Giving the Power of Money to the People through Decentralized Mutual Credit Networks ft. Aleeza Howitt from Trustlines
This week I spoke to Alleza Howitt (@aleezagroks), a contributor to the Trustlines protocol. Trustlines is a mPoS (minimal viable Proof of Stake) sidechain to Ethereum and stores transactions for a system of decentralized mutual credit. Mutual credit is an alternative medium of exchange to most money that we use today in which "money" is created through lines of credit that are established between people who trust each other. In this episode we discuss how Trustlines works from the sma...
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Transcript
Hello, everyone. You're listening to the Blockchain Social podcast, and I'm your host. And today, I have a special guest with me. Her name is Elisa Howitz, and she is a contributor to the TrustLines protocol. Hey, Eliza. How are you doing?
Hey. I'm good. How are you?
Good. So I was wondering if you could explain a bit because it's an interesting project. Of what TrustLinez is, and how did you get involved?
Yeah. I'm so I'm a I'm a contributor to the TrustLinez ecosystem, and I, yeah, I I ended up, in the blockchain world through a pretty nontraditional path, I think. I always kind of struggle to describe myself. But, I first got into alternative currencies through my research and advocacy on universal basic income, specifically in framing it as, like, a a monetary policy tool, not just, like, welfare, like, the usual narrative. And, the point like, that point is really important because the question of how to define and to create money is, it's, you know, it's not given enough attention, and it's pretty critical to, like, having a healthy economy. So this is a this is a multidisciplinary concept. It gets you to ask really tough questions about economics and, governance and, also law and technology. But I was drawn to alternative currencies because they let us be proactive. They let they let us experiment with new types of monetary systems. And yeah. So, trust lines is a project that I initially discovered through these interests, and I was following it, writing about it for a while, before I, you know, sort of officially became a contributor.
Basically, you had already an interest in these sort of alternative, alternative thinking around finance and around monetary policy, and that's sort of led you to, I guess, blockchain world, which was some sort of the another area, which is also thinking about these questions as well.
Yeah. Like, yeah. I would say that. You know, not all alternative currencies are blockchain based. But
but Yeah. Definitely.
The blockchain based ones are, you know, they're very interesting. There and there's a variety of, philosophies behind them. So it's not just the typical, idea behind Bitcoin, for example. There's a there's a diversity of, of ideas out there. Maybe,
could you explain a bit how trust lines works? I think it's it's a very different approach to, money and to monetary systems when compared to I mean, one, the normal financial system of today and also with sort of the rest of, currency, including Bitcoin. It's not really, it's not something that tries to take its value from, you know, sort of imposed scarcity, for example, but it's something quite different. Maybe you can explain a little bit how that works.
Okay. So in a nutshell, TrustLine is a decentralized mutual credit network, or you could also say, like, a payment system based on peer to peer mutual credit. And what what I really liked about TrustLines is that it's, like, a very, flexible, basic, like, sort of core infrastructure for creating any type of, credit based monetary system. Yeah. So it kind of goes into, you you do have to ask a question about, like, what what is money, and how does money enter our economy, and how should it enter our economy. And I think a lot of people who are interested in trust lines are fascinated by this concept of what's been started to be called, people powered money. Mhmm. So like a type of money that is both that that is whose issuance is both governed by people and whose issuance, benefits the people. And so I think mutual credit in in general is this old type of, money where the money users are the ones who issued the issued the currency. And, this has a lot of advantages in, specifically, in in those two, respects. So the users are the ones who decide when to issue the money, and, they are also implicitly the ones who are benefiting from its issuance.
This is opposed to, you know, the system of today, right now, where you have, you know, sort of like the Federal Reserve, at least in America. You have the Federal Reserve that, or central banks that sort of determine how money is given out to people or given out into the economy largely via, commercial banks. They sort of have these different relationships. But in a system of mutual credits, this is, or at least in the in trust lines, it is a relationship between at least at its most basic level, a relationship between two people. Is that sort of how it works?
