In any economic system, some relationships are transactional—one-time exchanges between strangers. Others are sustained—repeated interactions between trusted parties. The latter are more valuable to the network, yet traditional systems treat them identically. A decentralized credit network can do better. It can recognize and reward sustained trust relationships through value loop detection and rewards.The Concept of Value LoopsA value loop occurs when a series of transfers creates a closed cy...

In any economic system, some relationships are transactional—one-time exchanges between strangers. Others are sustained—repeated interactions between trusted parties. The latter are more valuable to the network, yet traditional systems treat them identically. A decentralized credit network can do better. It can recognize and reward sustained trust relationships through value loop detection and rewards.The Concept of Value LoopsA value loop occurs when a series of transfers creates a closed cy...

# BitCredit: A Peer-to-Peer Electronic Credit System **Abstract.** A purely peer-to-peer electronic credit system would allow individuals to extend credit directly to one another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending and over-leveraging. We propose a solution to these problems using a distributed network where credit capacity is determi...

# BitCredit: A Peer-to-Peer Electronic Credit System **Abstract.** A purely peer-to-peer electronic credit system would allow individuals to extend credit directly to one another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending and over-leveraging. We propose a solution to these problems using a distributed network where credit capacity is determi...