Topic: NXTBank Credit Rating System (Read 5918 times)

spaw · « **on:** May 20, 2014, 12:12:28 pm »

Need to start discussion on the NXTBank credit rating system. A couple of ideas are floating around, but it would be nice to get more input from everyone.

One suggestion I thought was interesting from the previous thread was using a trusted pathway like Ripple.

Quote from: Funkylump on May 19, 2014, 03:19:22 am

I wonder if it would be possible to somehow leverage Ripple's trusted pathways to help in establishing trust relationships. I'm not sure if/how that could work but it seems a trust network is being built by them already. It might be possible to use it as part of the solution, either by using their gateways or somehow gaining access to their trusted pathway network.

https://ripple.com/working-with-ripple/

Whether we work with Ripple or develop our own system is something to discuss.

Other ideas are wanted/needed so please chime in.

spaw

jl777 · « **Reply #1 on:** May 20, 2014, 12:16:02 pm »

Quote from: spaw on May 20, 2014, 12:12:28 pm

Need to start discussion on the NXTBank credit rating system. A couple of ideas are floating around, but it would be nice to get more input from everyone.

One suggestion I thought was interesting from the previous thread was using a trusted pathway like Ripple.

Quote from: Funkylump on May 19, 2014, 03:19:22 am
I wonder if it would be possible to somehow leverage Ripple's trusted pathways to help in establishing trust relationships. I'm not sure if/how that could work but it seems a trust network is being built by them already. It might be possible to use it as part of the solution, either by using their gateways or somehow gaining access to their trusted pathway network.

https://ripple.com/working-with-ripple/

Whether we work with Ripple or develop our own system is something to discuss.

Other ideas are wanted/needed so please chime in.

spaw

On paper, ripples system sounds like a peer rating equivalent
In reality, people just set the trust level for a few selected gateways and it has not value for rating peers

spaw · « **Reply #2 on:** May 20, 2014, 12:23:28 pm »

Quote from: jl777 on May 20, 2014, 12:16:02 pm

Quote from: spaw on May 20, 2014, 12:12:28 pm
Need to start discussion on the NXTBank credit rating system. A couple of ideas are floating around, but it would be nice to get more input from everyone.

One suggestion I thought was interesting from the previous thread was using a trusted pathway like Ripple.

Quote from: Funkylump on May 19, 2014, 03:19:22 am
I wonder if it would be possible to somehow leverage Ripple's trusted pathways to help in establishing trust relationships. I'm not sure if/how that could work but it seems a trust network is being built by them already. It might be possible to use it as part of the solution, either by using their gateways or somehow gaining access to their trusted pathway network.

https://ripple.com/working-with-ripple/

Whether we work with Ripple or develop our own system is something to discuss.

Other ideas are wanted/needed so please chime in.

spaw
On paper, ripples system sounds like a peer rating equivalent
In reality, people just set the trust level for a few selected gateways and it has not value for rating peers

Is the idea sound, just implemented poorly, or is it just a bad idea?

spaw

jl777 · « **Reply #3 on:** May 20, 2014, 12:27:02 pm »

Quote from: spaw on May 20, 2014, 12:23:28 pm

Quote from: jl777 on May 20, 2014, 12:16:02 pm
Quote from: spaw on May 20, 2014, 12:12:28 pm
Need to start discussion on the NXTBank credit rating system. A couple of ideas are floating around, but it would be nice to get more input from everyone.

One suggestion I thought was interesting from the previous thread was using a trusted pathway like Ripple.

Quote from: Funkylump on May 19, 2014, 03:19:22 am
I wonder if it would be possible to somehow leverage Ripple's trusted pathways to help in establishing trust relationships. I'm not sure if/how that could work but it seems a trust network is being built by them already. It might be possible to use it as part of the solution, either by using their gateways or somehow gaining access to their trusted pathway network.

https://ripple.com/working-with-ripple/

Whether we work with Ripple or develop our own system is something to discuss.

