Be Your Own Bank

Ripple is a monetary system based on trust that already exists between people in real-world social networks. You create money simply by accepting an IOU from a friend. If someone you don't know who is trusted by someone you trust wants to pay you, all they have to do is issue IOUs to the person you trust, who in turn issues IOUs to you.

I've been interested in the idea of mutual credit based currencies for a while now, but I couldn't get past the idea of a single account balance and single credit limit for each user. With Ripple, balances and credit limits exist for each arrow in the social network graph. This protocol, particularly if a few widely trusted organizations took part, could even conceivably scale to encompass most of the world.

Ripplepay.com is a standalone web implementation of Ripple. I just signed up for an account and their verification email hasn't made it through my spam filters yet (I use greylisting, which delays email from new correspondents), so I haven't had much chance to play with it. I don't expect a lot of features; I don't even know yet if it will automatically find paths through the trust network. I can imagine systems like this someday having features like automatic "settlement" reminders, interest charges, and auto-payment of debts where cycles exist; i.e. Alice owes Bob, who owes Charlie, who owes Alice.

Ripplepay.com does support multiple currencies and will automatically convert, though gold or any other "hard" currency is absent from their list. Account balances for each trust relationship are correctly held in a specific currency, fluctuating relative to other currencies. One interesting thing you can do to "cash out" from Ripplepay.com is to buy carbon credits from third :: direction. As online services become a larger part of the economy, more and more Ripple IOUs could be settled entirely online with no exchange of any government currency.

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