An architecture for the Internet of Money

[Meher]

Here is proposed an alternative architecture called "The Internet of Money (IoM)" to build a Ripple like system with the following differences:

1. No in-built math based currency.

2. No requirement for a singular consensus process. Gateways use a decentralized consensus pool, outside their control, to run their ledger. We replace a singular consensus process (Ripple) with multiple ones, and make up for the disadvantage at higher protocol layers. This simplifies the Ripple consensus engineering challenge.

Reading the Bitcoin technical forum with its numerous resident geniuses has been the best educational experience of my life. I welcome everyone to post comments, questions and point out mistakes / errata. Please bear in mind that the document is an early draft.

Current document version is 0.2.9, please discard the old versions.

Version published through google docs: https://docs.google.com/document/d/1Bc-kZXROTeMzG6AvH7rrTrUy24UwHoEcgiL7ALHMO0A/pub

An aesthetically better pdf version: http://issuu.com/meherroy/docs/an_architecture_for_the_internet_of/01
Pdf works best with Chrome.

A third backup, suitable to download the file: https://www.scribd.com/doc/241975638/An-Architecture-for-the-Internet-of-Money

Comprehensively crediting work that came previously is always a challenge; omissions (if any) should be treated as arising out of ignorance.

Hyperledger thread for the same: http://forum.hyperledger.com/t/an-architecture-for-the-internet-of-money/157

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[Billbags]

So this is a centralized system using banks? No p2p? No mining? Banker and Government ran? Basic ACH 2.0?

Note: I think these are the questions that will be asked. If you could explain a little more here. Thanks

[Meher]

@Billbags: Thanks for the questions.

P2P: System is a mixture of P2P and non-P2P. P2P when exchanging assets and paying another person with an account at the same bank. Non-P2P when payments cross the boundary of an individual bank.

Mining: There is no mining.

Banker and Government ran: Banks can issue as many assets as dictated by daily operations and reserves. The ledgers are maintained in a decentralized fashion. This kind of decentralization is very useful in mediating interactions between banks, and the article explains why.

Basic ACH 2.0: Yes, it is supposed to be ACH 2.0 + Stock Market 2.0 + FedWire 2.0 + Contracts 2.0.

The paper considers the following question: What system can we design if financial institutions (banks plus others) tracked asset and liability balances using public decentralized cryptographic ledgers with inbuilt scripting languages?

[Billbags]

You have put a lot of thought and research into this system so I have a lot of respect for it. I was asking questions and you have gave me great honest responses. Thanks

[Meher]

Thanks for the kind words BillBags. I understand your perspective; I am a large holder of bitcoins and events like the current price decline don't worry me at all.

That said, I think there are 2 parallel movements about to happen: One is Bitcoin, and the other is the rise of a new type of Fiat banking. Call it crypto-banking if you must. Ripple kickstarted this movement and Stellar is a strong follow up. I am doing a thought experiment to explore if there is a different way of building Ripple. It would be great to have technical views from the excellent Bitcoin folk to help with the thought experiment.

Ripple is as much a challenge to the current banks as is Bitcoin. That is because it allows small startup banks to become competitive with big banks. It is a system by which lots of small fish can collaborate to challenge the big fish eventually. The genius lies in the Settlement mechanisms which reduce liquidity needs of small banks.

Hope you understand my perspective.

[Billbags]

I totally agree with your perspective of there being two or more systems in the near future. I was just making sure I was understanding you. You have a good out look with your system because the bankers powers are harder to overcome than the government powers. Thanks for responding.

[bitsalame]

If your "new technology" requires a clearing house, you are doing it wrong.

[Meher]

Thanks Bitsalame, you could be correct. It is only by being wrong that I have a hope of eventually being right.

It would be good to have a concrete analysis from you, especially since the proposal does away with a Clearing House for securities trading. There is a difference between Settlement and Clearing House.

[vancsj]

Thanks Bitsalame, you could be correct. It is only by being wrong that I have a hope of eventually being right.

It would be good to have a concrete analysis from you, especially since the proposal does away with a Clearing House for securities trading. There is a difference between Settlement and Clearing House.

It seems to be too complex, but good work, you are at least thinking about it.

[Meher]

Thanks a lot vancsj.

Complexity is the hallmark of an unfinished idea, which this one certainly is. Hope, a discussion will allow me to spot the elements that can be taken away.

[vancsj]

Thanks a lot vancsj.

Complexity is the hallmark of an unfinished idea, which this one certainly is. Hope, a discussion will allow me to spot the elements that can be taken away.

Try harder, there're not much people watching the technical threads:)