One of the foundational problems in payment networks is that they are mostly uninteroperable. This problem exists at all levels, from consumer payment solutions like PayPal, to national and multi-national banks. This complexity is brought on by the proprietary nature of payment networks, and moving value from one to another requires a negotiation between parties on which common payment network to use in a transaction. We saw similar problems in the early days of the Internet, assembled around protocols which allow for data to be routed and move between networks in a standardized way.
We’re joined by Stefan Thomas and Evan Schwartz, co-creators of Interledger. This neutral protocol would bring the same level of interoperability we know take for granted around the flow of data, to payments, thus allowing money to move freely across networks. A market maker, who holds accounts in both networks, would receive funds in escrow from a sender, and move funds to an escrow account with the receiver, getting paid by the sender when he shows the proof the funds were delivered to the receiver.
Topics we discussed in this episode
- What is Interledger and what problem is it trying to solve
- Interledger’s architecture
- How connectors and routing works, and how we may compare it to the way data flows on the Internet
- Cryptographic Escrow and its role in Interledger
- Requirements for payment solutions to become Interledger compatible
- Interledger’s community group at the W3C
- How Interledger applies to micropayments
- Ripple’s role in Interledger