Yeah. Exactly. I mean, the our current monetary system, is based on it's a credit based system. And I mean, there's this, influential paper by the the Bank of England that kinda came out a few years ago that sort of broke the bad news to a lot of people that actually the vast majority of money in society right now is so called bank money. It's literally issued by private commercial banks. And so and and and that's a necessary probably a necessary system because it's better than the alternative, which is a static money supply. You know, banks enable us to have this dynamic credit based form of money that yeah. It's, the problem with that sort of system is, well, there are a few problems with that sort of system, But, I guess one of them is that, since commercial interests are the arbiters of new money creation, it's, becomes short term profit seeking activity that guides growth patterns rather than, like, bottom up investment from a broad population with diverse values. Mhmm. So you could also say that commercial banks find the current system, an undeservedly undeservedly lucrative, arrangement, due to special profit profits gained from, like, being the money creators from from what's called seigniorage. And that's, yeah, rough like, a pretty opaque topic. That's really yeah. But But the yeah. I'm sorry. I maybe I
So we know that, the current money system is very opaque, and it's very, it favors commercial interests. And commercial banks are in a wildly good position in that system. But so then what is the alternative proposed in a system like trust line?
Yeah. So with trust lines, money, you could look at or I should say, trust lines can be used for a lot of different things. But, yeah, one of the things that most contributors are excited about is the idea that we're creating we're we're making it possible to create a new type of money. And so this is, or rather, I should say an old type of money. Mutual credit is an old is an old type of money pre it predates the modern financial system, and it's appeared in various different forms. Mutual credit itself can be hard to define, but, the the general idea is that it's it's non exploitative credit that is issued between the entities or the people who are using the money in order to transact. And it generally, you know, mutual can mean that it's a reciprocal or a circular economy, or it's it can also suggest, in other interpretations that it's a a mutualized, credit arrangement where the risk of default is is sort of socialized within a group. And so I guess I sort of lean into the the first definition, where, yeah, because with trust lines, the way that it is that the system is designed, it's purely bilateral connections of trust that you can use to build, multilateral credit relationships on top of. But
I think you have an example of, what it would literally look like between people who have a line of credit between them.
Alright. So I I have thought through a bunch of, like, you know, user stories, previously. Let me see if I can use some of those examples. You could say that, ah, yeah. Sam and Andy, those are my two characters. So imagine if Sam is a stay at home parent, and Andy is a babysitter. Sam and Andy might want to transact where Sam might want, you know, to use some of Andy's babysitting hours. And you could like, for example, suppose they're both kind of low on cash, and, it would be really, really difficult for them to trade using their very limited supply of cash, so they could just agree to transact with you know, based on credit. So Andy would do a few hours of babysitting, and Sam, in return, would say, okay. Now I owe you, you know, three hours of something. And then later on, maybe, maybe Andy needs a ride, to school, and Sam has a car. So maybe, Andy can pay Sam an hour in order to get a ride to school or something like that. So that there's a kind of credit relationship that, like, that could go back and, you know, you you don't need any money, any national currency, or or anything in order for these transactions to happen. It's all purely based on credit. These people are creating their own creating their own money, really. Like, that's really what's happening.
Mhmm. Yeah. So I think that makes it a little bit more clear as, you know, it's basically a relationship, just sort of represented through, owing one thing or another to each other, and that sort of creates currency in sort of, like, the most basic sense, I feel. Yeah.
Yeah. Another point to make is that in the relate like, in the example I just described, nobody, you know, nobody signed any documents. Nobody put up collateral. It was it was just based on trust. You know, you can you can sign a contract or put up collateral when you're issuing credit to to people, but you don't have to. And, that's sort of part of the the the social agreement that's that's sort of, like, outside the the mechanics of what is actually happening.
Right. You don't need, like, a pot of gold in the middle to to represent, like, storage of value or something. You know? But that's the difference between a commodity and a credit theory of money, I guess. But so so trust lines, you're able to sort of digitally create these lines of mutual credit using blockchain. But I was wondering what what types of units of accounts you represent through, a mutual line of credit in general?
Oh, you can use anything. Anything anything you can dream of can be a unit of account. So, like, right now, I think there's about 47 different currency networks that are deployed. So those include, national currencies, like, you know, dollars and euros, which we're all, pretty familiar with. But, they also include things like hours, so work hours, or favors is a a community deployed currency network that I really love. Or you could also transact in, like, units of beer or something. You know, if you go out with friends and you end up owing someone a beer, you could you could, keep a record of that using trust lines. And then it's like the way that the system is designed. Anyone can anyone can create their own currency network with a different unit of account and different, set some other parameters as well.
