[stagas]

This looked initially like a cool idea, then I realized that to trade with someone you have to have a mutual credit line with them, or through someone who already has a credit line. How is this any different than the current model, where the bank/government/central money issuer is our mutual credit line and why wouldn't this model eventually end up with banker-type people managing the credit for everyone? You could go now to a bakery and ask for mutual credit, the problem is they would prefer the safest route, which is credit through the current monetary system. How is Offset protecting against the same thing happening? Am I missing something?

[fiatjaf]

If one, this would be open.

The current banking system doesn't suck because people are greedy or bankers are bad people. It sucks because it is closed and no one can join.

(If you're tempted to say: "no, anyone can join, they just have to fulfill the regulations blablabla", then this is your answer.)

[stagas]

There are local communities around the world that run their own credit lines for exchange of goods outside of the banking system, so it's not that Offset is enabling something that isn't happening already. Maybe the software is more convenient but is it any more different? I'm trying to understand. My question is what's preventing few people accumulating trust and credit lines and eventually becoming bankers for this system? Everybody needs bread, but those that sell bread don't need javascript applications, so there has to be a middle man even in this system for me to buy bread. The current banking system exists because it has established credit lines with goods that are almost impossible to acquire without a middleman, like petroleum, electricity, infrastructure.

[rjmunro]

> My question is what's preventing few people accumulating trust and credit lines and eventually becoming bankers for this system?

The way I understood it nothing is preventing people doing that. Quite the opposite, in fact. That's the whole idea. That's what is supposed to happen. The difference is that the barrier to entry for those people is essentially nothing, rather than having to start an actual bank, which will encourage local competition, keeping fees low.

[thinkloop]

> My question is what's preventing few people accumulating trust and credit lines and eventually becoming bankers for this system?

That would be great, it would be more credit for everyone and wouldn't take away anyone else's credit - and if they start misbehaving they can be quickly replaced.

[notduncansmith]

> It sucks because it is closed and no one can join.

Playing the devil’s advocate, limiting the number of bankers may make it easier* to regulate their behavior as a whole, because there are fewer of them to monitor/investigate. Predatory or exclusionary lending can be difficult to detect and curb already: increasing the number of actors to regulate may make it near-impossible. What are your thoughts on protecting borrowers in a web-scale marketplace of lenders?

* independent of other variables, such as the ability of the wealthy to influence policy in their favor

[stagas]

Exactly, nothing is stopping few individuals from becoming mafia. Eventually a secondary system needs to be established to regulate those guys at gunpoint, then voila, you've got current society.

[Nursie]

> "no, anyone can join, they just have to fulfill the regulations blablabla", then this is your answer.

Banking regulations are hard won protections for the consumer or investor applied after years of misadventure and (usually) large-scale fraud. They aren't perfect but the idea that it would be great to just throw those out so anyone can start being a bank is one of the crazier things I've heard recently.

[johnrgrace]

Anytime a business or person let's their customer pay after work has been done there is an extension of credit. The trade credit system is massive and anyone can join.

[greatgib]

The idea is that anyone can become a mini bank if I understand well. Decentralized banking.

[realcr]

Hi. You are correct, you need to have some credit line, possibly indirect, between you and the other party, if you want to send money or receive money with Offset. This is the core of how Offset works.

> why wouldn't this model eventually end up with banker-type people managing the credit for everyone?

I thought about this question for a long time myself. As a first note, I don't think Offset should completely replace the traditional banking system. Everything has its place in the world. I admit that I still use my bank account daily.

If I understand correctly, your concern is that Offset might eventually become centralized, and therefore will return to the starting point: the banking system that we have today. I have some thoughts about this:

1. I believe that technology like Offset gives very convenient tools to make payments work in a decentralized way. It takes about three "bash" lines to set up an Offset node in the cloud, and you have your own credit hub. I agree that it takes a certain amount of credibility to open a credit hub, but I still believe it makes things much easier than opening your own bank nowdays.

