The Superiority of Decentralized Credit

br flag

First and foremost, I am NOT trying to sell or promote any paid service or product whatsoever. The purpose of this post is to invite discussion about a fundamentally different approach to how we view systems of currency.

Decentralized credit is an extremely simple yet extremely effective system of currency, which I believe to be vastly superior to any other system of currency, including those based on blockchains.

Decentralized credit allows for irrevocable representations of credit to be assigned, reassigned, and traded, utilizing the principles of public key cryptography. We can think of it like a system of tradable gift cards without the need for a trusted third party to trade them. This approach is different to that of blockchain, as the premise of blockchain is to prevent double spending by going through great lengths to maintain an immutable chain of events, and thus implement a trustless currency. However, a trustless currency is ultimately meaningless without the need to eventually trust someone to provide some good or service in exchange for it, otherwise the currency is just a number. Therefore, decentralized credit simply utilizes the trust that must exist anyway, even when using trustless currencies.

Furthermore, the actual value of a cryptocurrency may fluctuate with market conditions, whereas the value of credit depends only on the service provider. On the other hand, service providers may one day disappear and their credit will instantly lose all its value, whereas blockchain has no such central points of failure. The safety of decentralized credit will thus depend on the reliability of service providers to remain in service. The end goal is to have people hold most of their credit on reliable "pillars" of society, such as governmental agencies, or those that provide essential goods and services like cars, petroleum, or Internet, such that if they were to go away, then society would probably be facing more dire issues than the loss of digital credit anyway. There is no inherent risk for any service provider to start maintaining a system of credit in this way; the risk is placed entirely on the holders of credit who trust them.

The benefits of decentralized credit are that it is accessible to anyone with just a computer and Internet, and that it is extremely more simple and efficient than fiat or blockchain systems.

I have linked to a work-in-progress document that explains the underlying purpose and mechanisms of the system, in a project I am tentatively calling "AliceChain":

My question is: why is this system not considered to be objectively superior to other systems of currency?

fgrieu avatar
ng flag
We are not a site about credit or currencies. Not even cryptocurrencies. We may be concerned by the cryptographic aspects of cryptocurrencies. But we do not want to discuss "actual value of a cryptocurrency", or compare their virtues, or lack thereof.

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