Thursday, 2 August 2012


Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money, or money earned by deposited funds.

When money is borrowed, interest is typically paid to the lender as a percentage of the principal, the amount owed to the lender. The percentage of the principal that is paid as a fee over a certain period of time (typically one month or year) is called the interest rate. A bank deposit will earn interest because the bank is paying for the use of the deposited funds. Assets that are sometimes lent with interest include money, shares, consumer goods through hire purchase, major assets such as aircraft, and even entire factories in finance lease arrangements. The interest is calculated upon the value of the assets in the same manner as upon money.

Interest is compensation to the lender, for a) risk of principal loss, called credit risk; and b) forgoing other investments that could have been made with the loaned asset. These forgone investments are known as the opportunity cost. Instead of the lender using the assets directly, they are advanced to the borrower. The borrower then enjoys the benefit of using the assets ahead of the effort required to pay for them, while the lender enjoys the benefit of the fee paid by the borrower for the privilege. In economics, interest is considered the price of credit.

Interest is often compounded, which means that interest is earned on prior interest in addition to the principal. The total amount of debt grows exponentially, and its mathematical study led to the discovery of the number e.

Wednesday, 13 June 2012

Interest Graph

The Interest Graph refers to the specific and varied interests that form one’s personal identity, and the attempt to connect people based on those interests. On an individual scale, this means the different things one person is interested in—be it jogging, celebrity gossip, or animal rights—that make up their likes and dislikes, and what has more meaning to them over someone else. On a broader scale, it’s the way those interests form unspoken relationships with others who share them, and expand to create a network of like-minded people.

Contrary to the Social Graph, which subsists of the network of people you know personally, the Interest Graph consists of the network of people who share interest with you, but who you don’t necessarily know personally. While the Social Graph, which was popularized by Facebook, has been touted by Mark Zuckerberg as making it so that “groups and applications can achieve enormous growth”, others are starting to question its limitations in connecting people in a meaningful way.