Why Trust Matters

Let’s dig into Rya’s most unique feature— the Trust coin.

Bitcoin’s most important quality is the fact that it is a ‘trustless system’. This enables a network of participants that may or may not be malicious to transact with one another regardless of individual intentions. This is in contrast to traditional currencies, which require users to trust centralized organizations like banks and governments.

I think most of us remember the feeling we had after buying or mining our first Bitcoin. The realization that as long as you hold on to your private key, you are in complete and total control of your money. It’s the eureka moment in which many new users begin to understand the true power of decentralization.

Yet, there are other elements at play in real economies beyond just a solution for double spending; most importantly, leverage.

Leverage is one of the most important factors in the economy— businesses borrow money to grow, hedge funds stake equity and expand their portfolios, and governments create money by issuing bonds and selling them to a central bank. All of these activities require a relationship between borrower and lender, and relationships inherently require a certain level of trust.

In the Rya ecosystem leverage is expressed in the form of p2p loans and the aptly named Trust coin balance represents a user’s behavioral history. If a user returns a loan with interest the system grants them a Trust reward, if they default on a loan than the system enforces a Trust penalty.

The Trust balance replaces the role of stake (as seen in PoS) in the Proof of Trust (PoT) blockchain so accounts with higher Trust balances will be able to mint more Rya. When the economy slows, less people will borrow Rya in the p2p loan market, causing interest to rise. The system compensates by automatically distributing bigger Trust rewards to successful loaners which enables them to mint more Rya and leads to lower interest rates. This decentralized stabilization mechanism replaces the dated central bank seen in fiat economies.

Many new community members have asked how a lender can rely on the Trust balance of an account when deciding whether to provide a loan to a potential borrower. The answer to this is that they should not.

The Trust balance can be used as a rough estimation of a credit score, and could be used as a metric when determining whether to give a loan, but the intelligent lender should always evaluate the borrower using other measures as well in order to protect themselves.

The Rya project is an open source, community driven monetary system and cryptocurrency. The project was initially forked from NXT source code and then developed in a very different direction. It is published under a modified version of the Jelurida Public License. The project did not ICO and is instead distributing its initial supply to the growing community.

To read the whitepaper head over to https://ryacoin.io/. 

You can interact with the community on Telegram at https://t.me/RyaCommunity and on Twitter at https://twitter.com/RyaCommunity.