...by Daniel Szego
"Simplicity is the ultimate sophistication."
Leonardo da Vinci

Tuesday, July 24, 2018

IOU debt graphs and trust lines on the blockchain

We were briefly brainstormed how IOU debt network can be represented on the blockchain and how it can be embedded into a mining process in the previous two blogs:  debt graph and mining. We can extend the model with trust lines as well, meaning that the IOU network can be optimized and a new IOU can be issued only if there is an existing trust line between two participants. Trust line can be represented again with a matrix T, where

T[i,j] = 0 if participant i does not trust participant j and
T[i,j] = 1 if participant i trusts participant j

It is an open question what further properties shall a trust matrix have. As an example, it might be reflexive and or transitive:

reflexive: if T[i,j] = 1 then T[j,i] =1 as well
transitive: if T[i,j] = 1 and T[j,k] = 1 then T[i,k] = 1

Having a trust matrix means that there is the possibility to issue a credit or to optimize a relationship between i an j if and only if T[i,j] = 1. Certainly, it is pretty much an open question what should happen if a trust line can be deleted as well.