| 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. |
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?