Soul Shards: Reputation/Credit/Loan Coin of the Steem Blockchain

Components

Using nothing but Custom JSON operations (no SMT) we can implement a personal blockchain for each Steem account based on trust.

Proposal Descriptio

At first I was just thinking I would create a personal blockchain for myself as a way for anyone to sponsor my development. However, I've come to realize that for the same amount of work I, or anyone else, can create a service that we can all use in the same way that could eventually benefit from the network effect.

The idea is simple: a client is created (Chrome extension?) that anyone can download. This client assumes that every Steem account owns 100 Soul Shards (coins), each representing 1% of an account's total Soul. Using the client, anyone would be able to "sell their soul" to anyone else with a built-in contract to buy it back later. In effect, this system could be used as a personal loan platform on top of the Steem blockchain.

Examples

@bob needs some money for whatever. @bob is an account that many people on the Steem blockchain trust. @bob logs into the Soul Shard client and issues a custom JSON operation on the Steem blockchain to post his Soul Shards for sale at $10 each.

Ten users each buy 10% of @bob's Soul for $100 each. In the contract, @bob agrees to buy back his Soul for $11 per shard within 12 months effectively promising he will pay a flat fee 10% interest. If @bob breaks his promise his indiscretion will forever be a stain on his reputation.

Benefits

Because this is a system based on trust, smart-contracts are unnecessary, and atomic swaps are also pointless. These are constructs that guarantee trust, so they are pointless and over-complicated in a system that already implies trust between two parties. The entire client can be scripted very simply and cheaply using custom JSON operation on the Steem blockchain.

Details

Accounts that own 100% of their own Soul can manipulate it as they see fit. They could fragment their Soul into more or less pieces. They can change the contract for buying back Soul or remove that contract completely. The value of a shard can also be changed. They can also turn morale bankruptcy on/off.

Morale bankruptcy crushes the morale of anyone you Sould to. By declaring morale bankruptcy one is declaring their intent to never pay back the users they owe. In effect, they steal all their Soul back and return to 100%.

Anyone who has Soul stolen from them may curse the Soul of the offender with the Dark Mark. This mark is a warning to everyone else on the platform that this was a loan gone bad. A new contract must be issued by the victim of bad debt to make it right again. It will be up to the community to decide if this claim is reasonable or not. Anyone can choose to ignore this warning and trust someone with cursed Soul.

Synergy

On its own this idea is probably not that great, but I also have an idea for a reputation/review system and a basic decentralized exchange. All these projects could be connected to make something quite powerful.

Fungibility

Not all Souls are created equal. Soul from two different accounts is in no way interchangeable. However, the goal is to evolve the system toward this direction. Monetary policy has to be locked in when Soul is at 100% only, and I believe analytics can be run and groups formed in an attempt to gauge risk and allow debt contracts to be traded or even tipped on the Steem blockchain.

Soul Collectors

If the system became popular I expect collectors to appear that buy up bad dept on the cheap to offer a better deal or simply collect Souls of accounts as a collectors item.

Conclusion

This service could be useful in many ways. If morale bankruptcy is turned off and there is no contract to buy back Soul users could attempt to give their coins dynamic value like a real blockchain because their shards would have a much higher rarity without being pegged to a payback value. The reputation of steemians could be given real and direct value. It sounds like a crazy idea but I'm giving it serious consideration.