Skip to content

Home

Jump to bottom
Anu edited this page Jun 15, 2014 · 28 revisions

Zero Reserve

A distributed Friend-to-Friend payment network integrated with a Bitcoin exchange. Its a module for the Friend-to-Friend platform Retroshare. The way it works is very simple:

You sell your friend Fred your used bicycle for $500. Your friend chooses not to pay you with bank notes (central bank IOU), he issues an IOU which he gives you as payment. Obviously, this IOU is not as universal as a bank note. But the next day, you want to buy a used fridge from George, who is also a friend of Fred's. Instead of giving him bank notes, you can give him Fred's IOU as payment.

Fred was creating money. Out of nothing. Like banks do. Of course there are rules in the game - you cannot simply create arbitrary amounts. But everyone can create money like this to the extend he is trustworthy with his friends. Now Fred's IOU is not good with anyone who doesn't know and trust Fred. But it is possible to create chains of IOUs from you to anyone in the world. Managing the complexity of that task is the job of Zero Reserve.

IOUs is in essence what our money is: "I Owe U" - in other words, debt. There is no reason only banks can do this. A long time ago it was quite normal for businesses to issue IOUs as money. We need to go back to this. Zero Reserve provides the infrastructure for this.

###See also: The Hawala Money Transfer System

References:

Rüdiger Koch: Zero Reserve - A Distributed Exchange Platform

Ryan Fugger: A Proposal for a Secure, Private, Decentralized Digital Currency Protocol

Satoshi Nakamoto: Bitcoin: A Peer-to-Peer Electronic Cash System

Clone this wiki locally