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I discovered that there are some questions that discuss finer points of the Open Transactions Software, however the project itself could use a proper definition.

Please explain concisely what the Open Transactions is: How does Open Transactions work, what problems does it solve and how does money get into the open transactions network?

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Open-Transactions is a free software library of financial cryptography primitives, used for implementing cryptographically secure financial transactions.

Open-Transactions also includes a server and client API.

Open-Transactions can be used for issuing currencies/stock, paying dividends, creating asset accounts, sending/receiving digital cash, writing/depositing cheques, cashier's cheques, creating basket currencies, trading on markets, scripting custom agreements, recurring payments, escrow, etc.

Open-Transactions uses strong crypto. The balances are unchangeable (even by a malicious server.) The receipts are destructible and redundant. The transactions are unforgeable. The cash is untraceable. The cheques are non-repudiable. Etc.

Open-Transactions is able to prove all balances, as well as which instruments are still valid, and which transactions are closed, without storing any transaction history (other than the last signed receipt.)

OT can be used to build wallets, market exchanges, and many other things. Basically anywhere you want to build secure transactions, you can use OT.

how does money get into the open transactions network?

Any user choosing to act as an issuer can issue his currency onto OT servers by uploading a signed currency contract and then issuing a number of units. Then any other user can use the same currency contract to open asset accounts denominated in that same currency. (In practice, most users will not issue their own currencies, but simply use existing ones.)

Upcoming additions will enable currency units based on blockchain-based currencies to be issued on OT without an issuer, since the backing reserves will be stored in a multisig voting pool on the blockchain itself. For details on how this will work, see: https://bitcoin.stackexchange.com/a/834/6473

You may also be interested in this: How can Open Transactions benefit Bitcoin?

  • Thank you Fellow Traveler for this comprehensive answer. I am afraid, I don't quite understand the part about creating a currency contract. Say, I create a USD-Dollar currency contract, and set a number of Units, how could somebody else then add balance to the network? Would he have to create his own USD-Dollar currency contract? – Murch Aug 23 '13 at 14:25
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    See Ian Grigg's article on Ricardian Contracts: iang.org/papers/ricardian_contract.html See the OT Wiki article on currency contracts: opentransactions.org/wiki/… Only the issuer (the signer on the currency contract) can issue units of that currency at any given server, because he will be the only one with the private key. He can issue units of the currency at multiple servers, and various protocols allow users to transfer funds from one server to another. The units issued are not in the contract, but on the issuer's last signed receipt. – Fellow Traveler Aug 23 '13 at 17:18
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    If multiple different entities wish to issue currencies based on dollars, or gold, or even a basket of other existing asset types, OT exists to provide the tools to enable anyone to do such things. We are also working towards having currencies without any issuer such as via blockchain based currencies, or using a system like Bitshares or LocalBitcoins, or the "Internet Freedom Bank": pastebin.com/pRDjAV3M These are all just examples of the kinds of exotic issues possible. – Fellow Traveler Aug 23 '13 at 17:26
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There a description here

https://bitcointalk.org/?topic=847.0;wap2

It seem to add extra anonymity to transactions in that its not possible to see incoming or outgoing transactions to an account, only that the account actually transacted. I'll look into this later but anyone in the know are most welcome to point other descriptions of value.

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Open Transactions are transactions that have been started by one wallet to another and have not been processed by the network. They are ' in ' the network, but have not actually been mined in to a block. Once it has been processed, barring the block it is submitted in to being ' Orphaned ' by chance, it is considered by some as processed until there have been enough other mining pools, wallets, and such as to make that block the transaction is in a valid block. If you look in a list of transactions, the status will change after each successive block until it is Confirmed.

The ' money ' gets in to the open transaction network when one wallet sends payments from it's holdings ( and will be confirmed that THAT wallet has that to spend plus the transaction fee, if any ) to the connected wallets and network nodes. It is this list that pools draw from for the information to make a block. The more open transactions, the more potential blocks, the more to mine so that pools, individuals and the network get payment. Bitcoin and other virtual currencies is a transaction based economy where instead of turning on a printer to make new currency, the system of processing the transactions adds to the total available currency. That per Block base amount lessons over time making it more and more difficult to get the same value per block submitted and is suplimented by the volume of transaction fees within the block.

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    I am afraid my question was aimed at the Open Transactions Digital Cash Software Library. Sorry that it was not clear. – Murch Aug 23 '13 at 5:08

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