Title of Ownership

Taler Bullion and variants make payments for acquiring a Title of Ownership on the underlying value in a 1:1 ration.

Payments in Taler Bullion are made to acquire the ownership to the underlying value. Since the Taler Bullion forms are all in the same units as their underlying value, this is always done in a 1:1 ratio.

It is not strictly required to pass the physical entity, but rather the claim one has it. This is legally termed the title on the value. This is coupled directly to the Taler payment, provided that it was prepared following a standard protocol.

The physical value must be available at the receiving end before the Taler payment is made. Without this precaution, the principle of full backing could be invalidated if the Taler currency was created in one place and paid to another. In such cases, a callback is needed, and so the procedure in Taler Bullion, Taler Energy, Taler Focus and Taler Dinosaur is to first negotiate a trade using FIX messages under a generic contract. This contract and trade combine into an obligation to make the Taler payment to obtain the underlying value, or to accept the Taler payment to pass over the title to the value.

The FIX messages negotiate an identity, which must occur in the Taler payment. The FIX messages are digitally signed with a validated public key, and all this serves as an audit trail to mitigate any legal problems. The contract binds the parties to the proper execution of the trade, Taler payment and passing the title of ownership.

Given the preparation and corresponding Taler payment, passing of the title of ownership may be implied, or it may call for explicit action. In general, these actions are obligations as soon as the payment has been accepted. The actions must be executed without delay, which is a reasonable requirement for fully value-backed Taler currency.

The passing of the title of ownership is a part of the receiving side's full reserve claims, so there is a need to get this immediately, which is why it is part of the payment. When a formality gets in the way of passing the title of ownership, then the Taler payment is not part of the ownership of the receiver and must be returned immediately.

A vital problem concerns the theoretic option of counterparty risk due to such things as a bankruptcy. In general, it is forbidden for bankrupt parties to use Taler Bullion and its variants. Furthermore, any payments that lingered to carry over to that state must be considered preferential obligations, to be resolved before anything else can be liquidated.