Saturday, March 22, 2014

Imagine you are running a stock exchange using the Promise Language specification

Initiating Promise:    100 IBM
Notice - accept: 5000 USD

Initiating Promise:    5000 USD
Notice - accept: 100 IBM

Note the structure is identical for both the Bid and the Ask.  Effectively this means everything is a commodity.

"Notice" messages become part of the contract.  Terms and late payments can be specified.  Clearing companies as well.

Monday, March 17, 2014

The Origin of Money

Once upon a time, some guy had an orange and you wanted it.  So you offered to trade a banana for his orange.  But your banana was way back at your hut.  So you picked up a seashell or something and handed it to him in exchange for his orange.  You promised to go get your banana and deliver it later.  That is the origin of money.  The seashell was a symbol that represented a contract to deliver a banana.

Alternatively, both people could have yelled out to the surrounding village that you owed that person a banana.  Then you didn't need the seashell.  Everyone knew you owed that person a banana.  Then you go back to your hut the next day and get the banana.  Then you yell out to the village that you paid back the banana.  Let's hope that banana did not go bad overnight.

Would it be possible to have a computer store these transactions so the villagers wouldn't have to remember?

Sunday, March 16, 2014

Closing out the transaction and EDI format

See below for the context, but two more EDI messages might be a good idea:

"Completed" to show that both sides delivered on their promises and all was acceptable.

"Closed" with a something in the description field to describe transactions that were voided or otherwise rectified if disputed.

The solution to money

Promise Language is a standard way to yell to the global village who owes what.  If placed into a peer-to-peer database, all promises would be tracked.  Open promises and delivered promises.  I was thinking today how to design that database:

Promise table

Type of entry (Initiating promise, promise, notification)
Id (GUID for that promise or a GUID corresponding to the person)
Description (describes what was promised)

So.. it would work like this:

    1 banana
    1 orange

One entry for the Initiating Promise:  my Id, his Id, "1 banana", 12/21/2003 12:15:34
One entry for the Promise:  his Id, my Id, "1 orange", 12/21/2003 12:15:45
One entry for the Delivery: his Id, my Id, "1 orange", 12/21/2003 12:15:48
One entry for the final Delivery: my Id, his Id, "1 banana", 12/22/2003 8:23:32

That's it.

Now.  That shows you made good on your promise.  That's your rep.  Now you can go anywhere in the world with the Promise App that shows your history of promises.

It's free.  No transaction fees.  Works with any currency on earth.

Friday, March 14, 2014

Does this solve monetary science?

The root of money is a "promise to deliver value".

Money is a human construct.

Money originally was a form of bookkeeping to see who delivered on their promises (or who had outstanding undelivered promises).  Sea shells worked in some locales.

Until recently, paper money was a receipt for gold or silver stored on one's behalf.  That promise was reneged upon in 1933 (domestically) and 1971 (internationally).  So today, paper money is a "note" with nothing of value behind it.

Where does the value derive?  Contracts are denominated in dollars.  Rent, salary, mortgage, contracts at the grocery store, etc. are all contracts denominated in dollars.  That is where the value derives.

In small communities, money was a temporary placeholder for one's promises to deliver value.  However, today, the world cannot track who delivers.

That is what "Promise Language" does.  It is a standard format to describe transactions.  The results can be stored on paper or in a computer so you know who delivers on their promises.

Theoretically, wealth translators replace the need for currencies.  However, that is an expensive process, so currencies will always likely remain due to their economies of scale in reducing transaction costs.

What is money?

Anything of value that is agreed upon by both parties in a transaction.

Tuesday, March 11, 2014

Promise Language basics

This is an EDI format/specification/standard/protocol for monetary transactions.  It is free.

Some terminology:
Wealth Storage - a vault or a bank.
Wealth Translation - currency exchange is an example.
Promise Assurance - credit card issuer or an underwriter are examples.
Promise Reporting - credit report agencies are examples.

Only living beings can make promises.

Officers of corporations make promises on behalf of the corporation they work for.  Officers take responsibility for delivery on their promises.

Simple format:

    1 pallet of 100 bills USD
    1 million Euros

Further details can easily be placed into that format.  Who.  When.  Time stamps.  Etc.

Legal can see that it conforms to what they term a legal contract.
Finance can assign risk and time to delivery.
IT can accurately represent it in a computer.

It fixes the world's economy.
It fixes the world's financial system.

Thursday, March 6, 2014

Preventing a perpetual fee (for being born)

An EDI format for monetary transactions prevents a perpetual fee. EDI formats are free.

Bitcoin uses an algorithm designed by the NSA. Is there a back door on that algorithm? I do not know. However, knowing the people involved, I suspect there is. While Bitcoin (and other digital currencies) reduce the fees, it is not perfect.  So, how to prevent a perpetual fee?

All transactions can be described as:

Two people.



End transaction.

Time stamps on each stage clarify risk and accountability.

That is "Promise Language" - a simple EDI format to describe all transactions, regardless of currency. For free.

Tuesday, March 4, 2014

An EDI format and a fill-in form that is a legal contract



End transaction.

The above creates efficiency in electronic transactions by providing a standard format.  It also disobviates the need for a lawyer in every transaction.

Lawyers don't understand money or finance, however, draw up the contracts that define the interactions.  Reading through the legalese is difficult due to lack of a standard format:  Promise Language solves that.

Sometimes lawyers create a contract that finance people call a "derivative".  The contract is unnecessary and creates confusion that loses responsibility and accountability.  This is due to the lawyer's non-understanding of money and finance.

Sunday, March 2, 2014

Potential issues with Bitcoin

Metaphorically (and digitally) speaking, are there 3 Bitcoins?

Was Bitcoin started on the 0 bit or the 1 bit?  Is there a switch/flapper?

A similar applies to the algorithm.  Is there a periodicity that is predictable and controllable?

I have not looked into these issues, however, are enough cause of concern to research... if I were planning a large investment.

Transactions without a lawyer, a banker, or a gun.

Two people.

One promise.
Another promise.

First delivers.
Second delivers.

End transaction.

Time stamps at each stage allow risk and responsibility to be defined.

Promise Language, a banking protocol, fixes the central banks' problems.