What did Ricardian Contract say?
Lochaiching
We has translated the content of the Ricardian Contract before, many readers said that the length is too long and difficult to understand. I try to make full use of concise words summed up to sort out a text version of the chart, along with personal understanding the explanation of the content, I hope this article can help you understand more about the content of the Ricardian Contract in a certain Angle.
As can be seen from FIG. 1, in fact, the whole Ricardian Contract tries to express the concept of The contract is the issue. And in this paper, the following content, we can see all of the financial instruments, is the issue of generation refers to all the price equivalent, such as currencies, shares, loyalty systems ,vouchers and other financial derivatives. Its value is recognized by some people and is willing to use it as a tool to trade equivalents.
So, why do we see the Ricardian Contract?
Because the original payment system in the financial instruments, has not kept pace with the needs of The Times. And it's important to note that every financial instrument, it's best to think of the relationship as a contract between the issuer and the holder. Such as the central bank issued by RMB, we would be willing to pay accept RMB, willing to take it as a tool for buying and selling of transactions, the value of these holders because we believe the behind and powerful government credit.
Or use another Angle to explain, because everyone around him to believe and accept, based on this agreement, as one of them, had to try to believe so self-evident invisible contract during a words:
"Trust me, and I'll give you the exchange of value."
Once you are a holder, you acknowledge that there is a contractual relationship between you and the issuer.
In our lives, the transactions we see, you can almost write it as an equation:* the transaction = transfer + payment system*. By issuing different instructions, the payment system receives, executes, and then transfers money. One common feature of these instructions is that they all recognize the financial system. So the question here is -- how do these financial systems find a better way to capture, identify, and describe?
The latter part of the process is probably more mature, whereas the former Instruction recognition part is more likely to generate ambiguity. Because in our ordinary people's cognitive, we believe that the dollar, gold, and the value behind the support, who can break the human belief in precious metals thousands of years？However, this is far from enough, the issue of other financial instruments, what you believe in it the value behind the support?
After all we are in a era of rapid economic development, the financial world is full of hot money and expectation, capitalists and politicians, and its derivative financial instruments has to be used to create more powerful and imaginative world. We know that Gold =AUG, Digital Gold Currency =DGC, when someone wants to continue issuing financial instruments based on gold, it is likely that there will be a bump the same shirt.
So ,
Who is who?
How do you tell the difference?
How professional do you have to be?
How can you guarantee the level of trust behind you?
These all are problems.
These problems have been tried in real financial markets. Such as Mark Twain Bank of the USA issued valuable currency was identified with the number 4, the digital cash plan eCash is each country according to the international dialing code column into a set of Numbers, as Germany is 49, Australia is 61.
Later, finding it insufficient, try to simplify the entire system with tuple (issuer, type, identifier). For example, Joint Universal and Nationwide Keiretsu issued zero coupon bonds in January 2100, forming a tuple of (JUNK, 0, Jan_2100).
However, such infinite growth is clearly not an effective solution for long-term development, and Numbers are prone to ambiguity. Can't you describe the entire tool in a simpler, more convenient way?
So first of all, we need to know:
What's the whole thing;
How to describe it;
And are the above descriptions true and believable?
The Ricardian Contract attempts to use Zero Coupon Bond as a benchmark for design, the smallest unit. We can try to imagine this as a tree-structured tuple database, a minimal unit that applies only to a single financial instrument, or small and easily replaceable financial instrument.
As we said above, there is a high consensus on the value of dollars and gold. Yet the cost of publishing digital dollars is also high for institutions like the federal reserve, which has never declared bankruptcy without a credit crisis. Because in general, derivatives need to do the pledge with the same amount or a percentage of the deposit, such as I want to release the number of units 1 dollar, declared that I use the same unit of dollar to pledge, I will issue the financial derivatives, it is one of them.
The other need to think about is risk. The fed just didn't have a credit stain before, but what about the future, or is it doing some secretly operation that we can't see?
In the same amount of stable cash, financial derivatives are abundant. Is cash enough?
