This is exactly the same as the banks do: Creating and destroying fiat money. Should this catch on, we, the people can take the banking business out of the banks hands and the wealth the banks skim from us remains in our hands.
Wait a minute.... I thought we were meant to be avoiding repeating the mistakes of the bank?
The banks don't make mistakes, they are the problem. They are huge, centralized, fraudulent, corrupt power centers.
But one of the benefits regularly touted about Bitcoin is that it's not a debt based system, because it's features of the debt based system that contributed to the various financial crisis. I can understand the purpose of it in the context of this system, but if I were you, I wouldn't market it as doing the same as the banks do, I'm not sure that will get you many supporters - at least on these forums. Debt based systems have bad connotations, at least for me.
From what I understand, it requires you put trust in people. For me, the strength of Bitcoin is that you don't have to trust people, if they send you the coins, you have the coins. In this system, what's stopping someone saying "okay, I trust Anu for $20" and then anu just not coughing up that $20 when required?
You have no reason to trust me. Do not grant me credit.
Bitcoin and credit money (ZR) are complementary - they solve different problems. The strength of Bitcoin is that it is zero trust. The strength of ZR is that it can replace the banking system's role in moving in and out of fiat.
That's my point though, Bitcoin doesn't require you trust another human. Once they've sent you the money, that's it. Again, that's one of the benefits of Bitcoin. With ZR, you have to place trust in someone, human trust in a human person which is fallible. Bitcoin removes with human element by implement trust using cryptography. Using ZR with Bitcoin, it's just another layer through which people can scam one another, but instead of it being one big centralized exchange scamming, it's lots of little scammers making it harder to actually get any resolution when you are scammed?
You said it yourself, the strength of Bitcoin is zero trust, the fundamental concept of ZR is you must place trust, the features of ZR negate the benefits of BTC.
The whole benefit of an exchange, for me, is that I don't need to know anyone (other than the exchange) I can just send my money, buy some coins.
You don't need to know the counter party. You need to know your friends.
There's a difference between knowing and trusting. But with chains, you're not just trusting that your friend will pay you back $20, you're trusting that they make good judgements in who they trust. E.g. I may trust my colleague to pay back $20, but what if my colleague naively trusts a bot to pay back $x, any transaction that goes from me through that bot (because of my friend) is relying on all the other people in the chain making safe judgements. So if one node fails (e.g. the bot doesn't pay up) all the transactions that go through that node will fail, right?
Also, based on reading user experiences, it seems this is even more reliant on critical mass for success, yet it's incredibly hard to get started with nobody else there. That seems a bit paradoxical. Have you any way to incentivise people using this? Also, if you're only streamlining relationships with friends, then why do we need this system in the first place? e.g. it requires me to say "I trust anu" but if I already trust anu, why do I need zeroreserve? Or is the main focus on trust chains formed including people you don't know (which would be hard to do manually arrange)
As you state below, its about chains of trust. The purpose of ZR is to route payments through such chains without the need for anyone (even the friends) to know who the seller and the buyer are.
As to the critical mass - that is indeed the problem and if ZR does not achieve critical mass, it will die.
So the links between nodes are effectively defined by humans placing trust. Humans are the weak part of any computer system, and this systems seems to be founded on human decisions.
If the focus is on trust chains, wont things like adding bots as friends, or adding the pirate party as a trusted party be bad?
In the context of ZR, a friend is defined as "An entity
you trust for X amount of credit". So in the context of ZR, your drinking buddy may not be your friend, but your business partner may be, even though you personally dislike him.
I understand that. But my point still stands, the whole system is founded on other people giving eachother accurate credit ratings - something that the banks failed spectacularly at despite lots of experience. What makes you think the average Joe would be any better at it? And what are the implications of wrongly placed trust? E.g. what happens if there's a big financial crisis again, and all of a sudden everyone has less money available, so all the links between nodes in the network are effectively wrong?
It sounds like it could be a workable system maybe, but I can't help feel a lot of the requirements of users seems to contradict what Bitcoin users would want to do (e.g. debt based system, trust in humans, undocumented off-system transactions)