2. There is this idea of 6 degrees of separation, where every two people in the world probably have a chain of friends between them that is of length no more than 6. If things actually work this may, it might be possible to pay using Offset without relying on central hubs.

There are two caveats to this idea though: (a) Currently Offset clients on mobile phones will eat your battery if you keep them open for too long. (b) You might not be able to make very large payments through the credit limits you set with your friends. Most people will trust their bank with $50000, but most people will not trust their friends with this amount of money.

About issue (a): Maybe it is temporary, and in 5 years we won't have these kind of battery limitations. For (b), I'm not sure yet myself. Maybe you will always need credible credit hubs to be able to make large payments.

3. Even if Offset becomes more centralized, based on a few credit hubs, I think that it is still better in some ways than the current ways banks work. (though note that I might be biased here).

a. Your money will be protected from inflation caused by state money printing.

b. Not much regulation is required, because the nature of Offset doesn't allow the "credit hubs" to do things like play with your money, generate new money through loans and more. More than that: Offset always provides the end user with a cryptographic proof about the amount of money in his account.

c. I expect that fees with Offset will be much lower than what you get with your banks.

d. It is easy to create Offset hubs, so there will always be competition.

e. Money will move through an auditable open protocol.

Offset is still pretty young and I am very far from having answers to everything. If you think something is still missing, please send a message.

[the_pwner224]

> I expect that fees with Offset will be much lower than what you get with your banks.

For p2p loans this makes sense. For credit card, my bank currently pays me 1.5% of the money they extort from businesses. I'm paying the same to the business whether I use cc or not, so I take the kickback (my refusal to participate will not hurt the system, since debit cards are the only other option since cash is not viable for online commerce). So advertising 'low fees' really means that I'm going to have to pay money to do things I currently get paid to do.

> It takes about three "bash" lines to set up an Offset node in the cloud, and you have your own credit hub.

This seems insecure in the same way as bitcoin - if a guy gets your private key number thing, you lose everything. Whereas with real CCs your bank will make you whole if fraud happens, since instead of an algorithm being the law we have humans who can can revoke transactions. With friends loaning to each other this is a lesser issue since your algorithm can allow reverting transactions, unlike bitcoin where everything has to be final for the currency to be usable. I guess i can set my credit limit with a merchant to the exact amount i owe for each transaction? But still feels a bit unsafe.

The big issue I see with this is that poor people will always be seeking money and rich/financially reponsible people will never need to get money through this. Aside from rare events like buying a house or extended job loss, in which case they'll end up getting money through rich/financially responsible friends instead of the poor ones they always loan to. So the system will get split into a few 'providers' and many 'leeches.' What do you think about that?

[jkhdigital]

Flow is limited by the narrowest pipe along the path, and my suspicion is that you would need to get to pretty damn high user adoption before you could expect consistent, high flow between points since you'll need to find many alternative paths. Prior to that level, the network wouldn't be very useful.

Still not entirely sure what problem this solves. As a consumer, I don't really have an issue with current payment systems. I can buy everything I need in seconds, and banks compete for my business by (as stated elsewhere in this thread) giving me kickbacks from the fees they take from merchants.

As a merchant, you're not going to trust your customers/suppliers at the level that would justify extending an unsecured line of credit to all of them. Not going to happen. Yes, perhaps payment systems suck, but honestly payments are an incredibly hard problem. A robust legal system which enforces contracts solves the hardest problems, I suppose, but legal action is slow and expensive so it's still pretty hard.

[realcr]

> Flow is limited by the narrowest pipe along the path

Ah, this was a concern I had too. To mitigate it, Offset allows paying using a multi-path: a few paths together. It happens atomically, and doesn't require intervention from the user.

[stagas]

I think it has potential, as you explain, it's pretty young at the moment. There is certainly some value in a friend-2-friend credit network and the technology looks good, a lot work has been done judging from the repo! I can't help but thinking there is some economic component missing, it feels like everything has been laid out, just needs a final "touch" that would get it off the ground. In any case, good work and keep it up!