Understanding Personal and Group Currencies

In Circles, money is generated collectively by many individuals over time rather than by a central authority at specific events.

When you become part of the Circles network, every person has their own personal Circles token and receives one Circle (CRC) per hour, unconditionally.

The trust network forms a social graph where each trust relationship acts as a link, allowing tokens to flow between individuals through these connections. This ensures that the value of Circles is supported by genuine social relationships, fostering a community-driven economy.

At the same time, this mechanism is an effective soft sybil protection, as it decentralises the verification process and relies on human judgment for trust, preventing fake accounts from compromising the network. Since the connections between Circles accounts have a limited capacity (defined by their balances of fungible tokens), this limits the impact of fake accounts that manage to get trusted by a credible member of the network to their direct surroundings.

Personal Currencies and Trust Path

Personal currencies are unique and require trust to be transferred to others. To send tokens, other users must first trust your personal currency. When someone trusts your tokens, they become fungible with their own tokens.

This fungibility allows for the transfer of tokens along a trust path, enabling transactions even between people who do not directly trust each other.

Group Currencies

Additionally, Circles v2 introduces support for group currencies, allowing communities to share a currency backed by their members' personal tokens.

This collective currency reduces risk, simplifies payments, and enhances market creation by aggregating individual tokens into a more stable and fungible group currency. Group currencies make it easier to integrate Circles into existing economic structures and protocols, further promoting a robust and interconnected community economy.