Ricardo - An Executive Summary

Features. Ricardo^TM, by Systemics^TM is a system for effecting payment in a wide range of instruments, including money, financial instruments and gaming units across the Internet

• employs Ricardian Contracts to describe any instrument,

• is real time - payments transact in less than a second.

• reliable - clients and servers provide transactional integrity

• open - client and base-protocol are made available within the WebFunds^TM open source project.

• secure - includes sophisticated governance against insider fraud, the SOX^TM -- Systemics Open Transactions -- protocol for network security, and strong crypto from the Cryptix^TM open source project against external fraud.

• flexible - architectured to support many applications.

Ricardian Contract. In order to do secure contracts on the Internet, Systemics invented the Ricardian Contract^TM. This form allows any contract that represents assets to become the basis for an Internet payments system.

The parties to a Ricardian Contract are the Issuer and the users, being holders of value. The document can be written in normal legal contractual terms, with added features to enable its use within an Internet context.

• It is digitally signed by the Issuer as a master contract.
• That signed contract is hashed to create a unique identifier that all software refers to, thus rendering replacements ineffective.
• The form of the contract includes special symbols within the text to allow programs to parse and understand the meaning of the contract. For example, a dollar contract indicates by these symbols the difference between dollars and cents.
• The client software creates payment instructions within signed requests that refer to the unique identifier, the hash.

By the nature of the contract form, Ricardian Contracts can be used to fully describe instruments such as shares, bonds, unit or mutual funds, loyalty system points, closed and open monetary systems.

Architecture. Ricardo was designed to handle monetary and financial instruments. The Ricardo architecture includes a Ricardo Issuance Server and the open-sourced WebFunds client, which communicate with each other using the SOX protocol.

At the heart of the system is the Ricardian Issuance Server. This server maintains a set of accounts in the Ricardian Contracts described above.

The primary user interface is WebFunds, a program written in Java. This program is open-source which means that different companies and individuals can download the source, make changes and customisations, and distribute new versions (within limits, core changes must be made available back to the open source project).

Value is managed by a co-operative arrangement between the server and an owner of value. Instructions to settle payments from one account to another are created by the WebFunds client and sent over the SOX protocol, and digitally signed receipts are returned that commit both server and client to the transaction.

Related Products. Ricardo is designed to be the foundation of a financial system. Several additional products use Ricardo to participate in that financial system:

• Intertrader^TM, a UK provider of e-payments middleware, have demonstrated support for Ricardo within their payment management product, the Intertrader CashBox^TM

  Intertrader's middleware takes the worry out of managing and choosing a payments infrastructure, by supporting other systems as well, within one environment. By fielding a system that manages the payments agnostically, the merchant or payments facilitator insulates themselves from the risks of technological choices.

• Systemics has built a financial trading infrastructure that utilises Ricardo payments. Using a plugin to the WebFunds program and an Exchange Server capable of effecting financial trades, the Systemics trading architecture provides the fastest settlement in the financial world, with full settlement currently clocking in at about a minute (t+60) our targets will be in the single digits some time soon as we aim to make trading available for realtime support of retail applications. Since 1996, Systemics has run an internal experimental exchange that has traded shares, bonds, currencies and precious metals.

• A new Systemics product is the Pumphouse^TM, a web site that overlays WebFunds with SSL-based access. Now being delivered to our alpha partners, this system extends Ricardo into the Website world, thus leveraging the unique governance features available within WebFunds across the widest possible user base.

As Ricardo is built for flexibility and financial strength, it also performs well for less stringent applications such as loyalty systems ("airmiles"), discriminatory tokens (vouchers), and internal monetary systems such as casinos, company transfer pricing regimes and club money.

More Information. See the Ricardo page at < http://www.systemics.com/docs/ricardo> or see the WebFunds project at http://www.webfunds.org/.

Ricardo, SOX, WebFunds, Pumphouse and Systemics are trademarks of Systemics Inc.
CashBox is a trademark of Intertrader Ltd.
Cryptix is a trademark of The Cryptix Foundation Ltd.