Category Archives: money transfer

A responsible transitive transactions protocol

A while ago, I wrote about transferring money through chains of IOUs. I’ve since discovered that such transfers are now sometimes being called “transitive transactions”.

So, for example, if Alice wants to pay Frank $600, but Frank doesn’t trust Alice’s IOUs, they might find a path through existing trust relationships, so Alice gives Bob an IOU for $600, Bob gives his own IOU to Charles, Charles gives one to Denise, Denise gives one to Edith, and Edith gives one to Frank. Alice has paid $600, Frank has received an IOU for $600 from someone he trusts, and everyone in between has given an IOU for $600 and received an IOU for the same amount from someone they trust.

A problem

But Charles will be upset if he thinks the transaction is going ahead, and gives his IOU to Denise, only to discover later that Bob didn’t agree to this transaction; and Denise will be equally upset if Charles then demands his IOU back, but she’s already given hers to Edith. Or, Alice will be upset if she gives her IOU to Bob, but discovers later that Frank never received the money, because Denise, who neither Alice nor Frank know or trust, ran off with the money. So how do all these people coordinate, so that they all agree on whether or not the transaction is going through? Continue reading A responsible transitive transactions protocol

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Corrections and clarifications: gateways and the value of XRP

My previous article, about Ripple and its currency attracted some criticism from some in the Ripple community. And it deserved it, so here I’m going to correct and clarify what I said earlier. Continue reading Corrections and clarifications: gateways and the value of XRP

Ripple and its currency

In my previous article, I talked about a potential peer-to-peer money transfer system, and the problem of how to get such a system started: Why would you be the first of your friends to join such a system? It wouldn’t be useful until you had well-connected friends to connect to the network through. I suggested that this problem might be alleviated by strapping such a money-transfer system onto pre-existing decentralized social networks.

Well, since then, I’ve read more about the recently rejuvenated Ripple, and I’ve discovered that they have a different, very clever solution to this problem. Their solution has other benefits, too, including a currency that I argue isn’t necessarily backed by debtors, as every country’s fiat currency seems to be. Continue reading Ripple and its currency

Money transfer via social network

At the moment, most of your income and expenditure probably goes through your bank (or, perhaps, banks). Here in New Zealand, only a handful of banks dominate the market, and I think the processing of EFTPOS and credit card transactions involves even more market concentration.

This centralization of money transfers has several downsides. Fewer players means less competition, greater risk of fraud by employees of the big companies, and obvious targets for malicious hackers. So how could we decentralize money transfers? Continue reading Money transfer via social network