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Re: holding of funds

From: Adrian Hope-Bailie <adrian@hopebailie.com>
Date: Wed, 27 Jul 2016 10:35:55 +0200
Message-ID: <CA+eFz_JW8TAF=kK-mF=amb=dxC4TaZwyQnyHOsxz8yFd3rP-8A@mail.gmail.com>
To: Andrew Bransford Brown <andrewbb@gmail.com>
Cc: Javier Romero <elmurci@gmail.com>, Interledger Community Group <public-interledger@w3.org>
@Andrew: The core ILP protocol deals with movement of funds at a few levels
of fucntionality below what you're describing. It is a protocol for moving
money from A to B not for dealing with the legal or regulatory aspects of a
transaction. Althoug, it is designed in such a way that these things can
easily be layered on top.

@Javier: To answer your question. The person making the payment on the
legacy ledger is the person at risk. So they could make up for this risk in
a number of ways, as you say.

1. They could have a legal relationship with the connector/receiver on the
other side of the legacy ledger that protects them from non-delivery by
that party
2. They could use a 3rd party escrow service
3. The legacy ledger could offer a psuedo-hold functionality by
transferring the funds on hold into a suspense account and then from that
account into the receiver's account when it receives the fulfillment.

In the case of the pseudo-hold then the receiver also shares some of the
risk as they need to trust the ledger to do the expected transfer when the
fulfillment is delivered but that is no different to the current scenario
where both parties need to trust the ledger to behave correctly.

On 24 July 2016 at 23:25, Andrew Bransford Brown <andrewbb@gmail.com> wrote:

