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Digital currencies for the World Wide Web
WebWallet is an API specification for digital currencies on the Web. Its design is inspired by the principles of logical decentralization and permissionless publishing of the World Wide Web, the use of asymmetric cryptography for independent verification on the Bitcoin protocol, and the notion of information about debts in the form of IOUs.
At its core, WebWallet is a set of data structures and algorithms for managing balances using digital signatures. Its design abstractions and generalizations aim to enable the implementation of different currency systems using the same accounting model, in which all state transitions are driven by digitally signed messages that authorize the creation of new transactions records.
WebWallet is NOT:
- a browser-based wallet service that holds private keys on behalf of users.
- a cryptocurrency like Ethereum, but a way of defining new units of account.
- a blockchain like Bitcoin, though it uses similar data structures internally.
- a decentralized, peer-to-peer network, but follows the client-server model.
- a payment method like $£€¥₩ Pay/Wallet, but it can be used to build them.
- a platform for issuing assets, but a convention for keeping track of liabilities.
- a currency exchange service, though it supports multivariate transactions.
Instead, WebWallet is:
- a general-purpose accounting model for creating abstract units of measurement.
- a currency-agnostic, cryptographically-driven transactional model for the Web.
- a protocol for managing balances in logically decentralized information spaces.
WebWallet is not for making payments, but digitally signed promises to pay. Instead of assets in a settlement network, these promises represent liabilities that can be cleared against balances denominated in the same unit of account. Therefore, WebWallet prioritizes features for increasing the velocity, providing liquidity and encouraging diversity of units of account, over those for controlling the supply, imposing solvency constraints or creating artificial scarcity.
- Promises, not Payments.
- Liabilities, not Assets.
- Clearing, not Settlement.
- Velocity over Quantity.
- Liquidity over Solvency.
- Diversity over Scarcity.
Since WebWallet is focused on solving the problem of transaction clearing on the Web, instead of transaction settlement on the Internet, there are some inherent limitations and trade-offs in terms of immutability and risk management. Hence, WebWallet is not intended to be used as a standalone transactional solution, but as a clearing layer on top of a settlement layer such as Bitcoin.
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Proof-of-work
Compared to the hard promises made by a proof-of-work system, WebWallet transaction records are relatively soft promises. This is a constraint imposed by the Web being a logically decentralized information space, in which independent domains are not likely to reach the scale of an organizationally decentralized (yet logically centralized) payment network like Bitcoin. -
Censorship Resistance
WebWallet currently has the same low censorship resistance as the Web. Nonetheless, WebWallet IOUs can be sent through relays and proxies with preventive measures against replay attacks, and the same unit of account can be issued and held in different domains, or moved continually between their ledgers, in order to spread the censorship risk among them. -
Risk Management
IOUs denominated in arbitrary units of accounts certainly carry credit and liquidity risks that depend on the creditworthiness and readiness of balances of the involved parties. However, creating information about debts relies precisely on the ability to make promises to pay without owning those numbers first, hence this is naturally an acceptable trade-off.