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MyCHIPs Digital Money

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Compliance Contracts

This leads us to the next mechanism for evaluating the quality of CHIPS issuances: Compliance.

When you set up your MyCHIPs node on the network, you may need to convince potential trading partners you are trustworthy. So, it will be advisable to execute one of several optional compliance contracts. <> These bind you to a set of practices and policies you agree to honor with your partners. For example, you would explicitly agree to not engage in any fraudulent activity, and to only engage in trades that are completely voluntary on both sides. Obviously, you would agree to honor all your debts, even if it takes a great deal of effort to do so.

You might also agree to only have a single trading identity on the network. For example, you wouldn’t join, rack up a bunch of obligations you fail to honor, ditch your account, and then come back later with a new, untainted identity.

Whatever form of contract you choose to execute would form a critical part of your quality rating. If you don’t agree to play nice, others may not want to trade with you. The higher the standard of behavior you pledge, the more people will be able to trust your credit.

It is a valid concern that a compliance contract executed in one country may not be easily enforceable by someone in another country. And while that could be desirable, it is not the only method of enforcement. It is also possible for the network itself to enforce your contracts. If you make certain representations to the community, and then don’t keep them, your reputation will suffer and others will choose not to trust you in the future.

With the protocol designed properly, those who are productive and trustworthy will thrive. Those who are not, will be left to find other ways to conduct their business.
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