What should Peer-to-Peer Money be? Thinking about debt outside the twin intellectual straitjackets of state and market opens up exciting possibilities. For instance, we can ask: in a society in which that foundation of violence had finally been yanked away, what exactly would free men and women owe each other? What sort of promises and commitments should they make to each other? This post is more about principles than detail; though I intend to follow up with more information about Pebble, a project I am collaborating on to create money around trust, soon. Money matters First of all, a detour. However, I want to look at a different question, which I think is fundamental to the future of money. Given this, I can return to peer-to-peer money. 1. Peer-to-peer money should be radically decentralised. It follows that, in an ideal scenario for peer-to-peer money, such decisions should be pushed out to the edges, to take advantage of local intelligence. 2. 3. 4. Why build it?
A Broader Definition of Currency « webisteme Money and currency are considered synonymous, but a broader definition of currency gives an interesting perspective on the current financial crisis, as well as the next wave of currency innovation. The Difference between Money and Currency In a recent panel discussion called “Monetizing Intangible Capital” at the Future of Money conference (Feb 2011), Art Brock drew an interesting distinction between money and currency which I had not heard before. Brock suggested that a currency could be regarded as any symbolic representation of value, issued according to a set of rules: I use the word currency distinct from money. Normally in every day speech we collapse the two. According to this view of currency, money is just one type of currency which is fungible, enabling it to serve as a medium of exchange and a store of value. Brock suggests that one of the functions of a currency, in this broader sense, is to “change the way value flows.” Why do we need currencies? When currencies go wrong
#PunkMoney: How to Print Money on Twitter NB: For a more up to date post on #PunkMoney, go here. In the Middle Ages, producers created their own money as a promise to deliver goods and services in the future, and spent it with people who trusted them. The promisee, who became the bearer of a new credit note, could transfer it to a third party as payment, by signing it on the back. If a note ever came back to the issuer, it would be redeemed for whatever it was a promise for. Personal currencies were effective forms of trust-based local money when bullion was in short supply. Today, as we face another shortage of sovereign money, why not revive the old practice with new technology? So here’s a proposal on how to literally print money with Twitter, called #PunkMoney. To make #PunkMoney work best, I’ve put together a set of minimal rules for money issuance, transfer and redemption. My suggestion is to make promises you feel you can actually keep, as this makes it all much more fun for everyone else. Print money Transfer money
The Future of Money is Abundance « webisteme We now enjoy an abundance of information goods unparalleled in history, thanks to the negligible marginal cost of distribution allowed by the internet. This has in turn disrupted old markets for such goods, and spurred exciting business model innovations. Forward-thinking companies are now working out ways to share value for free, and to leverage the resulting gains in attention and reputation to make money in the marketplace. While businesses react to a logic of abundant production, and work out how to adapt their models, there is another area which has received less attention: abundance-based currencies. By ‘abundance’ in this context, we don’t mean ‘free’ in the sense of ‘free beer,’ but rather ‘free speech.’ Abundance-based money Abundance-based money has existed for a long time. In the late middle ages in Europe, local forms of currency were based on deposits of grain. There is quite a profound lesson in both of these monetary systems. Demonetisation Abundance-based currencies
GiftPunk: A Twitter Tool for Giftcasting Recently I’ve been thinking about communities, and how to build them. Communities are in some sense defined by the flow of gifts, rather than market-based transactions. Perhaps the kinds of behaviour encouraged by the market is one of the reasons communities have been in decline in recent history. If gifts define community, it might be because they encourage feelings of generosity and gratitude, and hence bonds of kinship. After experimenting with #PunkMoney, a promise currency based on Twitter, I’ve been exploring how Twitter can be adapted and repurposed to do new, unexpected things. How it works A community sets up a central account, for example @OccupyLondonGifts. For example, if Alice wanted to offer legal advice, she could tweet: @OccupyLondonGifts I offer an hour of legal advice. – Alice GiftPunk can find Alice’s tweet, interpret it and tweet through the community account: [Offer] @Alice offers one hour of legal advice – @OccupyLondonGifts – Bob Gratitude currency – @Sally Try it out
The Economics of Abundant Production « webisteme Before the web, the business model for producing and distributing informational goods, such as music, books, films and journalism, was much more straightforward. Such models relied on the coincidence that a physical medium was necessary in order to share the information good in question. Written journalism could only be transmitted in print, for example. With the rise of the internet, these dynamics have begun to change. While this is a great opportunity for an explosion in free content, it also raises questions about how people who contribute to the information goods commons, for free, can earn a living. The paradox of the information producer The paradox of a person who produces information goods and shares them for free, is that their activity is enabled by participation in an economy based on scarcity and market transactions. However, the paradox of the information producer today often goes further than dependence on a market mechanism. Solving the paradox Social capital
The Special Logic of Gift Economies The gift is inherently unquantifiable: to count its worth too closely is to destroy its status as a gift. This might explain why it will never be possible to scale a gift economy beyond small social networks, even with the help of reputation measurement technology. Goods and services haven’t always flowed through market exchanges, and neither do they entirely today. Tribal societies most commonly exchanged value in the form of gifts. Such gifts usually carried obligations to accept and to reciprocate, either directly or indirectly, with the group. Today, the market has replaced gift flows as the predominant means of resource allocation in society, but gift economies still exist in parts of the economy where the market cannot enter. Underlying such patterns of exchange, an informal quid pro quo exists. Abundance and empathy Gift economies are indeed personal, and offer benefits of relationship and community which impersonal, market-based transactions do not. Measuring reputation Read More:
Rising Income Inequality & Shifting Identities – The Specialist & The Omnivore *Please note that this is not a political commentary. I will leave the political punditry to the people who think politicians are actually capable of accomplishing something. I have recently come across a number of debates about income inequality so I am going to try to contsruct some context around this issue. A recent article from The Economist notes that income distributions have become more unequal in the large majority of developed countries: American society is more unequal than those in most other OECD countries, and growth in inequality there has been relatively large. Reports such as this provide easy fodder with which to demonize your favorite economic villian, but before we jump to conclusions it will prove worthwhile to pause and ask a few questions: Why Do We Care About Income Inequality? Income is a proxy for well being. The Costs and Benefits of Specialization Benefits The most basic formula for creating monetizable value is specialization. Costs The Result Shifting Identities
Matslats - Community currency engineer | "Blessed is he who has found his work. Let him ask no other blessing" - Thomas Carlisle webisteme This is my second post on defining a trust metric for Ripple, or in fact any peer-to-peer credit network which relies solely on trust. In my last post, I looked at a simple approach based on measuring the average ratio of credits and debts for a user. While this wasn’t a bad start to thinking about the problem of trust in general, it suffered from being too simple (I’ll explain why.) First, let’s revisit the reasons why a trust metric is so critical for any peer-based credit network like Ripple to scale. Background Ripple is a system to create money out of credit relationships between peers, rather than between individuals and banking institutions, or the state. The critical difference between Ripple and more traditional types of mutual credit circles is the reliance on pairwise relationships between nodes, rather than relationships between nodes and a centralised book-keeper. This sets the context for why Ripple needs a trust metric. Trust as Credit Ratio Perspectival Trust An outline