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I am working on an alternative currency. We are not wedded to any particular software, but have definite term and conditions for participants. Our own dispute resolution system, and standard of value. One credit equals the median hourly wage for your community. We also impose a transaction fee of 2.5% to each party to support the institutions to manage dispute and legal documents and promote the exchange. We also are based on the lets system with equal positive and negative balances.

Could we potentially use your Stellar system to manage the transactions in a system such as this ?

Andrew Hill

CryptoPrincess
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Andrew
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1 Answers1

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(Full disclosure: I work for Stellar.org)

I'm not quite sure what you mean by "We also are based on the lets system with equal positive and negative balances.", so I cannot comment on how that effects Stellar's viability for your problem, but I can talk about the transaction fee you would require.

As of now (December 2015), the stellar network itself only has support for the native transaction fees used for spam prevention. This means that you would have to implement your own support for transaction fees. Let me describe how one such system might work on the stellar network:

Since the stellar network doesn't have support for collecting a transaction fee at the time of payment, you must instead collect transaction fees after the fact. Members of this system would be invoiced by you with their billed fees, and they would pay to keep their account in good standing. When an account is not in good standing, your system would revoke access to your currency (see "Controlling asset holders" at https://www.stellar.org/developers/learn/concepts/assets.html for details) that would prevent the account from making or receiving payments in your currency until you restore access.

Now, such a system is definitely more complicated than if the stellar network handled custom transaction fees natively, but our intention is to keep the core stellar network as simple as possible, and one of the features that got chopped was support for asset-based transaction fees. Luckily, this is a great opportunity for a group of developers to build a helper service to support this use case. Tracking payments on the stellar network and managing an account's standing based upon a set of customizable business rules seems like a generically useful tool to have available for developers and could benefit a large range of use cases, from custom currencies to e-commerce systems, to even something crazy like a stellar-funded metered power grid. I'd be happy to discuss such a solution further if you're interested.

Scott Fleckenstein
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  • Well, LETS is a "Local Exchange Trading System" in which everyone starts with a zero balance. The first transactions require someone to have a trusted credit line, they can then purchase something on credit putting them into a negative balance, while the other person receives an equal but positive amount into their account. These credit lines are interest free. – Andrew Dec 08 '15 at 02:30
  • At any moment if all accounts are totaled they will sum to zero. Proof that there has been no fraud. At some point everybody's accounts will return to zero. In this way the currency is not meant to be a commodity in itself, only a medium for exchanges. A secondary medium like gold or silver will be a more tangible for of wealth. This has certain legal advantages – Andrew Dec 08 '15 at 02:31
  • The other requirement was to have a transaction fee go to a third party arbitrator. This also has certain legal benefits. For almost all alternative currencies, what happens if you have a dispute ? I goes to the government courts, right ? Well this is one reason why the alternative currency gets taxed by that government. Therefore, we need to set up our own courts. – Andrew Dec 08 '15 at 02:47
  • In regards to your question, I would be interested. I currently have a third party barter exchange, taking on the role of transaction management, but in the future would like to offer a more sophisticated and self managing system. – Andrew Dec 08 '15 at 02:52