Transparency. We did exchange a few beers this past over just it works pretty well.
Yeah.
So the the way I understand it is that trust lines is at the moment, it's a it's a side chain of the Ethereum network.
Yep. So that's correct. That's sort of correct. Okay. So trust there are many different things, that you could be talking about when you say trust lines.
Mhmm.
A and I just wanna be clear. The core concept is, you know, the core concept is blockchain agnostic. It could be, implemented on anything on, you know, a private database if you want. But the the system that we have right now is running on, the trust lines blockchain, which is a minimum viable proof of stake Ethereum side chain. And the, you know, the reason why we have, our own blockchain is just for accessibility and, affordability. Like, we wanted it to be, you know, we we recognize that the the system well, I say we, but it was all sort of built before I got here. But but the system it has to be fast, and transactions have to be cheap. So these were the real requirements in in designing this blockchain. It also the system itself should be censorship resistant. That that's sort of one of the that's, like, the point of, I would say, of public blockchains in general. You don't want any entity, whether it be, hackers or some malicious dictatorship. You don't want anyone to be able to freeze transactions or shut down the system or something. And so that's why, you know, that's why blockchain is used in the first place.
Maybe you can talk very briefly about I think some people might be interested in how that side chain works and the role of the of the TLN token and, the TrustLine's coin very briefly.
Right. Okay. So there is there are two different tokens, in the TrustLine's ecosystem that are important to the ecosystem. There's the TrustLine's network token, which is, an ERC 20 token on the Ethereum main chain. And there's also the TrustLion's network coin, which is the native, token of the TrustLion's blockchain that could be used for, paying gas, basically, and and network fees. And the so the the TrustLine's network tokens were, the the Ethereum tokens, those were distributed through a Merkle drop to a wide range of of people, and there will probably be probably be further distribution in the future. You can convert your TLN tokens to TLC tokens. Oh, sorry. The the TrustLine's network token is nicknamed TLN. Yeah. TrustLine's network coin is TLC, like my favorite band. And for now, yeah. So so TLN can be converted into TLC, in order to be used on the TrustLine's blockchain. We did, a sort of cool thing. So the sometimes I I just don't like talking about the blockchain because, the truth is that the end user, like, doesn't have to know even that this is built on a blockchain. And, you know, that was kind of one of the goals in designing the system that we want all the advantages to using public blockchain, but we don't want to force users into this cycle of misery that is associated with purchasing a cryptocurrency and using it. So but Makes sense. Yeah. So, for an end user to make transactions, they can actually use a delegate service that will, pay their transaction fees on their behalf using TLC, and that can be done like, right now, that's done. It's all for free. The Relay servers pay for your transactions if you if you wanna use the TrustLines, one of the trust lines in the networks right now. Mhmm. And in the future, delegates could, exchange till you know, they could pay user fees on behalf on behalf of the user in exchange for credit within the currency network that they're that the user is transacting in. So so you would do this if you, you know, if the currency network was actually was useful and you believed in it and you wanted if you found that that credit was valuable, then it would be not, you know, not a big deal to trade your TLC for, users credits Mhmm. If that makes sense.
Basically, TLC exists as a native token on the side chain. You don't need to have it or to use it. I think Right. When I was when I when we were exchanging beers with each other, I didn't need to purchase any, cryptocurrency, any ERC 20 tokens that didn't have TLC. So if I didn't know any better, I really wouldn't have known that this is using blockchain.
Cool. Yeah. That that's what we're going for.
Yeah.
Yeah. Oh, and if you're wondering, it's it's super cheap actually to to run a validator node. It's like, I don't know, maybe $10 a month or something. So if you did want to yeah. If you did want to be part of running the blockchain infrastructure, then it's it's pretty affordable. So it's not
yeah. You should It's not like buying a bunch of, like, ASICs, graphics cards to have a Bitcoin mine or something. A warehouse in a now who knows where?
Yeah.
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But okay. So, basically, the TrustLines protocol, which is a side chain on Ethereum, is using this sort of idea around mutual credits, to create this sort of system of or this larger network of mutual credit, which is sort of an alternative to, I guess, status quo finance of today a little bit in a certain sense. But it gets I think the the interesting part comes with this network, you know, when there is a network effect. So I think I think it's pretty easy to understand when you have, you know, one person, another person who has their own, line of credit with each other. They sort of keep up with, you know, I owe, five you know, rides, five babysitting sessions, for example. You can keep track of that. But then maybe it'd be interesting to explain what it looks like when there's a larger network where sometimes maybe you want to transact with someone who you don't have a direct line of credit, but maybe you have a mutual friend with each other as, as the line of credit with the other.