Other ideas are wanted/needed so please chime in.

spaw
On paper, ripples system sounds like a peer rating equivalent
In reality, people just set the trust level for a few selected gateways and it has not value for rating peers

Is the idea sound, just implemented poorly, or is it just a bad idea?

spaw

The difficulty is in getting people to:
a) understand a nontrivial rating system
b) actually actively participate and use it

With ripple the only time you need to deal with the trust rating is when you find you cant get the deposit you made to the gateway. You contact tech support and they tell you to grant trust to match the largest likely deposit

there is no actual reason for bob to setup trust lines for sally
of course it is possible, and if the inventives were there maybe it could work
however I have found that people rarely do stuff they dont have to, especially if it requires spending time and effort to learn a complicated new system and when money is involved, mistakes become costly so in addition to inertia, there is the fear factor. Fear of making a mistke

spaw · « **Reply #4 on:** May 21, 2014, 03:37:33 am »

i guess the sticking point is that nobody has credit here yet. generally if you don't have credit you just get a co-signer who does, but here the cosigner has no credit either! i believe the idea was floating around on the monetary systems thread about collateralized debt which looked promising, but i don't think it's been implemented yet. maybe it doesn't need to be any one method either? perhaps reviewing everything on a case by case basis is best until the market has been around long enough for people to develop credit and reputation.

for now, the asset buyback looks like a good bet. maybe requiring recommendations from other community members to be included in proposals would give a little extra confidence.

spaw

bluemeanie1 · « **Reply #5 on:** May 22, 2014, 03:39:26 am »

there is a bit of precedence here: http://bitcoin-otc.com/trust.php

bluemeanie1 · « **Reply #6 on:** May 22, 2014, 03:42:37 am »

Quote from: spaw on May 21, 2014, 03:37:33 am

i guess the sticking point is that nobody has credit here yet. generally if you don't have credit you just get a co-signer who does, but here the cosigner has no credit either! i believe the idea was floating around on the monetary systems thread about collateralized debt which looked promising, but i don't think it's been implemented yet. maybe it doesn't need to be any one method either? perhaps reviewing everything on a case by case basis is best until the market has been around long enough for people to develop credit and reputation.

for now, the asset buyback looks like a good bet. maybe requiring recommendations from other community members to be included in proposals would give a little extra confidence.

spaw

you should look into how Google Page Rank works.

basically you get rank by being referenced by others with rank. So you can design a credit rating system where you get a good rating by being referenced by others with a good credit rating. You can of course just use some social network software(I think this forum supports 'friending' right?) and then process the social graph. Need to know a bit about graph processing, but not too difficult.

jl777 · « **Reply #7 on:** May 22, 2014, 03:57:13 am »

Quote from: bluemeanie1 on May 22, 2014, 03:39:26 am

there is a bit of precedence here: http://bitcoin-otc.com/trust.php

I already put in a ranking system into NXTorrent which I think has similar properties. The problem is that at first there is no reference. Not sure if there is an alternative to manually seeding ratings until there is enough context for a rating system to become relevant

bluemeanie1 · « **Reply #8 on:** May 22, 2014, 03:58:47 am »

Quote from: jl777 on May 22, 2014, 03:57:13 am

Quote from: bluemeanie1 on May 22, 2014, 03:39:26 am
there is a bit of precedence here: http://bitcoin-otc.com/trust.php
I already put in a ranking system into NXTorrent which I think has similar properties. The problem is that at first there is no reference. Not sure if there is an alternative to manually seeding ratings until there is enough context for a rating system to become relevant

use the NXTBank as a reference, just like the Federal Reserve does.

-bm

spaw · « **Reply #9 on:** May 22, 2014, 04:26:26 am »

There are various companies out there that can rate social media reputation. Klout comes to mind. It uses a few metrics to calculate.

I'm wondering if the community has already told us who it trusts? Is there anyway to tap into the nxtforum karma scores?

This could probably be gamed if it were a long term rating system but it could allow us to seed the original values.

The second number would obviously come from borrower behavior I.e. do they make payments on time.

spaw

2Kool4Skewl · « **Reply #10 on:** May 22, 2014, 04:32:29 am »

Quote from: spaw on May 22, 2014, 04:26:26 am

HuThere are various companies out there that can rate social media reputation. Klout comes to mind. It uses a few metrics to calculate.

I'm wondering if the community has already told us who it trusts? Is there anyway to tap into the nxtforum karma scores?

This could probably be gamed if it were a long term rating system but it could allow us to seed the original values.

The second number would obviously come from borrower behavior I.e. do they make payments on time.

spaw

Using the karma rating is a bad idea. Whether you are liked and whether you pay your obligations are two separate matters.

spaw · « **Reply #11 on:** May 22, 2014, 04:35:34 am »

Quote from: 2Kool4Skewl on May 22, 2014, 04:32:29 am

Quote from: spaw on May 22, 2014, 04:26:26 am
HuThere are various companies out there that can rate social media reputation. Klout comes to mind. It uses a few metrics to calculate.

I'm wondering if the community has already told us who it trusts? Is there anyway to tap into the nxtforum karma scores?

This could probably be gamed if it were a long term rating system but it could allow us to seed the original values.

