Title is a pun on "Modern Money Mechanics", which describes the fraudulent creation of the money supply (by private banks) as a debt that cannot be paid off.

Please save this and the Agora page for bad times (depression, unemployment, credit bubble crash, war or deflation) and show it to your community's computer technician so trade can continue when the bankster's money supply shrinks or dwells.

To transfer to p2,p1 signes a transfer document like:
----
recipient: p2
currency type: fishermanX
transfer value: 5
coin1: 4_1234_31
coin2: 4_1357_22
comment: thanks for all the fish
---- signed by s1

Where s1 is the secret pair of p1.p1 has two coins, with denomination 4. But p1 wants to transfer 5 units, so he will get back some change (3 units) from Titus (the title server). 1234 and 1357 are the serialnumbers for the coins (these allow audit of the total issued amount). The issuer advertises the valid range. Any coin with serialnumber outside the valid range for the given currency and denomination is simply invalid, exactly like a $17 federal reserve note.
31 and 22 is the sequencenumber, 1 right when the coin is issued, and incremented after each transfer.
4_1234_31 becomes 4_1234_32 (same coin, just new owner). It's that simple.

p1 has to attach the proof that he owns 4_1234_31 and 4_1357_22 (these are signed by Titus during an earlier transfer). This way Titus does not need to store history of each coin. Titus only need to store the actual sequence number of each coin. And, of course, Titus must be able to verify his own signature.

To summarize to the whole situation before and after the transaction:

BEFORE:

p1 owns: (total value 8)
4_1234_31
4_1357_22

p2 owns: (total value 0)

Titus owns: (total value 4)
2_5730_43
1_7896_234
1_0013_604

AFTER:

p1 owns: (total value 3)
2_5730_44
1_0013_605

p2 owns: (total value 5)
4_1234_32
1_7896_235

Titus owns: (total value 4)
4_1357_23
----
Titus is the title server, empowered by the currency issuer to sign coins over to the new owner and track sequence numbers, to prevent doublespending. Titus has a small pool so it can manage change during transfers.
As you see, the 4_1234_31 was transferred to p2 (as 4_1234_32, since sequence number incremented).
4_1357_22 went to Titus, but Titus sent 1 to p2 and 3 back to p1 as "change".

Since keys are pseudonymous, public keys don't mean much to Titus.
Anyone can create pseudonym keypairs easily. It's like a modern, do-it-yourself Swiss bank account.

The keys will be allowed to be compound, in a flexible way. Like authorization rule="2 keys from a keyring of 3 is needed to authorize a transaction". This way secure and reliable purse can be implemented using 3 not fully trusted or not completely reliable parties (useful when physically protected purse server is not feasible, so JAVA applet is used, connecting to semi-trusted providers).

• The coin is a contractual obligation.
• Normally non-inflationary money: redeem in goods / services of the issuer.
• But the contract can guarantee it to be redeemable in EUR, GBP, whatever (to make transition easy for people used to fraud-money).
• It can be a combination, of course.
• It can specify yield curve: value(time). Different yield can be specified if redeemed in goods/services of the issuer than if redeemed in EUR.
• No redemption cost if redeemed in goods/services of the issuer, but small cost if redeemed in EUR (because of banking cost).
• Contract can specify transfer cost, 1..1000 ppm (as a comparison, debit card payments cost 25000 ppm and paypal costs 40000ppm or 70000 ppm if exchange is involved). Transfer cost is considered at redemption time: the sequence number is considered with a linear (non-exponential) decay. Transfer cost = 1 ppm recommended. It is not ment as a revenue (for the issuer), but against DOS attacks. Perhaps 10..100ppm is reasonable for very small denominations (which is more affordable for a DOS attack).

The currency issue, transfer and public audit is simple.
Because most currencies will be accepted by a limited number of parties (mostly the business partners of the issuers, some wholesales and speculators), valued at a limited number of markets, the interoperation between markets will be the key of global convertibility.
This is not simple, but ripple tries to solve a more complex problem (with some success).