Yeah, so you're getting at sort of the the heart of what, you know, what, like, what's the point of digitizing or formalizing these trust relationships in the first place? Yeah. And that is to do multi hop transactions. Right. Okay. So first of all, just I don't think I I I defined this yet, but a a trust line is a thing. A trust line, is defined as two bilateral credit lines, and a and a balance. So, like, normally, you would say, normally, two credit lines could have two separate account balances. But with a trust line, they're collapsed into a single balance, so initially set at zero. And so if you and I, each extend a a line of credit to each other of ten, ten, hours each, then you could say that the the total capacity of our trust line is 20. And, yeah, when you when you create a trust line, the first thing that you have to decide is what is your credit limit, So the maximum amount that can be borrowed, and that's you know, it can be really high, but it can't it well, I guess yeah. But let let's say a safe credit limit in this example would have been 10. And and that just means that you can I'm willing to hold 10, units of debt from you, but not more than that.
Same beer.
Or beer. And so the reason that's important to predefine this relationship, is because you can use those predefined relationships in order to conduct multi hop transactions. So when you and I have created a trust line together of 10, u 10 units on either side, we are not actually making a payment. No one's sending a transaction. We're just formalizing this agreement, this relationship of trust between the two of us. And then if I wanted to transact with your friend, Bob
Yes. My good friend, Bob.
And so suppose you and Bob also have a a chest line of of 10 units on each side. And I want what do I want to buy from Bob? French fries?
Sure. Fries.
Okay. So I wanna I wanna pay five units of credit to Bob, in exchange for French fries. But Bob doesn't know me and doesn't trust me. He doesn't have a trust line with me. So the way that we can make this transaction is through you, using you as an intermediary. And what really happens is I can pay you five credits. So my balance with you goes to negative five, and your balance with me goes to plus five. And meanwhile, you know, automatically, simultaneously, you can pay Bob five credits. So your balance with Bob goes to negative five, and Bob's balance goes to plus five. And, you know, so Bob Bob ends up with a balance of plus five, and he can now give me some delicious French fries. And you you don't actually have to know that this transaction even took place, because for you, it's still net zero. So plus five with with me and minus five with Bob cancels out. And Yeah. It's net zero. As long as you equally value my credit with Bob's credit in this currency network.
Yeah. So we we all use friend tokens, for example, station.
Yeah. But meanwhile, Bob, Bob is plus five, but Bob didn't have to open you know, accept credit from someone he doesn't know. He's got plus five friend tokens from you, a person he knows and trusts. So it's like a very secure system. You never end up holding credit from someone you didn't already personally, agree, you know, make an agreement with, have a trusted relationship with.
And at the end of this still, you don't have to have a relationship with Bob if you don't want to.
Right. Yeah. Bob and I are using this system of credit just as if it was real, you know, quote, unquote real money, it's for all intents and purposes, it appears to be exactly the same thing as a regular payment system, especially, you know, if we were using euros to send that payment, it's it should feel exactly the same.
Yeah. And so this this idea around, I guess, mutual credits is also, it's similar to, like, things like time banks in a way. If at least if you trade trade in time and hours if you want for your for your labor. With trust lines, it doesn't you know, hours is an option to actually use if you want. So it it's sort of like the, the Marxist idea of labor vouchers, and some some people have proposed before, which I think is also pretty interesting. But I think what I wanted to ask you because I think would be interesting is why do you think the left should care or be interested in something like funds? Yeah. I think it's
it's a super, so as long as you are not convinced that money is the root of all evil, as long as you can be willing to look at money as a tool, a tool for for mutually beneficial exchange, then then you should be open to trying to focus on human centered monetary design. And and how do we how do we get to a, you know, how do we what are the right tools that we need to get to a monetary system that is healthy, that that works for all of us and takes takes our, you know, community values into account. Yeah. And so TrustLines is, like, a very, flexible tool that can be used to support a variety of different, you know, different denominations of currencies, the different units of account, but also different, types of economies. Like, it can be used to to to build sort of more circular local economies, but it's also a very organic system that can map on to real what what real economies or real trusted relationships look like in a global setting. So it can sort of is a way to organically connect a lot of diverse communities together.
