This post is an introductory overview of the core graph algorithm behind Cycles Protocol.

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The network of payment obligations amongst firms is inherently interconnected. And, like all systems, the very structure of the system itself often greatly determines the patterns of the parts. These patterns create complex overlapping feedback loops, so it’s hard to map the symptoms of a structure to a single causal factor that created it. As a result, mapping the interconnections of the patterns can be more challenging than just identifying parts, leaving many systems as resistant to analysis as they are to change.

Money is anything that enables economic relationships. It might surprise you to think of an invoice as a form of money, but actually almost all our money represents a debt or obligation between two parties. At its core, credit creates a possibility for value to be exchanged now for future, often greater value to account for the passage of time. Credit allows us to shift time and to delay settlement to align with the natural distance between the creation of value in the supply chain and a purchase by an end consumer. Credit creation also implies mutual benefit, for our reciprocal exchanges should enable us to serve all our needs by focusing on a particular business niche and trading to fulfill our other needs.