Is the paper receipt to a gold vault a letter of credit?
It depends on the legal setup, buy many money warehouse do not gain legal ownership of the money stored, for example physically allocated gold vaults.
Discussion
A letter of credit is a promise to pay on your behalf. In olden times when you travelled to another city or country for an extended time, you’d ask for a letter of credit from your home bank. When you went to a new bank to set up an account, you’d present the letter of credit along with your passport to get a local balance. The letter of credit would eventually make it back to your home bank and attributed to your account where the amount would be debited from your account and credited to the agent working on the other bank’s behalf. This is how international banking began, long before nation state currency.
But what you explain is much more than just deposit ecash.
But ecash is not a ‘deposit’ from the standpoint of the mint/bank. They hold no account. Your ecash wallet is the equivalent of a leather folio where you hold your letters of credit.
Why would it not be a deposit?
The bank is not holding anything for you. While they have a general liability of notes outstanding, and promise to redeem when a note is presented, they are not holding any specific deposit on your behalf.
If the bank is holding your wallet on your behalf, then it’s a deposit.
Just because it's a bearer certificate rather than a account balance doesnt change the nature of the deposit.
User has bitcoin, sends it to mint, mint sends to where ecash holder wants.
It’s more like cash on hand, than a cash deposit. Anyway, it’s a matter of degree. With ecash, as a mint operator, I could easily do fractional reserve, so long as I met the daily redemption requirements. If user are simply swapping, I need nothing behind those swaps!
Fiat cash is base money without counterparty risk.
Cashu/Fedimint is a moneywarehouse receipt with counterparty risk redeemable for bitcoin base money.
fiat cash has a lot of counterparty risks, is a paper asset representing promises.
The political centralized setup makes it "stable and boring" in countries in a position of economic dominance. A lot of people in the world have been fooled by fiat cash and a lot will be fooled in future.
I understand your narrative, but that's not correct in a rigorous analysis.
Fiat paper does not represent a promise, it's not backed by anything, you cannot redeem it for anything.
It's the equivalent to gold, or bitcoin, a stupid rock without liabilities or responsibilities.
The original dollar paper bill was a promise to pay out gold, so to say a money warehouse receipt.
But in 1934/1971 the paper changed to not be redeemable for anything anymore, thus turning it into base money without counterparty risk, because there is no counterparty that can fail to honor the payout of gold.
Yes, I think the only sense in which fiat is really "backed by govt" is the promise that it will be accepted by govt as taxes.
Yup. Fiat gets its value because it’s the only way you can discharge your liabilities to the state. That’s what the Brits did in South Africa, imposing a ‘hut tax’ that could only be paid in British currency.
They don't even promise you that...
It's a promise to cancel other liabilities in an equal amount to the denominated face value. Nothing further, yes, but that it functions at all has its root in its ability to make the men with guns leave you alone at tax time. The government agrees to accept these "leave me alone" tickets, and in exchange, the bank agrees to provide the government with them most any time it wants them to buy things.
It's just the grease in the kleptocracy machine.
dont agree, paper fiat are based on the promise that you will exchange it fro goods and services. The difference with gold and bitcoin is that you have a natural expectation of exchanging them for good and services in future based on their property and phisical laws;
with paper fiat the expectation is based on an artificial gun enforced centralized power that promise you to maintain power and dont fuck up all. And most of fiat promise are been already broken, all of them will be broken at some point.
I'd say this isn't correct either, saleability is neither a promise nor a contract.
I'd suggest reading What Has The Government Done To Our Money by Rothbard,
https://mises.org/library/book/what-has-government-done-our-money
And The Ethics of Moneyproductuon by Hülsmann.
Nothing to do with gold receipts,though gold might be used as the unit of account for settlement between banks.
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