That it's interesting because it's sort of it reversed it it it's different from I mean, we can for sure the the financials in use today. And then it sort of, I think, reverses the relationship that's the usual in cryptocurrency, I think, where the cryptocurrencies are generally created, and then the community is formed around that. There's like a their community is formed around a particular cryptocurrency where in a system like this, it feels more like there's an existing community based around other things, more human things. And then you have this sort of shared system of something like that is pretty interesting from a, I think, from a left wing politics point of view or really maybe even anyone. So based on what you've been working on at TrustLines, is there any particular circumstance or, like, setting or environment in which people would want to use a system like trust lines? Are there examples of that?
I would say, so in general, I I would expect it to be most useful in, situations where there is a a scarcity of money. That's sort of where mutual the idea of mutual credit shines, where whether that's, you know, you know, money is not going to solve scarcity of resources, but it can solve scarcity of money. So to the extent that that's the source of your problems, and then that's a really simple fix. So there, you know, in in countries or places where the national currency is not trusted or, can't be used for some for some other reason or yeah. Those those would be probably good place to start, using trust lines. And the other advantage to the system that we've built is it's accessible from a mobile phone. You know, it's not it's not something that you need to, open a bank account to use or have a some, you know, hard to get government issued documents in order to get set up. It's it's accessible from a mobile device. So that's one advantage to to using
Yeah. I guess it's it's also I mean, because there's, I guess, there's the, there's the usual sort of, arguments around, like, providing for the banked or the unbanked and the underbanked in sort of, third world countries, which is used a lot. I use, in my opinion, sort of very suspiciously and shadily by, other cryptocurrency companies just because, like, in, you know, giving people in a third world country access to, cryptocurrencies can be a good or a bad thing just depending on, like, how the market reacts. So instead of like, what I find interesting about this system is that it sort of removes the external factors of like, the market in a sense, like, you are very poor, and you just put put your savings in Bitcoin to try to save your wealth, and then all of a sudden, you know, the Bitcoin market crashes again, then you've lost a lot of wealth that you may need pretty quickly. Whereas, I think, in the system of mutual credit, it's a lot more stable of a system and allows it it provides more trust in the sense, I think, than I would think than something, like, Bitcoin would necessarily provide.
Yeah. Yeah. Mutual credit at the end of the day, it's not it's it's it's about exchange within, you know, sustainable, economic circles or usually local circles of exchange. Yeah. And yeah. So, like, historically historically, mutual credit has been most successful in times of financial collapse. Like, that was when the, you know, the thirties, that was when the the famous, via via bank, w I r bank. Mhmm. That's when they got started, and they were based on a mutual credit system.
But, yeah, my next question I was about to ask you if there were historical examples of, of using such
Yeah. Yeah. Sure. I mean Yeah. Keep going. Well, yeah. I mean, the the commercial trade exchanges, so the bank would be an example of of that, were and still are pretty popular ideas, and and they they usually used, as a a business to business trading network. They're also called, like, barter networks, sometimes. Although, I guess, if they're they're using a mutual credit system, it's not it's fundamentally not barter. And and, yeah, they've been there are some pretty famous, it's successful examples. Also, Sardex would be another one. They emerged after the, the two thousand eight crash. And it's this they work by the same logic, which is that businesses have resources, and there's, you know, there's still productive capacity in the economy. And the only thing the only reason why they can't trade with each other may be because they're short on cash. And if that's the problem, if that's the the real problem in the market, then you can solve that by creating credit between these businesses, and that that's what mutual credit can do. Yeah. There's another type of system, like, a a more grassroots person to person system known as the local exchange trading system or abbreviated LETS, and that's just an accounting system between members of a community that allows them to, exchange without using, yeah, again, without without using national currency. So it's the same concept, but applied to, you know, person to person transaction, and it's usually it's usually organized as a nonprofit and volunteer run and a lot less formal. And the relationships in that sort of system are based on trust usually. So that's more more of the, yeah, that that might be more true to the inspiration behind trust lines, although it can be used, as I said before, can be used for any type of trade relationship.
Mhmm.
