Question

6) token money

Answer 1

Token money is a form of money which represents a greater value than its intrinsic value.Originally medium of exchange involved metals with intrinsic value – such as gold coins. However, it became inconvenient to carry around sufficient gold. Therefore banks began issuing token money – notes and coins which they promised could be converted into gold. If people have faith in the notes and coins, others will accept them as a form of payment. Token money is related to the concept of fiat money – money which derives its value from government regulation or law.Token money is money made from tokens of some form, as opposed to account money. Most modern coins used in circulation are token money, as are paper notes. Token money has a strong privacy feature in that it works as money without the intervention of any other party in each transaction between two parties. Privacy makes money safe from interference by more powerful third parties. Where property rights are not strong, privacy is required to protect assets and permit trade, and token money works well in this regime. Token money is a form of money that represents a greater value than its intrinsic value. Originally banks issued coins that were worth their weight in gold or other precious metals, but banks soon began issuing token money, such as notes or coins, that they could guarantee would be worth a certain amount of precious metals. Token money relies on the bank's guarantee or backing of the notes or coins and relies on government laws or regulations. In some instances, token money can decrease in value because of inflation or the government printing too much money. The token money is paid when the buyer and seller reach a verbal agreement to conclude the deal. At this stage, the paperwork is yet to start. While there are no written rules about it, another standard practice in India’s real estate market, is that the sellers get to forfeit the entire amount, if the buyer backtracks from his verbal promise. The seller, on the other hand, will have to return the token money to the buyer, if he cannot complete the transaction, because of any reason. Tokens are also known as digital coins - discrete packets that act as a single denomination and can be passed hand to hand.

The most famous example of this concept was the blinded money packets known as eCash coins, created by the DigiCash company using David Chaum's blinding formula. WebFunds differs from the old DigiCash project in several ways:

The entire protocol and client side are open source.The protocol is SOX, which is a generic Internet secure capabilities protocol that happens to do payments as its primary application. As a side effect, there is no need to do the clumsy underlying bank account mechanism from DigiCash's mint project, tokens are withdrawn from SOX nymous payment accounts. Because it is SOX, the end-to-end protocol transactions are reliable, something that wasn't clearly available in eCash's protocol.