The second number would obviously come from borrower behavior I.e. do they make payments on time.

spaw

Using the karma rating is a bad idea. Whether you are liked and whether you pay your obligations are two separate matters.

It would only be part of the equation, and only used in the initial seeding. In the end people will make the decision to lend or pass. At the moment though we are starting from nothing, karma is at least some kind of index. Ultimately the rating is simply a tool, and only as good as the people who use it.

And generally people who don't pay aren't liked for long

spaw

2Kool4Skewl · « **Reply #12 on:** May 22, 2014, 04:37:08 am »

True.

I'm wondering why any "initial seeding" is needed at all.

P2PGuy · « **Reply #13 on:** May 26, 2014, 10:36:40 am »

Meritoractic system? You do good things for people, that flow of energy comes back to you. You don't need to ask for it (or expect anything to come to you), selfless giving will always, come back to you eventually, in many other ways and in times you don't expect. Karmic flow.

Meritocracy and the Ubuntu system is an interesting peer-to-peer contributionism model. A community all participate and offer skills, time and make a contribution and everyone benefits. The idea is that you only have to spend 3 hours a day working hard. The rest of the time for yourself or voluntary if you want to contribute more. For example, if it's a community garden, the benefit is that you share in the project, share food, make friends build trust and share knowledge.

Michael Tellinger is a great guy, passionate about building an Ubuntu community, starting in South Africa. This is a RW example. You might say, NXT also works in this way in the virtual world, but has a more business like approach.

http://www.ubuntuparty.org.za

http://nova-gaia.com/wisdom/ubuntu/

nxtgt · « **Reply #14 on:** June 12, 2014, 08:39:26 pm »

I don't see the real need to have one of these NXTBank DAC's. If the tech is truly P2P why not let people loan to other people like on Prosper or LendingClub without all the strings attached? It's high risk but you can charge higher interest

bluemeanie1 · « **Reply #15 on:** June 12, 2014, 08:45:13 pm »

Quote from: nxtgt on June 12, 2014, 08:39:26 pm

I don't see the real need to have one of these NXTBank DAC's. If the tech is truly P2P why not let people loan to other people like on Prosper or LendingClub without all the strings attached? It's high risk but you can charge higher interest

a good point, but I do foresee the need for management functions. Consider how many ways a business loan can go wrong and how much information needs to be reviewed.

nxtgt · « **Reply #16 on:** June 12, 2014, 09:01:14 pm »

Quote from: bluemeanie1 on June 12, 2014, 08:45:13 pm

a good point, but I do foresee the need for management functions. Consider how many ways a business loan can go wrong and how much information needs to be reviewed.

All true but given the nature of the system you can go through all of that and still get a very sophisticated scammer that disappears with your money and you can't go after him. Then we can flag his credit rating on his account but then he just transfers the money to a DGEX account, sells it and opens a new NXT account, slowly builds a decent credit rating and then boom another big scam. We'd need perpetual NXT identities for a credit rating system to be worth anything, no?

The vouching system seems more compelling, but as jl777 described it, it doesn't seem intuitive enough for people to use or understand how important it is for the overall functioning of the trust line. I'll think more about where we can innovate on that one.

bluemeanie1 · « **Reply #17 on:** June 12, 2014, 09:04:30 pm »

all you say is 100% correct.

have you ever seen this paper on P2P bonds? http://www.altchain.org/?q=whitepapers/paper3.html

an interesting point is that yes, the credit ratings grow over time, but they can also be computed against a declaration of relationship to some other long-standing account(such as in a social network). I think a simple factor is that you can't do business without identifying yourself to some degree.

-bm

nxtgt · « **Reply #18 on:** June 12, 2014, 09:34:58 pm »

Quote from: bluemeanie1 on June 12, 2014, 09:04:30 pm

all you say is 100% correct.

have you ever seen this paper on P2P bonds? http://www.altchain.org/?q=whitepapers/paper3.html

an interesting point is that yes, the credit ratings grow over time, but they can also be computed against a declaration of relationship to some other long-standing account(such as in a social network). I think a simple factor is that you can't do business without identifying yourself to some degree.

-bm

Thanks for the link I will read it when I get home later tonight.

Something interesting about the trust network idea too that kind of relates to the "keeping people on one account" notion is that as that trust network grows bigger, it becomes a bigger dis-incentive to "leave the network" so to speak by opening a new NXT account. Very very interesting, need to think more.

bluemeanie1 · « **Reply #19 on:** June 12, 2014, 09:36:49 pm »

yes, this sort of 'stickyness' does contribute to NXT value and yes... price.

-bm

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Author Topic: NXTBank Credit Rating System (Read 5918 times)