Yeah. Both both person to person and business to business trade relationships is what I mean.
Yeah. In the, I mean, in the b two b example, I mean, I think that, yeah, there there are plenty of examples, I think, in history of times when businesses could have been running. I mean, you know, they had the capacity to do so, but they can't because of money problem, crashes in the market, something like that. And sort of the, yeah, the the usual solution nowadays tends to be, like, either bailing them out or, like, providing, like, PPP loans or something like that that's going on right now in The US. But, providing a system of mutual credit would be seems like it's an interesting alternative.
Yeah. Yeah. It can be. Mutual credit can be either, a a complimentary system to the existing financial system, or it can be an alternative. So, it really depends on it it depends on how you want to use it, because they can like, the systems I've just described, I guess, barter exchanges or sorry. It's a commercial trade exchanges. Those are really complimentary at their core, I think. But let's systems and also time banks. I I didn't talk about time banks, but to the extent that time banks use the idea of mutual credit, like, those are those could also be seen as complimentary, but, I think a lot of the people who use those systems would see them really as a as an alternative, type of economy that they would they would rather live in a in an economy where all money was just made up of mutual credit.
Let's say, for example, I would like to create a trust lines network with, with some people. Are there any limitations or even recommendations you can say at this point in terms of the size of a community for for one trust line network? Right. Make a
look. Okay. So the correct term to use, I guess, would be well, actually, it depends what you're talking about. I think I think the correct term would be currency network, but currency networks are shared platforms implicitly. And they usually, a currency network is, like, the most distinctive, you know, property of a currency network is its unit of value. So, like, there's a euro's currency network, a dollar's currency network, now is currency network. And if you opt into one of these currency networks, and by that, I mean, if you create a trust line with anybody using one of those currency networks, then you're sort of implicitly joining a big, you know, a potentially global platform. So it can be used to connect with someone, you know, on the complete opposite side of the world as long as there's a path in the network of friends of friends that are connecting you. So you can also have, two different totally isolated networks of of friends that are not connected at all coexisting on the same currency network. That's also possible.
So in in our, you know, test of the trust lines network, we were exchanging beers. Now since we have a trust line together, then now I am able to potentially connect with anybody else who's also using the beer currency.
Yep. As long as so you would be able to to transact with anyone in my network, for example. And, so you'd be able to transact with any of my any of my friends, and you would also be able to transact with friends of my friends and friends of their friends and so on. But you yeah. But you wouldn't be able to transact with, somebody else who joined the the currency network, created a trust line totally separate and never connected to any of my extended network. But but what I should also point out is that the, you know, you asked, like, what what are the guidelines on community size? And their trust lines is a bottom up system. There is no there are no guidelines to community size because it like, the the really the relationships or the economic communities that emerge, they are not predefined by a central entity. They emerge organically from individual users connecting to other users that they have existing trusted relationships with. So it's it's a very, it's a decentralized in the true sense of the word. It is a decentralized monetary system. Point, the decentralized system. But the at at its core, the and I guess that's a sort of a abstract thing to say, but, I could talk more about that. I don't know if I did already. But the the, yeah, the the point is that it is, fundamentally a decentralized system that's just interoperable with different several different configurations
of of credit. You basically, it potentially, community size doesn't necessarily matter so much in the system.
Yeah. Well,
it Depending on, like, potentially what you want.
Yeah. I mean, their your community could be global.
Or It can't be two b.