Here again, the phrase Every different issuing currency is a clear contract between the issuer and the holder is stressed. Imagine that almost all of these derivatives need to be based on cash reserves, or gold reserves. What if there is no such high consensus as the dollar or gold?
This is exactly the same as the above problem of trying to extend with tuples and bytes. What is the problem we need to solve?
Capture, describe, identify. The two are then correlated and executed.
It from a certain perspective, actually in the middle of this contract is a bit like a matchmaker, matchmaker worth his salt can accurately capture and describe the condition of the woman, she identified a type which is suitable for men, and then use professional competent ability, information matching set related men, men and women both parties to identify consistent, execute the next Deal.
If you accept the concept of Issue = Contract, you will understand more than half of the whole article. If you don't accept it, I'm afraid the following will be more difficult for you to understand. The bottom line is based on this concept, and the core of what needs to be done is to create a contract that connects to the payment system.
Let's define the Ricardian Contract as a document, the meaning of which can be seen in the 7 extended content. Simply put, it's a file that supports one of the values that's being released over the Internet. Think about what we said above, what could we do to benchmark derivatives without the support of high consensus value equivalents like the dollar and gold?
My understanding is that this is a strict and free document. It has certain precise and insurmountable principles as the precondition, which must be followed, and at the same time, it has a high tolerance for different value systems and accepts derivatives of different benchmarks.
We used to worry about centralizing institutions because they had too much power, privately modifying contracts or even unilaterally tearing them up. There was no framework to limit it. The Ricardian Contract USES hash to protect the weaker party from such unfair treatment and there is no solution. Because the hash is untamable, the hash value exists as a record in the contract. Whenever there is any modification, a new hash value will be created.
The definition of the public key structure also increased the contract information, a trusted third party need to use the certificate issued to prove that the issuer of the key, the process through the entire network traces the person information is verified. In general, the relationship is that this key (the top secret key of an individual signing a contract) signs another secret key (signing a contract). This sentence is rather convoluted, read it several times before you can understand it. That is, to sign a contract with the highest authority, the signature needs to ensure the identity of the individual and the security of the entire document.
So，the Ricardian Contract wants to build is a readable document with verifiable digital signatures and unfalsifiable identifiers linked to each record. Each of the above attributes has an important meaning:
Determine what each file describes;
Whether the description is accurate;
And whether the precise description was actually agreed by the signatories;
How to ensure that the consent of the parties is indeed signed by the parties;
......
We are on guard against the need for future partial judicial decisions that require too much effort to define unclear content and not necessarily fair outcomes. The document set out above is detailed and accurate enough to be followed by evidence that it will take a lot of effort to argue if there is a real dispute. There is only one line in someone's heart:
Clearly defined in the front, want to argue? No way!
Finally came the conclusion. Remember that the contract is the keystone of issuance. The innovation of the Ricardian Contract is that it is clear, untampered, unforgeabled and verifiable with the digital contract, so as to reduce disputes.
As you know, how high is the cost of dispute ! And all this happened, because everyone who participated in the execution have different values, the understanding of the same thing, will have different meanings for different people. Probably the result of Lucy thinks it only be X, but Tom think is not only Y, but Z. When the cognitive and in the contract before and made no mention of the matter, assume their respective contents appear in the results will be split when disappointed. Describe a contract with a digital contract, linking each possible operation to minimize non-consensus.
So there's a lot of room for this ideal model to hit a wall. For example, Every Associated Operation, where you can continue to imagine the future within experience, but what about the beyond experience? This requires a higher-order model to simulate ahead of time.
The details of the build before the operation are too numerous to be imagined and fully covered, but it is certainly a leapfrogging structural proposal. Importantly, the contract proposal has become the consensus of a group of people who are building the world of ideas for the future.
In conclusion, what did the Ricardian Contract say?
Think of each issue as a contract, and the Ricardian Contract forms the basis for understanding the issue and each transaction in the issue.
I hope this article will help you understand a little bit more about the Ricardian Contract. The interpretation may be biased. This article first language is Chinese, and the link is https://steemit.com/eos/@eoshenzhen/6ipbwb 《李嘉图合约究竟讲了什么》
Conference :
The Ricardian Contract, Ian Grigg
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