Stefan Thomas & Evan Schwartz: Building The Internet Of Payments With Interledger
We present a protocol for payments across payment systems.
It enables secure transfers between ledgers and allows anyone with accounts on two ledgers to create a connection between them. Ledger-provided escrow removes the need to trust these connectors. Connections can be composed to enable payments between any ledgers, creating a global graph of liquidity or Interledger.
Unlike previous approaches, this protocol requires no global coordinating system or blockchain. Transfers are escrowed in series from the sender to the recipient and executed using one of two modes. In the Atomic mode, transfers are coordinated using an ad-hoc group of notaries selected by the participants. In the Universal mode, there is no external coordination. Instead, bounded execution windows, participant incentives and a “reverse” execution order enable secure payments between parties without shared trust in any system or institution.
We have proposed a protocol for secure interledger payments across an arbitrary chain of ledgers and connectors. It uses ledger-provided escrow based on cryptographic conditions to remove the need to trust the connectors.
The Atomic mode of the protocol provides atomicity for payment chains in which the participants can agree upon a group of notaries. The Universal mode uses the incentives of rational actors to enable practical payments between participants that do not all share trust in any institution or system.
Our protocol does not rely on any single system for processing payments, so there is no limit to its scalability.
Payments can be as fast and cheap as the constituent ledgers and connectors allow and transaction details are private to their participants. The separation of concerns and the minimal standardization requirements enable continuous optimization and competition between connectors and between ledgers.
Removing the need to trust the connector enables anyone with accounts on two or more ledgers to make connections between them. Connectors can be composed to make payments and the financial system more accessible, competitive and resilient. This enables the creation of a global graph of liquidity or Interledger