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CreditExchange

Credit Exchange

There is a basic explanation of the Credit Exchange concept at Definitions.

For this extended example, consider Node A, which can route payments between any three nodes B,C, and D.

     C
     |
 B - A - D

A is more friendly with nodes B and C, less friendly with node D. So there is no transaction fees for payments routed B to C or C to B. Nor is there a transaction fee for routing payments where D is the payer. However, where D is the payment recipient, there is a transaction fee of 2%.

Node A's exchange rate table is

 B-A -> A-C: 1
 C-A -> A-B: 1
 B-A -> A-D: 0.98
 C-A -> A-D: 0.98

Every node stores an exchange rate table like the above, which it uses when acting as a payment intermediary between any two neighbors.

A node could store a ridiculous exchange rate, like 1%, or 0%, to discourage exchanges it does not want to do. Alternatively, the party could register a second node to segregate credit exchanges it does not want to do. See Users,Parties, and Nodes.