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71 Wash. & Lee L. Rev. Online 14 (2014-2015)
Digital Value Transfer Systems

handle is hein.journals/waleelro71 and id is 14 raw text is: Digital Value Transfer Systems Edward Castronova* Abstract A digital value transfer system (DVT) is a computer program that moves purchasing power from one person to another by exchanging different forms of virtual currency. In this Essay, I will give examples of DVTs and explain how they work. Then I will use the economic theory of budgets to explain how DVTs increase the liquidity and reach of all forms of virtual money. In effect, DVTs make all forms of currency, from dollars to frequent- flyer miles, essentially equivalent in terms of purchasing power. I conclude with a brief discussion of the possible implications of DVTs for the economy and for government policy. Table of Contents I. Digital Value Transfer Systems ..................... 15 A. Definition ..................................... 15 B. Examples..................................... 16 II. DVTs and Budget Theory ............ .............. 18 A. Budgets with Different Forms of Money.. ........... 18 B. The Practical Operation of DVTs .................. 19 III. Implications ............................. ...... 20 A. Proliferation of Currency .................... 20 B. Regulation and Taxation .................... 21 * Professor of Media, Indiana University Bloomington. 14

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