(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 business entirely?
(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 the present form of income taxation becomes unworkable due to some of the problems we are discussing. What alternatives are there? Do any of them raise constitutional problems? Consider, for example, a head tax.
(PYS): The use of eCash will make it much easier for minors to participate in commercial transactions, especially those on the internet. Currently, credit cards, which are not issued to minors, are the standard way to make instantaneous transactions over the web. Invariably, this will lead to minors making anonymous purchases of goods or materials which sellers are currently forbidden to sell to them. If neither the buyer nor the seller are identifiable, how will law enforcement adapt?
(PYS): If an eCash system will preserve the anonymity of the buyer and/or seller in a particular electronic transaction, it will become much more difficult for the SEC to enforce Rule 10b-5 against insider trading. Any individual who has material nonpublic information will have the ability to buy or sell based on that information and who will ever know? In a world where insider trading cannot be stopped or prosecuted, it may be considered an emolument of the particular employment or board seat regardless of any psychological impact it may have on the investing confidence of the public.
(DF): Currently, one way of detecting illegal transactions is by keeping track of flows of money. With fully anonymous ecash, that will be impossible; money laundering becomes something that any normal citizen can do. What substitutes are there? How do you detect flows of money from illegal transactions in such a world?
(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 worthless.
(PYS): Are there any good reasons about having a paper trail when you purchase something? Is there any way of retaining the good reasons for using something like a credit card and removing the bad (giving away your identity)?
(PYS): If I am carrying around $50 in cash and a smart card that has $300 in anonymous ecash, if I am mugged then presumably the thief will be able to spend the entire contents of my wallet. If the ecash is substituted with a credit or debit card, I can quickly call up my bank or credit card company and let them cancel the numbers associated with the card. They will do this because they know who I am. Anyway around this problem for ecash--or perhaps ecash will remain for use only in cyberspace?
(PYS) If the government issues e-cash, would it be
covered by FDIC? Should it?
(PYS): With the use of e-cash, it is likely that in under certain circumstances it will be impossible to distinguish an anonymous electronic payment from an anonymous private or political message.Thus, is the regulation of e-cash likely to be a legal terrain in which most legal battles concerning constitutional or statutory rights to anonymous speech will be fought ?
(DF): David Friedman
(PYS): Previous Year's Student
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