Thursday, June 22, 2017

Block chain and the S&L pits

The savings and loans pits are not calling the block chain for each interest swap.  The block chain network would jam.

S&Ls for bitcoin are not currency issuers and must be backed by a bit error fund to remain zero bound.  So the pit boss has a bitcoin account on the block chain and all traders must check their bitcoins in to the pit boss on entering, and check their coins out when leaving the pit. The pit is secure, as secure as a hardware wallet and the pit boss runs an honest game.

Why would anyone leave their coins on the block chain instead of on account with the pit boss, utilizing the savings and loan function?  All of the side chains become savings and loan pits, I do not see any other way. Most of the activity on the block chain will be traditional savings and loaners checking in and out of the S&L pits.

But we can extend the concept. If you trust your S&L and it is well regarded by merchants, then keep the money on the pit boss address, it is as safe as your own address, then all the merchants can deal with the S&L and mostly skip any call to the block chain except for daily balances.

The block chain is really just an account balancing activity and need only happen once a day, week or month;depending upon the activity. Otherwise, keep it as pit boss money. Ledger services are there only to meet some smart contract or regtech condition of verifiability.  If no regulatory or contract is pending, just carry around pit boss money and spend it normally.

Make it the general rule.  All crypto coins are either issued from S&L or converted to S&L format, and shove the block chain completely up into the smart layer.  It is pretty clear the sandbox will not work without S&L functionality for pricing purposes, so let us just adopt S&L permanently on theoretical grounds as he main solution for congestion management.

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