What exactly is entailed with making currencies open? It turns out, quite a bit more than simply making currency accounting software open source. In order to understand what makes a currency truly open, we may need to let go of some preconceptions about currency design and implementation.
First, what do we mean by “open?” Open refers to a common space that cannot be enclosed by any individual, organization, or government. A common space is owned by all, regardless of nationality, affiliation, employment, or ideology. A common space may refer to something tangible, such as air, or something intangible, such as knowledge. Free speech could be thought of as an "idea commons." In other words, a commons is a space which, by definition, is not enclosed or controlled.
We assert that the “currency commons” refers to the capacity that communities have to agree on how to measure and interact with flows of resources that matter to them. We also assert that the right of groups of people to agree on how to measure what they care about is as inalienable as the right to free speech. However, without intending to, most currency projects end up enclosing this space in some way. What follows is a four part piece on how we can have truly OPEN CURRENCIES. Thanks Eric Harris-Braun, Arthur Brock, and Michael LInton for the solid education in these matters!
PART ONE: TRANSPORT
Let's assume that all currencies are formal structures for gathering / sharing information about flows of resources. What those flows are, how they are measured, and what we do with that information are the rules that define the currency. For example, a twenty dollar bill encapsulates the information that the bearer is entitled to twenty dollars worth of goods or services from any vendor in the United States (presumably because the bearer provided a good or service worth twenty dollars to someone else). The paper note simply transports this information. The same information could be transported by a check or a card reader. The information is what counts; having twenty dollars means something. What it means is, of course, dependent on the rules that make up the USD.
We frequently forget to differentiate between how we transport (or transact in) a currency, and the rules of a currency. For example, there is NO differentiation in the case of the twenty dollar bill. The paper transports information which is generated under the USD rule set. It would be impossible to instead transport another currency generated under different rules on that piece of paper. The transport medium necessarily includes a specific rule set.
Now, consider the bank's funds transfer network. You can’t use it to transfer time-dollars, because US dollars are the only currency allowed in the network. In fact, how the Fed defines who has access to the transport network is synonymous with the definition of the dollar. If you want access to the transport network, you HAVE to agree to their particular set of rules. Therefore, the currency is CLOSED.
Consider how detrimental this is for a second. I could opt out of the banking network, but to do so would mean I couldn't transact. If I want to retain the ability to transact, I have to play by their rules. The banks have made adherence to the USD rules a precondition for making transactions. They have me over a barrel by virtue of their currency’s monopoly of the transport network. I have no choice but to accept those rules if I want to make transactions using their network.
What's strange is that almost all community currency projects to date have done EXACTLY the same thing. Sure, I can find a well-intentioned time-bank run by a co-op or non-profit, but I can't use the time-banking network to transact in any currency other than that network's time-dollar. Sure, I can join a commercial barter network, but I can't use their point-of-sale readers to transact in any currency other than their trade credits. Inadvertently, we seem to have exactly duplicated the closed pattern of the USD.
In these closed community currencies, if I want the ability to make transactions, I MUST use the the currency for which the network was created. I cannot generate my own rules and invite others to play using the same transport network. I would have to invest the resources to build a completely new transport network if I wanted to transact in a new currency, and, for all but the most zealous, doing this is highly cost prohibitive.
OPEN TRANSPORT
In contrast, an OPEN transport network would allow transactions to be made in ANY currency. The rules of the currency would be SEPARATE from the ability to transact. I would be free to stop participating in a given currency if a new and better currency appeared on the transport network (or choose to participate in both). I would no longer be COERCED into adhering to a particular set of rules by virtue of needing a way to transact. I would be free to choose the rules that made sense to me, since access to the transport network is not in question.
I have been an active participant in the currency community now for four years (both as a documentary filmmaker and as a currency practitioner). I have been struck by how deeply the scarcity mentality is embedded in our community despite what we know about money. When I think about the fact that currency practitioners have to invest countless hours in implementing a network for ONE currency, it’s no wonder that they get contentious about what currency design is the best. They are putting their reputation and a whole lot of resources behind ONE idea, so they MUST convince people it works, sometimes even to the detriment of other perfectly viable currency designs. Add this to the fact that ~85% of currencies fail, and you have a pretty bleak picture scarcity-wise. What if we dropped the ideological arguments, and came together to create a truly OPEN TRANSPORT NETWORK where there was room for ALL types of designs? Wouldn’t we all gain? Wouldn’t we transcend the artificial scarcity of transport?
Right now, the most tangible manifestation of an open transport network is the wikiwikimoney project by the Twollars folks. Twitter is the transport network, and wikiwikimoney lets you track transactions in currencies you define. However, you can choose how to structure your currency (within limits) and what it is supposed to be for. Access to the transport network is not dependent on obeying the rules of A particular currency. For a more powerful taste of what’s to come check out THE METACURRENCY PROJECT.
MORE SOON
We also need open data, open rules, and open identity, but those are discussions for another time. Stay tuned!
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4 comments:
I don't think you can assert the broader definition of currencies and then cite a strange statistic saying that 85% of currencies fail.
First, there is no such statistic for the broader definition of currencies. We see successful currencies of that type all around us: bus passes, movie tickets, first place ribbons, trophies, awards, certifications, Olympic medals, college degrees/credits/grades, titles & honorifics, black/brown/green/yellow belts, etc.
Quite simply, the ones that fail are ones that have tried to compete in a highly monopolized space without demonstrating that they meet any needs much differently. Some have been poorly designed or poorly managed and most poorly funded. From any reasonable assessment of the situation, they SHOULD have failed.
Then you take some (bogus) statistic about those kinds of projects and apply it to currencies of all types? Hmmm...
I think that interpretation comes from being caught between worlds. Between the narrower monetary definition of currency and the broader space you've been finding yourself empowered by which also helps clearly illustrate why those projects have failed and were doomed to fail.
Oh... but by the way... I like where you're going with this stuff. It is a new way of thinking we need to get more folks engaged in. :)
Art,
Touche! Michael also called me out on that yesterday, although for a slightly different reason. So, to clarify, there seem to be two issues around the word "fail."
1) What is counted as failure (or success)? On this front, Michael's point was that even if a monetary currency only enables three transactions, it might still be a success if those were transactions that wouldn't have happened otherwise. To me, this raises the question of how much economic activity is enabled vs. how much effort it took to launch the currency. Measuring from this perspective, even some of the more "successful" "complementary currencies" may not be worth the cost. Perhaps this is where "lowering the cost of failure" might actually increase the success rate, because if a currency was very easy to start, then even a few transactions might be worth the effort.
2) What is counted as a currency project? Of course, I advocate for expanding the definition of currency beyond money. So you are very right to call me out on this. The 85% was in reference to what are usually dubbed "complementary currencies." Of course, if you include all the currencies you mentioned, I am sure the number is much lower than 85%. Also, I am sure currencies in this more expanded space would measure their success or failure quite differently than "complementary currencies."
So yes, 85% is a BOGUS statistic. And yes, we should think carefully about what qualifies as a success or failure, no matter what type of currency we are creating.
A true currency circulates as it represents a “unit of account” that has an intrinsic stored value that is accepted in the marketplace. For example take a look at WIR Bank in Switzerland, an excellent example of a complementary currency.
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