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Assets, usage tokens, grids….what’s all this?

Read previous entries 1 and 2 so you can catch up on the Loom system or just watch the new Loom Tutorial Video.

There has been a lot of discussion in the past few weeks about Loom Gold and the Loom system. An Open Source ‘value transfer’ system, descriptions of the Loom have ranged from ‘economic dial tone’, fun with giant spreadsheets and on down to simply ‘the grid’. I believe Loom is all of those and more.

What can Loom do for you? Patrick and I spent some time on Skype. He explained and I listened. Here are a few of the points from our discussions which I have pieced together in Q&A form and mixed with some additional info. The following, along with the previous 2 posts on Loom, may help you to understand the dramatic benefits of Loom Gold and the reason I feel its has such a bright future.

Is Loom just an online accounting tool?

Patrick: Correct, Loom is not a currency. At its core, Loom is an entity called the Grid, which is somewhat like a giant abacus with one slight complication…you must reserve space on the abacus with “usage tokens.” Usage tokens are burned up in small fees as a user sets up their folder(s). This technique prevents the public from despoiling the space, and compensates the creators for the energy and time they spend maintaining it.

Advanced functions and API information can be found here. A very helpful interactive grid tutorial to help you set up and test grid operations can be found here and here is my newest informative Loom Tutorial Video.

What about Loom Gold?

Loom Gold is a certain type of asset on the Loom system. Loom is currently backed by some gold coins. Other types of assets in the system can be backed by gold or something else. Some types of assets are may even have no valuable assets behind them. This all depends on the users.

Mark: So any user can create his or her asset?
Patrick: Absolutely. I’m just a user like anybody else. I don’t have any special privileges as the Loom Gold operator. (I happen to issue usage tokens, but I grabbed that privilege when we first started the server) Some of those assets will be something we recognize as valuable like money. Some will not. And it does not matter since everything has a value of something. As the great economist Karl Menger observed: value is subjective.
Mark: So each user can create a folder and issue their own types of assets for use in the system. You issued Loom Gold and backed it by gold, I could issue Mark’s gold units and back them if I like and its my word on what is behind the curtain correct? However, we would both still have to find users who would accept them for e-commerce transactions and we would both need third party agents to exchange the units for national currency. etc. Agents like Vertoro.
Patrick: Ya know, it’s kind of like basic bookkeeping of IOUs … might be another way to think about it
Mark: Is it possible for users to display in a transparent fashion more info about the assets?
Patrick: It’s possible for the issuer to publish a hash by which anyone can view the outstanding liability
Mark: Is it wise to think of Loom as being a large operation like Webmoney, e-gold & Pecunix or a more personal type local operation?
Patrick: It has flavors of both — on the one hand, it’s a huge wide open space. On the other hand, it’s SO huge that you’ll probably only know about tiny corners and connected little societies and cliques. However, I’ll venture a guess that several asset types will emerge as prominent, highly liquid, highly trusted “favorites”. Those asset types will enable people from DIFFERENT cliques and societies to settle up among each other

How did such a simple folder interface come into existence?

Patrick Chkoreff says: I created the folder interface so people could use the Grid easily *without* having to download any specialized software to their computer. It’s nice having a purely web-based interface. Eventually there will be specialized interfaces that run on cell phones, PDAs, or your own computer. In fact, I know of at least one such “wallet” available right now. Keep in mind that the Grid itself cares nothing about user interfaces, and is not the least bit aware of their existence. It is just a pure mathematical entity shimmering in space, behaving according to its own immutable laws. Everyone is so paranoid about numbers, it’s like they’re black magic or something. The commutative and associate properties of arithmetic are useful tools, and I encourage good, sane, rational people to use them frequently.
Patrick: You mentioned that the subject was fraud
Mark: If every user can create assets, I’d assume at some point one of them would screw another user and claim fraud.
Patrick: Its possible and I could almost guarantee something like that will happen. How many families have a dead-beat brother-in-law who “forgot” about that $5000 he owes you? However, here’s the defense against fraud: pricing….or rather, pricing is the way information about reputation is carried around the world.

What is new on the Loom horizon?

Mark: What near term upgrades are you working on now?
Patrick: I really do need to get that Types screen done. It’s the CRUX of the whole system, and it’s what really pushes demand for loom services over the top. All the open issuance stuff is already available in the raw API, I just need to rig up the folder interface for it so any hot-shot programmers out there can already start doing Lindens, or whatever…
Mark: Yes, the virtual game currency is a huge growing global market. Sales and exchange for virtual currency such as Linden dollar and PED (Entropia Universe currency) would work well in a Loom.

e-gold webmoney pecunix

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