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Escrow Risk (was Interledger and Privacy)

From: Adrian Hope-Bailie <adrian@hopebailie.com>
Date: Mon, 26 Oct 2015 17:39:34 +0200
Message-ID: <CA+eFz_J4aXMtVoDjPrmoU-pwouopNX5HtaO94phsp9JcA+3YDQ@mail.gmail.com>
To: Interledger Community Group <public-interledger@w3.org>
More Arie questions to scratch your head over:

Given the connector ultimately holds the money for however long in "escrow":

   - is there counterparty risk relative to where the escrow money sits
      (call it escrow risk??)?
      - could central banks play a role here?
      - IMF / BIS?

I'd only classify this as counter-party (settlement) risk if there is a
chance that the reserved funds are lost before they are released (i.e. they
weren't really in escrow).

The risk of this happening will differ from ledger to ledger and connector
to connector (e.g. If the connector is the central bank I'd say the risk is
close to zero...) and this is another characteristic of the ledgers and
connectors that a user may consider in path-finding.

If there is some way for the user to get a guarantee that the funds are
truly in escrow the risk is very low.

Perhaps this would be through some independent certification of the ledger
system if it is a closed ledger?

For a system like Ripple or Bitcoin it is almost non-existent because the
system is open and the user can verify that the funds are in escrow if they
want to.

This topic feels like it has some more questions that are not immediately
Received on Monday, 26 October 2015 15:40:02 UTC

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