To ensure a stable and non-inflationary medium of exchange, MONEY 2.0 participants need to differentiate between two types of payment: Payments for goods and services increase the seller's account limits, while reducing the buyer's money creation limit. Other payments (basically gifts and loans) don't affect the account limits.
Before an incoming payment can take effect, the recipient must specify what type it is. An incorrect categorization on the recipient's end may be challenged by the money sender. Usually, the seller of a product or service will label a received payment correctly (after all, a confirmed sale will raise his account limits), while the sender of a gift or loan will contest a categorization as purchase (as it would unjustly reduce his money creation limit). Frequent disagreements over the type of payment, as well as the disputed amount exceeding a certain percentage of a trader's total transaction volume, will trigger an investigation by the currency administrator (and entail possible sanctions).
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• Reducing the buyer's balance limit serves to solve the so-called "eBay dilemma": As long as both participants benefit from a collective lie, assessing the true nature of a transaction becomes almost impossible. Once all scenarios in which both sides benefit from collusion have been eliminated, the truth is much more likely to emerge.
• Reducing the buyer's balance limit serves to solve the so-called "eBay dilemma": As long as both participants benefit from a collective lie, assessing the true nature of a transaction becomes almost impossible. Once all scenarios in which both sides benefit from collusion have been eliminated, the truth is much more likely to emerge.