Re: [Help-gnunet] Ideas of debt tracking system to replace currencies

[James Cook]

Hi Mildred,

Thank you for your message. It reminds me of Ripplepay (https://ripplepay.com/). Development on the project has stopped in favour of Ripple, which has some of the same functionality but focuses more on involving financial institutions. I don't know if there are any active projects that match your description.

James

On Tue, 18 Sep 2018 at 20:14, Mildred Ki'Lya <address@hidden> wrote:

Hi,

I had some ideas about a payment system that could help us survive the next big financial crisis, and I wanted to share it here as I believe it might be of interest to some. I come from the postulate that we don't necessarily want a currency to exchange goods in a society. All we need is a debt management system, and a currency is just one way of implementing it. I also come from the idea that monetary creation is a critical point for all currencies. It drives the economy. Too much money generated, and it's over-inflation. Not enough money and you block the exchanges and the economy. We should always be allowed to perform an exchange if both parties agrees, without consideration for lack of money.

Inspiration comes from the book "Debt: The First 5000 Years", see
https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years

The question is how to create a completely decentralized system around these principles, and I had basic ideas around that. To take the gnunet terminology, the network would be composed of different egos, and each ego would have debts to creditors and debtors ("créances" and "dettes" in French). There is not really any notion of wallet balance there.

When a transaction is made, a debt is recorded in the system and both the creditor and debtor would record that debt. This makes a potentially cyclic oriented graph. Think of the debt as an arrow coming from the creditor to the debtor.

When a debt is recorded, the system would look for cycles in that graph, and when the debt to be recorded would complete a cycle, all debts in this cycle would be reduced by the minimum debt in that cycle. Let's take for example the following graph:

    A --[10]--> B --[20]--> C

    C is owing 20 units to B, and B is owing 10 units to A

In that graph, if a transaction is made between C and A such as it would complete the graph, with 15 units as amount, it would lead to:

    ,--> A --[10]--> B --[20]--> C --.
    |                                |
    `--------------[15]--------------'

That graph could be simplified to:

    ,--> A           B --[10]--> C --.
    |                                |
    `---------------[5]--------------'

The debt from A to B has been purged because A. It's logical. What happened is that A provided some goods to B in exchange of a debt, B provided some goods to C, and C provided back goods to A. A received something in return and B isn't owing anything to B.

What's nice is that before A and C made their transaction, by querying the graph, C knows who to ask to purge his own debt (A or B) and A knows who is owing to him (B and C). If the graph contains with each ego their skills and the goods they can provide, it's a decentralized market where we share with our own network. Over time, we will know those people and it won't be strangers.

The system could record metrics such as the amount of purged debts and non-purged debts. If someone has a great amount of purged debts, it means they are contributing back to the community and we can safely exchange with them. In contrast, someone with unpurged debts is someone that is not well inserted in the economy and that is unbalancing it. In either case, that's not a good thing, and people should be mindful of that and try to avoid such unbalanced exchanges.

Then comes anonymity. I believe complete anonymity is problematic on decentralized systems. Only centralized systems when monetary creation is controlled by a single entity can afford complete anonymity, because everyone is trusting that single entity. On decentralized systems, you need to know who you are exchanging with, and you need to know your community.

That being said, you don't need to know anything that happens on the network, you only need to know your local network. We can imagine a system hierarchy where you have full disclosure about who is in your local community, their identity, but when you exchange with people far away, you only need to know what is your community relationship with other communities. Then on a more global scale, you only need to know that the relationship between your country and the other countries in the world is balanced, and don't care about who exactly does the transactions.

That were my ideas. Hope it can be of inspiration.

Mildred

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