Terms and Concepts
In order to clarify the concept it is important to understand some concepts. The concepts have been given the following names:iCoins
iCoins are digital cash. They exist only in electronic form and must be issued by an iCoin Treasury. An iCoin is simply a code that can be validated by a Treasury as being unique and correct. It has a value that is related to a real world currency (so it may be worth, for example, US$15.75). Note that an iCoins Wallet would only ever contain a single iCoin for each currency that it supports. If it has (for example) an iCoin for US$15.75 and then received another one for US$10 the original iCoin would be destroyed and a new one for US$25.75 would be created.iCoins Treasury
An iCoins Treasury is an organisation that can create and destroy iCoins. It has reserves to cover all digital cash on issue and complies with eMoney regulations in the jurisdiction where it is incorporated.
An iCoins Treasury issues and redeems iCoins and provides functionality whereby 3rd parties can validate and transfer iCoins. A Treasury tracks ownership of iCoins down to the holding Wallet.
Wallets that hold iCoins have to be registered with the Treasury, but the wallet is simply an electronic iCoins holder – the Treasury does not have information as to the owner of the wallet. Ownership and authentication is delegated to Wallet Servers. Treasuries require Wallet Servers to maintain appropriate “Know Your Customer” (KYC) information on their Wallet holders and reserve the right contractually to source the information where required in response to an investigation.
iCoins Treasuries act as address servers for other Treasuries and other Wallets. All iCoins Treasuries know and provide addresses for all other iCoins Treasuries and Wallets.
The iCoins Treasury guarantees that the iCoins that it creates may be exchanged for the equivalent value in real world currency at any time on demand. In practice this is accomplished through intermediaries (Certified Wallets). All iCoins Treasuries will guarantee and accept all other iCoins Treasuries’ iCoins (there is a trust relationship between iCoins Treasuries). In the event of any issue with a Certified Wallet all iCoins are still secured by the Treasury.Home Treasury
The term Home Treasury refers to the Treasury that an iCoins Wallet or Wallet Server is attached to. A Wallet Server may only be attached to a single Treasury, and all Wallets within the Wallet Server are automatically attached to the same Treasury as the Wallet Server.Wallet
A Wallet is a repository for iCoins. Wallets will always accept incoming iCoins transfers. Transfers are routed by the Home Treasury. All Wallets are hosted in Wallet Servers. Wallets have limits imposed on individual transaction size and gross transaction volume in accordance with requirements for money laundering and control at the Home Treasury.Wallet Server
A Wallet Server is an organisation and software that holds customer details and provides a repository for iCoins. While the software may be provided by iCoins Systems it may also be an existing wallet system that has integrated the required interfaces for iCoins. A wallet server may have a Certified Wallet but this is not a requirement. If the wallet server does not have a Certified Wallet then its wallets have to be funded by exchange with other wallets or with a Certified Wallet in another Wallet Server.
All Wallet Servers have to be registered with an iCoins Treasury (the Home Treasury). There is an authentication protocol between a Wallet Server and its Home Treasury. Wallet Servers are required to comply with legislation pertaining to anti-money laundering and eMoney in the country where they are incorporated and also any legislation that is applicable in the jurisdiction of the Home Treasury.
Wallet owners (consumers) trust the Wallet Server to store their iCoins and only transfer them on demand. Clearly the trust of the Wallet Server provider is important.
iCoins Wallet Servers carry less risk to the consumer than existing Wallet Servers since iCoins underwrites the iCoins held, and the Wallet Server is merely acting as an intermediary for trust delegation.Certified Wallet
A Certified Wallet is a Wallet belonging to an organisation that takes real cash and issues iCoins in exchange or vice versa. A Certified Wallet has a relationship with an iCoins Treasury. A Certified Wallet pre-funds an account with the iCoins Treasury (in effect purchasing iCoins in advance and then reselling them).
On the merchant side of a payment a Certified Wallet accepts iCoins against goods and settles with real cash with the Home Treasury. There can be many Certified Wallets, catering to different geographical locations or vertical markets.
The issuing of iCoins and assumption of the associated real world liability may be a totally separate transaction, often with a different Certified Wallet, to the redemption of the iCoins at a later stage. The two transactions are not necessarily linked in any way – the Certified Wallet that sells the iCoins has no knowledge as to how the iCoins are later used, any more than a high street bank that issues an individual with cash has control over where the individual spends that cash.Merchant
A Merchant is an organisation that sells something and wishes to accept iCoins as payment. Merchants may enter into contractual relationships with a Treasury and have their own Certified Wallet in order to be able to convert the iCoins into real money, or they could also simply settle in an ad-hoc manner with a 3rd party Certified Wallet.Customer
A Customer is anyone who has a Wallet.Lender of Last Resort
Any cash equivalent has to have a “Lender of Last Resort”. This is the party that guarantees the cash and underwrites its value. In the case of iCoins this party is the iCoins Home Treasury. The iCoins Treasury also exposes an API (application programming interface – computer to computer) whereby iCoins can be created, redeemed, validated and transferred between wallets. There are a number of iCoins Treasuries, but each Treasury has to have relationships with all other Treasuries in order for iCoins to be interchanged between Treasuries.
