Title of Ownership

Sensible Taler currencies make payments that pass a Title of Ownership on the underlying value in a 1:1 ratio.

Sensible Taler is fully backed in a real asset; when paying with the technical GNU Taler mechanism, the ownership of the asset is passed; more legally, the title of ownership migrates from the payer to the payee. The GNU Taler coinage denominated in a Sensible Taler currency allows the payee to claim the amount. But he may also use it as payment to another party. In other words, it works like holding cash money that has intrinsic value.

The physical value must be available with the payer before the Taler payment is made. This is the case when a properly audited mint never circulates more Sensible Taler coinage than the underlying value passed into the system.

• In a gold payment system, you would deposit gold in an account and receive Sensible Gold coins for that value.

• In a sustainable energy system, you would receive Sensible Taler Energy in return for solar energy fed back into the grid, which you can use later to purchase wind energy if it is easily available.

It is relatively simple to track books on such simple operations, but it is vital that it is done well. The administration must commit to each step in the way, and open it for external inspection. This is sufficient to maintain the full backing required for Sensible Taler currencies.

The reverse of minting new coinage is destroying it while cashing out. This too is easily audited, but it is vital to proper backing. While coinage moves between people who use it, people have the right to claim ownership, but they may also defer it, for various practical reasons or for privacy. Cashing out is the process in which the title of ownership actually passes to its new owner. This may or may not involve a physical transfer; passing the title is essentially a paperwork procedure (or very often a digital analogue) and it may or may not require the name of the recipient.

A vital problem in all this is counterparty risk; those who manage the title of ownership could enter a state of bankruptcy. There are proper defenses to avoid this; the titles and Sensible Tailer coinage are not on the balance of a payment provider but on the owner's. Coins are not owned by anyone until they are claimed. Anyone could take over the business of a brankrupt party, including a peer that offers similar services.

TODO: Coins are not owned by anyone; they are held in the Exchange for a future coin claim.

TODO:MOVE:FIX The FIX messages negotiate an identity, which must occur in the Taler payment. The FIX messages are digitally signed with a validated public key, and all this serves as an audit trail to mitigate any legal problems. The contract binds the parties to the proper execution of the trade, Taler payment and passing the title of ownership.

Given the preparation and corresponding Taler payment, passing of the title of ownership may be implied, or it may call for explicit action. In general, these actions are obligations as soon as the payment has been accepted. The actions must be executed without delay, which is a reasonable requirement for fully value-backed Taler currency.