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Hi, let me try to answer: 1. Why is the mediation fee 1 credit? In the beginning I had code that allowed any node to pick any fee he wants. This caused some pr

by realcr 7y ago

Hi, let me try to answer: 1. Why is the mediation fee 1 credit? In the beginning I had code that allowed any node to pick any fee he wants. This caused some problems. Because of the nature of this system, whenever you want to send funds along a route you have to know ahead of time all the fees along the route. If you got some route, and before you managed to send the funds one of the nodes decides to change his fees, your transaction will fail. It's not a final decision though. I might add this feature again in the future. In the meantime if someone wants to collect 2 credits instead of 1, he can "simulate" another node. Then the route appears to be longer. Not optimal, but possible. And why exactly 1 credit? This is the only arbitrary choice in the protocol, so it doesn't really limit anything, and it might actually give the credit its actual value in the protocol. Another thing I was afraid of was some kind of credits inflation: All participants will start increasing their fees gradually. If we fix the fee to be exactly one credit, we can avoid this situation. 2. You can actually set as many fake nodes as you want, but it will not give you extra buying power on the outside world. For example: I can set up two nodes, each trusting the other one with 1 million credits. It will seem that I have lots of buying power (1 million credits!), but I will not be able to use this buying power outside of the clique of nodes I invented to myself. Your buying power will always be limited by how other entities trust you, and this is something that might be hard to fake. You might be able to fake it once, but after the first time you default people will not be willing to trust you again (Hopefully). One more thing: Offst has a way of producing a token that proves the last operation done in a mutual credit between two nodes. This token is signed, therefore we might be able to use it as a proof in a court. I haven't yet documented this feature, but it already exists in the first release of Offst. 3. They could, but maybe Bob and Charli don't really trust each other? Imagine that you are on a vacation, you go to some hotel in Shanghai and you want to pay for your stay. You could tell the hotel manager: Hey, why don't we open a mutual credit account and I could pay through that account. But it's not a good choice for the hotel manager, because most likely he will never see you again. It is better for him if you pay through a known route. Thanks for the interesting questions, Prepare to get an email!

irq-1 7y ago
Normally money is fungible and we trust the money, not the people. Pirates want gold because the gold will be accepted even if they won't be trusted. This seems like an impossible obstacle -- every buyer and seller must have a connection (of trust), and the connection must have enough credit! Is the hotel manager in Shanghai going to have a connection to every customer? Is the local restaurant going to have thousand of trust connections so a relay can be found? The other issue is the zero sum of credits and debits. How can money be added or removed from the system if "the total amount of credits in the system always remains 0"? How can you convert $100 USD to credits, spend the credits and someone else can get the $100? Does any money put into the system also need to removed at the same time? How would that work?
- all2 7y ago
  > The other issue is the zero sum of credits and debits. Let's say I've got 100USD. You've got a node and a pile of trusted friends. I spin up an account and pay you 100USD. Initially it looks like this: Me->Dollars: 100, Credits 0 You->Dollars: 0, Credits 0 What do I get in return? A line of credit that you extend to me. So now it looks something like this: Me->Dollars: 0, Credits: 100 You->Dollars: 100, Credits: -100 It is up to you what you do with the cash, but there is now a debt on my account to you for what you provided to me. In this sense, a positive number of credits is "debt owed to another" and a negative number of credits is "debt that is owed to you". Suppose I have a friend, CM, who I trust. If I want my 100USD, but you already spent your cash, I go to my friend and buy the cash with credits; Before we trade Me->Dollars:0, Credits: 100 CM->Dollars:???, Credits: 0 And after Me->Dollars:100, Credits: 0 CM->Dollars:???-100, Credits: 100 Notice that you still have -100 credits. Essentially, I bought your trust. Because I gave you cash, you know that I'm good to pay you the money I've already given you. This debt owed to you will remain in the network until you are paid an equivalent amount in credit. I can see now that lenders will be "debt sinks" that exchange cash for credit within the system. So, while the balance of the whole system is essentially 0, there will always be an imbalance because there will be those who take cash in exchange for "trust" and credit. > Is the local restaurant going to have thousand of trust connections so a relay can be found? No. The restaurant will trust a node that trusts many other people. I can see that as well as "debt sinks" on the network, there will also be nodes that specialize in taking on "trust" so that others don't have to. Like a bank. There will likely be a fee (in credits or cash, you choose) associated with assuming other's risks.

by realcr 7y ago

irq-1 7y ago

Normally money is fungible and we trust the money, not the people. Pirates want gold because the gold will be accepted even if they won't be trusted. This seems like an impossible obstacle -- every buyer and seller must have a connection (of trust), and the connection must have enough credit! Is the hotel manager in Shanghai going to have a connection to every customer? Is the local restaurant going to have thousand of trust connections so a relay can be found? The other issue is the zero sum of credits and debits. How can money be added or removed from the system if "the total amount of credits in the system always remains 0"? How can you convert $100 USD to credits, spend the credits and someone else can get the $100? Does any money put into the system also need to removed at the same time? How would that work?

all2 7y ago
> The other issue is the zero sum of credits and debits. Let's say I've got 100USD. You've got a node and a pile of trusted friends. I spin up an account and pay you 100USD. Initially it looks like this: Me->Dollars: 100, Credits 0 You->Dollars: 0, Credits 0 What do I get in return? A line of credit that you extend to me. So now it looks something like this: Me->Dollars: 0, Credits: 100 You->Dollars: 100, Credits: -100 It is up to you what you do with the cash, but there is now a debt on my account to you for what you provided to me. In this sense, a positive number of credits is "debt owed to another" and a negative number of credits is "debt that is owed to you". Suppose I have a friend, CM, who I trust. If I want my 100USD, but you already spent your cash, I go to my friend and buy the cash with credits; Before we trade Me->Dollars:0, Credits: 100 CM->Dollars:???, Credits: 0 And after Me->Dollars:100, Credits: 0 CM->Dollars:???-100, Credits: 100 Notice that you still have -100 credits. Essentially, I bought your trust. Because I gave you cash, you know that I'm good to pay you the money I've already given you. This debt owed to you will remain in the network until you are paid an equivalent amount in credit. I can see now that lenders will be "debt sinks" that exchange cash for credit within the system. So, while the balance of the whole system is essentially 0, there will always be an imbalance because there will be those who take cash in exchange for "trust" and credit. > Is the local restaurant going to have thousand of trust connections so a relay can be found? No. The restaurant will trust a node that trusts many other people. I can see that as well as "debt sinks" on the network, there will also be nodes that specialize in taking on "trust" so that others don't have to. Like a bank. There will likely be a fee (in credits or cash, you choose) associated with assuming other's risks.