http://pelagic.wavyhill.xsmail.com/Private_Digital_Economy.html#CoinsDigital coins are cryptographically authenticated bearer instruments[6]. They can represent any concrete or abstract thing that can be owned: gold grams, US dollars, back rubs, cows. What they represent is determined by the issuer of the digital coins of that type via the form of payment and redemption she requires. They can even be fiat, not backed by any real asset, say Merlin Grey's pseudo-gold ounces. Certain properties are a constant, generated by some byzantine crypto:
* Only the creator of a given type of coin can mint more of them. He decides the type, units, and denomination.
* The type, units, and denomination of a coin can be authenticated.
* Each coin is created with a unique identifier, distinguished from all others created of its type.
* The continued uniqueness of a coin cannot be guaranteed since they can be copied. Similar to the DMT Digital Bearer Certificates, double spends can only be prevented by validating them against a public signature, and immediately exchanging them with the issuer for a new, guaranteed unique one (if you know of a way around this not compromising the other privacy properties, we are all earz).
* They are frangible (sort of). The issuer can give you change for that 1-cow coin in nano-cows. The inability to break up my own cow slightly compromises this frangibility (if you know of a way around this, etc).
* They are fungible (sort of). Every 1-gold-gram coin is probably equivalent to every other, give or take the reputation of the issuers. But 2 different Ming-vase-coins are not-at-all interchangeable.
* Coins are easily moved between worlds, since they're just data. They can be downloaded into a flash key or PDA, or emailed to a friend. So they can even be used as money on the Dark Side.
The paper's a tad long, but easy and enjoyable to read nonetheless.
I have first dibs in stating that Wavyhill is Satoshi Nakamoto.