> FYI, in my opinion, this is something for an in-person discussion.  Legal,
> business, and technical people discussing the terminology and rules, while
> going through various scenarios.
>
> What is a 3-party legal contract?  That doesn't exist at the moment.  This
> is new "law".
>
> Andrew B. Brown
> 10723 River Plantation Drive
> Austin, Texas  78747
> (512) 947-8282
> http://linkedin.com/in/keihatsu
>
>
> On Sun, Jul 24, 2016 at 4:11 PM, Andrew Bransford Brown <
> andrewbb@gmail.com> wrote:
>
>> That is the reason we need a standard protocol.  Those examples are all
>> internal functions of the application.
>>
>> A protocol defines the interface, but does not decide implementation.
>> The Deliver event might be Bitcoin, dollars, or any good/service.  The
>> protocol should verify that delivery was made and accepted, regardless of
>> implementation.
>>
>> For example, I haven't decided how to handle 3rd party escrow services.
>> Note the complexity of the legal contract:
>>
>> CommerceID     EventType         Description
>> Javier         Terms-Escrow      ABC Escrow
>> Andrew         Accept
>> Computer       Notice            "This is a binding contract, dependent
>> on ABC Escrow's acceptance."
>>
>> ABC Escrow     Accept
>> Computer       Notice            "This is a 3-party legal contract."
>>
>> Javier         Deliver           Lasagna
>> Andrew         Deliver           $25
>>
>> ABC Escrow     Deliver           Lasagna
>> ABC Escrow     Deliver           $25
>>
>> Computer       Notice            "Contract complete."
>>
>>
>> NOTE:  The "Deliver" destinations can be determined entirely via
>> algorithm.
>>
>>
>> Andrew B. Brown
>> 10723 River Plantation Drive
>> Austin, Texas  78747
>> (512) 947-8282
>> http://linkedin.com/in/keihatsu
>>
>>
>> On Sun, Jul 24, 2016 at 3:22 PM, Javier Romero <elmurci@gmail.com> wrote:
>>
>>> Thanks for your responses Andrew!
>>>
>>> My question was more if rather than just failing the transaction other
>>> alternatives had been explored when a legacy ledger doesn't have the
>>> capability of *holding/authorise temporarily* funds and just admits
>>> confirmed transactions...
>>>
>>> I guess a plugin sitting on top of the ledger could decide depending on
>>> the situation:
>>>
>>> - If less than a certain value, accept the transaction even if it leaves
>>> a negative balance
>>> - Use a 3rd party escrow for high values
>>> - Just fail the transaction if needed if conditions are not met.
>>> - Write a debit movement on the way out and then a credit movement if
>>> the payment fails on the way back.
>>> - ...
>>>
>>>
>>>
>>> On 24 July 2016 at 15:30, Andrew Bransford Brown <andrewbb@gmail.com>
>>> wrote:
>>>
>>>> The "Deliver" event would not occur, of course.  You could write an
>>>> event to the "transaction stack":
>>>> CommerceID     EventType         Description
>>>> Andrew         Deliver-Failure   "Insufficient funds"
>>>>
>>>> The API could include a GetContractStatus(transactionID) that would
>>>> return ""Undelivered", "Open", or "Partial delivery", or similar.  It would
>>>> be up to the application to determine who ships/delivers first.
>>>>
>>>>
>>>> Andrew B. Brown
>>>> 10723 River Plantation Drive
>>>> Austin, Texas  78747
>>>> (512) 947-8282
>>>> http://linkedin.com/in/keihatsu
>>>>
>>>>
>>>> On Sun, Jul 24, 2016 at 5:51 AM, Javier Romero <elmurci@gmail.com>
>>>> wrote:
>>>>
>>>>> Thanks Andrew,
>>>>>
>>>>> But you would still need some kind of funds holding?
>>>>> What would happen if, in your example, Andrew doesn't have enough
>>>>> balance of funds at the time the transaction is executed?
>>>>>
>>>>> On 24 July 2016 at 02:02, Andrew Bransford Brown <andrewbb@gmail.com>
>>>>> wrote:
>>>>>
>>>>>> Javier, good questions.
>>>>>>
>>>>>> I think the following can be useful for separating implementation
>>>>>> from protocol.  This conforms to contract law.  Your questions pertain to
>>>>>> the "Deliver" event:
>>>>>>
>>>>>> *CommerceID EventType Description*
>>>>>> Andrew     Offer     $20
>>>>>> Andrew     Terms     Lasagna
>>>>>> Computer   Notice    "This is an open legal binding offer."
>>>>>>
>>>>>> Christine  Terms     $25
>>>>>>
>>>>>> Andrew     Accept
>>>>>> Computer   Notice    "This is a binding legal contract."
>>>>>>
>>>>>> Christine  Deliver   Lasagna
>>>>>> Andrew     Deliver   $20
>>>>>> Computer   Notice    "Contract complete."
>>>>>>
>>>>>> The above forms what I call a "transaction stack" of events.  So, it
>>>>>> functions as a data structure, a protocol, and potentially a Contract
>>>>>> Scripting Language (CSL).  Each event would have a "snippet" to form a
>>>>>> smart contract.  It will handle any transaction in any currency (or
>>>>>> barter).  I think this can get ALL ledgers to talk the same language (easy
>>>>>> to roll this into debits/credits).
>>>>>>
>>>>>> FYI, I have 20+ years of IT executive and design experience, a degree
>>>>>> in Accounting, and a stock trading background.  Comments would be
>>>>>> appreciated.
>>>>>>
>>>>>> Andrew B. Brown
>>>>>> 10723 River Plantation Drive
>>>>>> Austin, Texas  78747
>>>>>> (512) 947-8282
>>>>>> http://linkedin.com/in/keihatsu
>>>>>>
>>>>>>
>>>>>> On Sat, Jul 23, 2016 at 9:51 AM, Romero, Javier (ISBANUK) <
>>>>>> Javier.RomeroColomo@isbanuk.com> wrote:
>>>>>>
>>>>>>> When the legacy ledger does not have the capability of holding
>>>>>>> funds, what would be the proposed solution?
>>>>>>>
>>>>>>>    - Assume the risk in the same way as an offline card transaction
>>>>>>>    (depending on amount etc...)?
>>>>>>>    - Get the balance at the moment of sending the instruction and
>>>>>>>    then, on the way back where all the crypto conditions have been met apply
>>>>>>>    the transfer if there are funds or fail it in case there aren't?
>>>>>>>    - 3rd party escrow?
>>>>>>>
>>>>>>> I guess each case needs assessment but wanted to see if you guys
>>>>>>> have a clear view in this.
>>>>>>>
>>>>>>> Thanks
>>>>>>>
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>>>>>>
>>>>>>
>>>>>
>>>>
>>>
>>
>
Received on Wednesday, 27 July 2016 08:36:30 UTC

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