Minting the coins of Sublime Taler

Audited procedures are needed to create and destroy Sublime Taler currency.

Creating new currency is a technicilty, it is not difficult, especially for digital money such as GNU Taler. The real trick is doing it well, using verifiable procedures that can be subjected to independent auditing, such that others will be able to trust it and take it in payment. For Sensble Taler this mostly involves guaranteed full backing in the underlying value and instant pay-out when a claim is being made.

The principle of fully value-backed currency means that the value must be owned before corresponding Sublime Taler coins can be minted. The value of such coins in circulation must not ever exceed the value owned, at any time.

When new underlying value enters into the system, it is possible to mint coins to the same value. This requires either the actual delivery of the underlying value, or the incoming transfer of a title of ownership at a trusted peer noting that trust is not the same as faith).

When coins are being cashed, they must be rendered useless for further trading, that is, their value is destroyed. In return, the underlying value can then be transferred as directed by the party who is cashing out. This means that the title of ownership must be transferred in a mutually agreeable manner, which may involve a physical swap or a mutual account transfer or any other form of delivery, possibly over intermediate peers.

The general mechanism also applies internally, though short-cuts may then exist. For instance, the underlying value may be transferred from one account to another, or the coins could be replaced by new ones in the posession of the new owner.

Auditing requires the constant review of the balances in the system, including an irreversible (signed) time trail to which potential peers (so anyone) can subscribe, along with abilities to verify that (1) minted coins are part of the stock of underlying value, (2) titles or actual underlying value has actually been deposited and (3) that payouts have been instantly handled in the vast majority of the system's history.

It is vital to keep the underlying value off the balance sheet of the company that manages it; it should be in the name of the owners or, once minted, it should be in the posession of those who make the claim based on issued Sensible Taler coins. This external independency must be legally secured to avoid any downfall of the ownership in case of a bankruptcy by any party.