) Traditionally in a
court of law monetary damages may be awarded to make parties
whole. This is because legal tender, like the USD, is a medium
of payment allowed by law and recognized by a legal system to be
valid for meeting a financial obligation. In a world where
private eCash dominates will a court of the state have the
authority to force a party to give such private eCash as a form
(DF): What happens to the concept of legal
tender if practically nobody is using the official government
money? What if the U.S. government goes out of the money
Law Enforcement and Regulation
(AK): What potential
methods of law enforcement might be used to prevent illegal use of
ecash? A digital equivalent of confiscation of the ecash?
(MR): Criminals would
have the greatest interest in completely anonymous eCash. A
murderer of a person could therefore easily receive his payment
via eCash. How would that solve the problem of an increasing
(MR): As already discussed
in class, a protection against fraud on eBay with a well-known
feedback system would be possible. However this would only make
sense for small transactions. So what should be used for large
multi-million dollar transactions?
regulations could the federal government impose on ecash and could
they be effective? Would the SEC be the appropriate agency
to deal with regulating ecash?
(AK): What level of anonymity restrictions
could the government impose with respect to ecash? Could the
government use similar techniques to those employed by China to
ban websites or services that provide true anonymity?
(SE) Private eCash,
like any currency, can gain credence by being "backed" by valuable
and naturally scarce tangible commodities (e.g. gold). Imagine if
eCash providers choose to back the currency by virtual commodities
(e.g. facebook credits, WoW items, copyrighted content etc.) that
by definition are not scarce. If the provider runs into trouble it
could choose to simply inflate the currency by creating more
virtual commodities. Would it be considered criminal behavior if
the provider begins exploiting consumers through such inflation?
Should a government step in? Or should we instead rely on
competing currency providers to remedy this?(MR):
Will eCash just be usable in cyberspace or am
I able to draw money from my eCash account to use it in real? How
should this work if eCash is not provided by central organizations
like banks? Do I have to print my own dollars?
(MR): Suppose eCash would already exist and it would
not be offered by banks but would be completely private. Who will
be liable if something goes wrong? Currently, if a bank
transaction goes wrong my bank is liable to me.
(SE) As credit cards
(CCs) become a predominate form of exchange many small business
are seeing their profit margins get squeezed by the processing
fees. If the store owners choose to not accept CCs they will
certainly loose significant business because nowadays fewer and
fewer people are using paper cash. Since the government has an
interest in having its own currency be used, and since the state
is also offloading the burden of creating and managing cash onto
the hands of CC companies, should the government come in and
regulate the processing fees that can be charged by these
(AK): Who would have jurisdiction over
ecash used either in the United States or internationally?
(AK): Alex Korzh
(DF): David Friedman
(MR): Markus Reinfeld
(PYS): Previous Year's Student
(SE): Saad Enam
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