Why Nostr? What is Njump?
2023-06-09 12:43:27
in reply to

Benjamin [ARCHIVE] on Nostr: 📅 Original date posted:2015-06-23 📝 Original message: Hello, I find the paper ...

📅 Original date posted:2015-06-23
📝 Original message:
Hello,

I find the paper very interesting. There is quite a few things I don't
understand. In the the paper there are the terms "channel
counterparty" and "clearinghouse". What is exactly the risk to this
counterparty and why would it be trustless to route through that
party? How would users of the network find and select those
intermediaries? I think in general building trust-based level 2
protocols is a good idea - it's not clear to me how it would work
without explicit trust. Opening a channel is similar to declaring - I
trust this counterparty X up to amount Y. If X disappears then the
risk is capped at Y.

In the existing banking and monetary system counterparty risk can be
minimized by shifting unwanted exposures. The problems are often more
in the systematic risk, such as a failure of a banking system as a
whole. If counterparties are interconnected, failures can propagate in
unexpected ways. For example A might trust B to route or clear and not
trust C. But B might have exposure to C, so that A's exposure can't be
diversified.

Regards,
Benjamin
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Author Public Key
npub17kz55p7ysz4ftvq2xyr2zamc776cygwcm5fdz8ndj3jm5umm65xq4sr5tq