Sounds like that's the only thing it's good for. As far as I can understand it's designed so the merchant has to report it in order to verify it exists. I find it really hard to understand, but I think the thing I'm missing is that the person who buys Taler in the first place simply has to trust the issuer - because they can't verify that they've actually received any without leaving a record i.e. becoming a merchant who is receiving Taler in exchange for cash.

So if you get Taler from your bank and spend it somewhere, the government can see it at your bank, and they can see it where it was spent, but they don't see you at all. You've done your trusting out of band.

If that's right, it could still be used for illegal and untaxed transactions if the entire chain was trusting out of band. I could use it to buy drugs without paying taxes if by dealer would be happy to shoot me later if they couldn't spend it at a retailer, rather than to check if it was good.

I still don't understand it. I've tried periodically for years, but I'm missing something.