Decentralising online transactions

Or “online cash” – since I don’t have to hand my physical cash to Visa so they can give it to you for that coffee I just bought. Of course they’d like it that way, hence the push of “mobile wallets”, owned by guess who! (If not owned, reliant on the infrastructure of – this is not a step forward)

Flattr just announced they’re becoming a normal* payment gateway. With some caveats, and differences, that make it more interesting, but the important thing is – we get it now :)

Anyway, one of the comments reminded me I’d done a lot of thinking about how you decentralise the transaction of cash, in a simple sense all that’s happened is that a number in one row of a database is going up and another is going down, right? This should be easy. And I suspect most of it is.

Here’s the brain-dump: (was going to be a comment on that TC post)

Gratz to the team :)

Although this might appear to be a step backwards, towards traditional payment mechanics, the current players need to be disrupted by replicating current behaviours, with better practice, and with less barriers to mass adoption. And more options are always better, the current choices of PayPal or Google Checkout are frankly appalling. We use them because we have to. This slows innovation because we’re locked in. There are also lots of horror stories, do some Googling.

Now of course true p2p is the holy grail, as it were.. maybe build something out on bitcoin? I hear they’re doing well, it just needs some UX work, what doesn’t!

(We’re heading into a time when everything is distributed (like the work to distribute DNS) and trust will be king, services will compete on it, and where choice will be free, doesn’t that sound like a utopian future for humanity?)

Truly distributed services will always have that problem, trust. So there needs to be a system of nodes and providers (anyone and everyone is a node, and anyone or everyone can be a provider), you trust a provider based on other existing proofs. i.e. Twitter could be a provider, you trust them, right? Or your bank (yeah i know, ack), or the guy who runs your local residents group.

You then enter your provider at the point of payment with your unique identifier in a oauth/openid style interaction (Email address? More trust proof), that then gets looked up in the network, and payment is authorised.

Balance and transaction info is stored encrypted and distributed in the network, no node can be locally read. Each unit of currency holds a transaction history against itself, who last owned it, who owns it now, and where it was last transfered. Each unit is also unique with this triplet of info. that uniqueness can be looked up too, records are stored and replicated DNS-style. PGP cash?

And so it goes. money is democratised.

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This has been a hard thing to articulate, and I’ve rushed through it here, I’ll try to elaborate more if I work out how to :)

* Normal in that you can make a payment of any amount, previously it was a percentage of your monthly pot based on the ratio of pot size to number of payments. They explain it better, I’m sure.

    One comment

    1. Sam Sethi says:

      Trust is the key issue. Bank Notes are not money they are a promise to the bearer that the Bank of England will pay the recipient upon exchange. There are more notes (IOU) in circulation than there is gold in the Bank of England which is why governments prop up bank as they fear a run on the banks. So I don’t think P2P distributed money will happen anytime soon it is a case of who will be the lender of the last resort. i.e if you pay for something and I make the payment and thus you owe me, maybe I then need to borrow from someone as your payment was larger than I had available etc. There are new services appearing Zopa a P2P lending startup and then there is Wonga. Personally I see the same companies developing NFC app for my iphone and the status quo remaining for now. When was the last time a new bank entered the highstreet (First Direct). Virgin were trying to create a new bank and got stopped by regulation. Personally I would prefer to just get rid of coins and have a trusted micro-payment system in my pocket linked to my current account. (I don’t use a credit cards) Maybe a good topic for a chat when we next meet.

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