Karma is a virtual currency for peer-to-peer systems. Its main advantage is that it is not controlled by any single entity. Its implementation, along with the means for the control of its supply and value, are entirely decentralized.
Karma is designed to thwart the freeriding problem, encountered in many peer-to-peer systems. Malicious participants in peer-to-peer systems often consume resources without contributing their fair share, or otherwise force other peers into subsidizing them. A secure exchange mechanism ensures that nodes cannot counterfeit karma; an anti-inflation/deflation mechanism regulates the karma supply to ensure that prices do not over or under-flow; a reward mechanism makes the system incentive-compatible for participants, and a completely peer-to-peer scheme for tracking karma transfers protects against adversaries that corrupt a significant fraction of the system.