No. It could okay. So I maybe you should talk about this differently. So one of the problems with, like, the the trade exchange systems and the let's, let's communities that I was just talking about is the fact that those those systems are centralized. And, well, I can't exactly say it's a it's a problem, but it's just it's a it's a very different system when it's centralized. And there are advantages and disadvantages. The disadvantage is the community should, you know, cannot grow that large. You can't have a a global system of let's because because the the fundamental idea is that the everybody in the community should trust each other equally. And, if your community size grows too large, then what tends to happen is the trust in the system breaks down. And that's because you, you know, you know, it's the same idea as you would trust your neighbors, but, you know, you'd be willing to lend your your neighbor across the street, like, an hour of time or maybe €20 or something because, you know, they they live across the street. You've got friends in common. Even if you don't know them personally, there's some level of accountability there. But if it's somebody who lives two cities away from you, then that that implicit trust tends to decline. And so they're like, in larger communities, there's a higher number of so called free riders, people who would take take from the system but not contribute or something like that. And that's just a disadvantage of a centralized system. You can never prevent that, you know, especially if it's based on pure trust, but it's also even if it's based on, some extra contracts or something. It's just it's just a lot harder to control. Yeah. So the the thing about and I I guess, you know, there is an advantage to that type of system, which is that it's socialized. Like, the the risk of default is socialized, meaning in some ways, it can be, better for certain vulnerable, people or entities if they don't have enough trusted connections individually, then they can still sometimes be in the group and participate like that. So so that would be the advantage. Yeah. But with trust lines, it's all the trusted connections are bilateral by by design. And so you could you could mimic the centralized idea with just creating a, like, sorry, like an like an organization account that opens trust lines with all of its members. Mhmm. But at its core, you know, you should not have to you should not have to apply to an organization and be a member, with some random group in order to use mutual credit. You know, if you if you want to access a system of mutual credit and just use it between individually trusted friends, you should be able to do that. And that's what trust lines enables. So it makes it super duper accessible to any use case and any person while still allowing centralized configurations of credit to exist.
Right. It's blockchain provides sort of that standardization that in that, like, it enforces, but it also creates the ability to have an individual relationship also like a like a stable one without needing to join, you know, a central organization.
Yeah. And and this, I should point out, yeah, I was I was just gonna add that this is, trust lines is a very scalable form of mutual credit. So unlike existing centralized systems, a trust line's currency network can literally be a global currency network. And there's no problem with that.
Yeah. But so there seems to be a pretty high potential when you're making a network that it would largely fit within a geographic area, but it it doesn't necessarily have to be because I mean, just by virtue of of the Internet. Is this, like, the the main difference between using, trust line versus using, like, a local currency?
Yeah. So low like, trust lines can act like a local currency. So it's not it's not mutually exclusive. The you're I think you're right that probably, a lot of natural community or well, actually, wait. People within like, people using trust lines would be able to transact within the natural borders of of natural economic circles that they're part of. So that would tend to be probably based on, like, local communities and regional, you know, currencies or regional economic circles. But it could also be any arbitrary, ideological or whatever, group that is connected by, trusted relationships and that has a need to trade with each other. So if you're I don't know. And and then, like, an online gaming community, then potentially you could use trust lines to trade with each other and whatever, like, I don't know, swords or digital, like digital. Yeah, That kind of stuff. Yeah. But like the natural, you know, how we were talking about credit limits before? It's like, it's really important to set your credit limits with people because those credit limits are literally the borders between different economic communities, if that makes sense. So natural natural economic, communities will emerge from people, creating trust lines and and and credit limits with each other in a decentralized way. You end up with what is effectively a bunch of local currency systems.
Is this in, like, I guess, the the credit line between, you know, between two people in different economic communities or it's sort of like, I don't know, like a valve or a pipe that is bigger or smaller that allows, like, the different communities to trade with each other. And if you have more connections between, then you have more capacity, I guess, between the communities. Yeah. And when you look at it? Yeah. Yeah.
If there's more capacity in your in your trust line with some other individual or community, then the that that helps tie those two communities together and the reverse also.
Yeah. Well, thanks a lot for taking the time.
My last question was just,
where can people learn more about trust lines and how can they contribute?
Cool. So a lot of there are a lot of resources online. What would be really valuable for us, I think, is if you if people would be interested in testing out the mobile app, which you can get at trustlines.app.
Yeah. I'll have a I'll have a link.
Yeah. Cool. And, our you know, the the the Trust Lines Foundation is a is the nonprofit that's kind of, supporting this. So they have a website and a Twitter so you can follow them. And, yeah, and we also have a blog. We have a forum. We have some docs pages. So if you're interested in diving into the system, then you can go there. Trustlines.network is a good website to start off on, I guess. Yeah. You can also hit me up on, I have a Twitter. So Aliza Grox. Just reach out to me if you wanna talk about TrustLines.
Should people reach out to you directly if they want to, if they're thinking about implementing a a mutual credit system within their community?
Yeah. Yeah. Definitely. Talk to me.
Alright. Definitely, we'll do. We'll see. Well, thanks a lot for taking time again. And, yeah, just a very cool project. And, yes, best.
Thank you so much for having me.