by On his blog, JP Koning discusses the versatility of cheques: A cheque instructs a bank to transfer deposits. It is a derivative on bank deposits. A post dated cheque serves as debt instrument, e.g., vis-a-vis pay day lenders. An uncashed cheque may serve as money if marked “to bearer” or endorsed by the recipient. Laws grant cheques currency status. A cheque may be used for payments even if other payment mechanisms break down. During the Irish banking strike of 1970, “for six months post-dated cheques circulated as the main form of money.” A cheque can be used by the unbanked. This combination of negotiability, robustness, openness, and decentralization means that long before bitcoin and the cryptocoin revolution, we already had a decentralized payments system that allowed pretty much
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Dirk Niepelt considers the following as important: Cheque, Debt, Derivative, Money, Notes
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On his blog, JP Koning discusses the versatility of cheques:
- A cheque instructs a bank to transfer deposits.
- It is a derivative on bank deposits.
- A post dated cheque serves as debt instrument, e.g., vis-a-vis pay day lenders.
- An uncashed cheque may serve as money if marked “to bearer” or endorsed by the recipient. Laws grant cheques currency status.
- A cheque may be used for payments even if other payment mechanisms break down. During the Irish banking strike of 1970, “for six months post-dated cheques circulated as the main form of money.”
- A cheque can be used by the unbanked.
This combination of negotiability, robustness, openness, and decentralization means that long before bitcoin and the cryptocoin revolution, we already had a decentralized payments system that allowed pretty much everyone to participate and, indeed, fabricate their own personal money instruments! …
… a whole language of cheques has emerged, allowing for significant customization. By putting crossings on cheques, like this the cheque writer is indicating that the only way to redeem it is by depositing it, not cashing it. This means that the final user of the cheque will be easy to trace, since they will be associated with a bank account. Affix the words non-negotiable within the cross on the front of the cheque and it loses its special status as currency. Should it be stolen and passed off to an innocent third-party, the victim can now directly pursue the third-party for restitution. To even further limit the power of subsequent users to use the cheque as money, the writer can indicate the account to which the cheque must be deposited. This language of checks can be used not only by those that have originated the cheque, but also by those that receive it in payment. On the back of any check, any number of endorsements can be written, effectively allowing for the conversion of someone else’s payment instructions into your own unique medium of exchange.