Caveat -- that was a discussion of part of the Anglo-American law of paper instruments. It may or may not apply very well to various kinds of digital money. Metaphors are quite useful, but when it comes to the actual law they have their limits. What Bob Hettinga and I call a "digital bearerr certificate" may or many not legally be a negotiable instrument. It may not even be desirable that it be considered a negotiable instrument by the law. We call it that primarily because its mechanism reflects some (but by no means all) of the core security functions currently provided by the technology and law of paper bearer instruments. The same, with varying degrees of metaphorical similitude, holds for "digital cash," "digital signature," and so on.

I distinguish between the "functional" and the "selfish" parts of the law. The former we'd like to emulate as mechanism, and the latter is best left left to the musty legal tomes.

For example, a "negotiable instrument" under the U.S. Uniform Commercial Code must involve the payment of "money." "Money" is defined in that code as "a medium of exchange currently authorized or adopted by a domestic or foreign government. The term includes a monetary unit of account establsihed by an intergovernmental organization or by agreement between two or more countries." U.C.C. 1-201(b)(24). As a result many things that are in fact money (e.g. e-gold) probably cannot be "money" and thus not "negotiable instruments" under the U.C.C. I'd classify this as a selfish rather than functional part of the law.

In sum, the law can be used in two very different ways by a security designer, and one should be careful to distinguish them. If one is designing mechanism in such a way that law carries part of the security burden (e.g. one creates a "digital contract" and expects the state to enforce it), then one has to care about the law as it is (quite a job!) rather than as metaphor. If, OTOH, one is designing a mechanism to emulate or surpass a security function currently performed by law, then one should care about the functional policy reasons for the law and how to distinguish those from the selfish parts that your customers don't need as mechanism.