When you choose to trust someone, it means you are willing to accept their currency as valid. eg. “I trust you, therefore I accept your tokens” or “You trust me, therefore I can send you my tokens”. If someone doesn’t trust you in the Circles system, they may not be able to accept your Circles tokens. If they are able to accept your tokens, the transfer happens through the “transitive trust” connection. This is another trust path, where a person you trust can transfer tokens to another person they trust, who can transfer the tokens to their trusted connection, etc.
When you trust someone, they can issue payments with Circles to people in your trust network, without them directly trusting those people. This is called “transitive trust'' and allows the Circles network to grow more easily.
Think about it as a nervous system where neurons that fire together, wire together.
Example: The person might not trust you, but you happen to own someone else's tokens along with your own. You can still pay that person with this person’s token.
A wants to send B 10 tokens
B does not trust A but B trusts C
A owns 10 of C’s tokens and can therefore send these 10 tokens (originally belonging to C) to B
You should use your trust in the Circles system cautiously. It doesn’t work like social media, where you might accept friend requests from people you don’t know very well. That kind of behavior could lead to you giving your Circles tokens (CRC) to fake accounts, which, over time, could lead to the loss of your basic income’s value. As well as to the loss of the Circles tokens’ value held by other trusted members in your network.
Money is a promise.
If you trust random people or people who create fake accounts, you might quickly end up in a situation where the real people, whose connection means real economic exchange for you, will revoke their trust in you in order to protect the value of their own “promises” they made to other people.
Although the Circles garden interface currently appears as a singular currency, you will hold multiple different CRC tokens once you begin trusting others. You are not necessarily only sending your own tokens to someone when you send Circles. You are sending a combination of your tokens and other individuals’ tokens that you got from previous transactions through a trusted line. The system on the blockchain follows and calculates the value of your tokens, and if you have too many tokens from fake accounts, their value will drop and will stay in your Wallet as a useless burden.
Read the Circles whitepaper to read more about transitive transactions.