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3. Reputation, Trust and Credit Money

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Rogelio Segovia edited this page Mar 7, 2016 · 2 revisions
Any commoner can endorse a P2P credit to another commoner. The **amount** of credit in HR, and the **duration** of the credit in number of days, he is allowed to endorse is limited by his remaining **Reputation** as moneylender in the name of the Community, measured in **UoT (Units of Trust)**. For each P2P credit endorsement, the money lender risks some Reputation.

#P2P Credit

  • Only commoners qualify to get P2P credit.
  • Credit has no interest.
  • The endorsement of a credit is made by authorizing a Credit Line to the borrower for a certain amount of HR and for a certain number of days.
  • The borrower may use part or all of this Credit Line any time the balance of his account is not enough to pay a transacion.
  • Notice that the part of the Credit Line the borrower is using is new monetary mass, created ex nhilo. This has an inflationary effect in the Community Monetary System. The credit money must be paid back to restore the monetary mass to equilibrium.
  • Once the time is over, at trying to make a payment, the Credit Line will detract all avalailable balance from the borrower to pay back the credit.
  • If the balance is not enough, the credit is not paid fully back, and the credit endorser is penalized. The borrower account is blocked for any further payement and any new income will be used to pay the remainer debt.
  • The Commune will take care that the borrower does not cheat the system, leaves the debt and asks or another identity. Eventually, it will kick off the cheating commoner.

Endorsing a credit

  • The credit endorser will analyze the borrowers solvency by studying all documentation he may ask and the borrower may want to show.
  • Additionally, the borrower may authorize the credit endorser to access the monitoring screen of his/her account, where you can see balances, credits, the borrowers reputation, etc..

#Reputation

  • Reputation is measured in UoT (Units of Trust). The meaning is the historical accumulated reputation at endorsing successfull P2P credits, that is, credits that are paid back.
  • The reputation cost at endorsing a credit is the amount of the credit measured in HR times the duration of the credit in number of days, and is measured in UoT.
  • Once the deadline is over:
  • If the credit was successfull, the reputation of the Credit Endorser is restored and rewarded with a certain percentage of the reputation cost. In this way, good moneylenders are stimulated to provide this service, and their credit endorsement capacity increased.
  • If the credit was not successfull, the reputation of the Credit Endorser is not restored and even penalized with a certain percentage of the reputation cost. In this way, bad moneylenders are automatically restricted in their capacity to provide credit endorsement. Notice that this is done automatically by the system and escapes any political influence.
  • Optionally, the Commune may select according any Community selection criteria and nominate qualified "Credit Endorsers" to do the job. Its up to any Community to decide if to use this risky approach.

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