Monday, November 16, 2009

Open POS

On this blog we have spoken much about the design principles that underlie “Open Currencies.” However, there is an aspect of this we haven’t said much about, which I believe has significant implications for on-the-ground currency efforts. So let’s unpack how the principles of Open Currency would apply to the Point-of-Sale (POS).

So what is the primary function of a POS device? A POS device must be able to securely send and receive data to and from a server. Usually this data is in the form of a monetary transaction, and records a customer buying X dollars worth of merchandise from the merchant. It must be noted that the current technological ability of devices to provide this service in a secure manner in such volume is, to say the least, awesome. However, despite my personal awe at what is already possible, I must draw attention to an even more amazing future waiting in the wings.

Right now, these devices require stand alone applications that are capable of talking to one (or a specified group of) server(s). This means that if a start-up currency group wants to get access to the POS, they must develop (or license) and install an application on the device that will talk to your server so transactions in your currency can be recorded.

How we treat the POS is analogous to if Amazon, Facebook, and Netflix all had to develop separate stand alone applications for your computer. Obviously, this approach is incredibly inefficient. Had this been the approach 20 years ago, I am quite sure there wouldn’t have been widespread adoption of the Internet. Widespread adoption of the Internet was enabled by the web, and the web was made possible, in part, by a browser which could talk to ANY server using a common protocol.

What if instead of a stand alone application, we had the equivalent of a browser at the POS? This would mean that ANY currency group that needed access to the POS would be able to do so by simply declaring themselves in the space (like registering a domain). No one’s hands would be on the tap. There would be NO middleman. We heartily support net-neutrality, but incoherently accept the non-neutrality of the POS.

Let’s remember that on this blog we define a currency as being “a formal system that allows a community to perceive and interact with flows.” We have named grades, reputation scores on Ebay, driver’s licenses etc. as included in this expanded definition of currency. Think of the UNBELIEVABLY large variety of currency data that could be gathered at the POS (obviously with the full consent of all participants). Merchants could ask customers if they had received good customer service, allowing them to know more about the performance of employees. An endless variety of loyalty point systems that encouraged various shopping behaviors could be devised and implemented. Customers could track their own carbon footprint. And, of course, monetary currencies that aren’t based on scarcity could finally get the access to the POS they need. The possibilities are literally endless.

For some very strange reason, we haven’t yet approached the POS like this. Having tried to pitch this idea to currency groups of various sorts, here are what I think the mental and emotional barriers to this concept might be.

  1. Scope. Most currency projects have fairly narrowly defined mission statements. While a tightly defined mission can be a good thing to keep focus in a group, in this case it seems to hinder perception of the larger ecosystem. Sometimes it’s good to think outside the mission.
  2. Competitiveness. Some groups don’t think that spending resources on an application that may be helpful to their perceived competitors is a good idea. While few seem actively focused on keeping their competitors down, many would be loathed to waste their own scare resources in this manner.
  3. Territorialism. POS providers make most of their profit by being the middlemen. Embracing an Open POS would mean that a large part of their business model would simply be irrelevant. However, I would argue that this evolution is inevitable. The sooner smart merchant services companies embrace it, the sooner they can position themselves as leaders of the next paradigm.
  4. Fear of the cyber boogie-man. For some reason, upon hearing the word OPEN, some people conjure images of cyber villains lurking in the shadows waiting to pounce on unsuspecting grandmothers. Let’s remember that we do LOTS of transactions over the web, and the web is an OPEN network. In fact, most security breaches happen because of human error. People use their own birthdays as passwords for their bank accounts, yet weirdly think the technology itself is what is making us vulnerable. Of course, security must be considered, but there is nothing inherently less secure about an open network.
  5. Fear of too many choices. Believe or not, I actually heard this argument recently at a meeting with the City of Portland where we were discussing the possibility of a municipally funded Open POS. A consulting group that was at the table claimed that unless we restricted the number of currency groups with access to the POS, merchants and customers alike would be overwhelmed with choice. Clearly, these people don’t understand the last 20 years of cultural evolution. And, more importantly, this mindset is completely antithetical to both democracy and the free market. I suppose there are those that would have claimed 25 years ago that an open hypertext network would be quickly filled with porn, false claims, and criminality. While they would have been right, they would have completely missed the point as well as the benefit of the web. Taking personal responsibility for your web experience is a learned skill (one that some still struggle with), and the same will be true of any Open Currency network.

Each of these hang-ups are, in their own way, remnants of a dying economy. At their root, all of these fears lead back to the fear of scarcity. New business models that leverage the power of networks bypass the threat of scarcity by finding innovative ways to create value through autonomous collaboration. Again, think about what makes open source work so well.

One of the key advantages for any currency group taking this approach in concert with other groups is the ability to cross-market. Right now, each group has to hawk its own proprietary POS technology. If instead these groups were selling an OPEN POS device, they would be helping each other get access rather than forcing businesses to choose a POS technology before they had any experience with the currency. Obviously, this would make marketing the POS technology MUCH easier. Some people got online to buy books from Amazon. Some people got online to rent movies from Netflix. But once they were online, it was pretty easy to find and use other services. By embracing an OPEN POS, other groups could join this effort by simply plugging their currency in. No barriers. Only autonomous co-innovation.

So what can we do now? Let’s start by declaring our intent. I propose that those who represent currency projects that might want to adopt an Open POS approach comment on this blog with your intent. I certainly don't pretend that there is a functioning technology ready to use right now, and the challenges we will face in building this kind of network will be significant. But, it would definitely help build momentum for each of us to see that there were other currency groups ready to jump in. Let’s build a truly functional ecosystem at the POS where we can support each other through autonomous collaboration rather than continue to fight over non-existent territory.


Nitin said...

Right on, Alan.

We need a system where anyone anywhere can do a POS transaction and trade currencies

I agree that an open system is inevitable. While a lot can be provided by creating apps from private POS providers(example,, we shouldn't beat around the bush, and get to the point. Once this happens, and especially when people can do more ubiquitous POS LETS-type transactions, this will absolutely explode.

We need to approach this from all angles - design and development, funding, and marketing

I see that you and some groups approached the City of Portland about funding... What kind of funding is needed? What kind of time and effort is needed for the people who are going to do the majority of the work for the basic development? How did the group plan on structuring the effort and delegating the resources?

Perhaps we should start by creating an open, central site for the project. It can have wiki pages for groups and partners, and forums for collaboration.
Perhaps we can also have some sort of log of the activity (time, points, etc) that can serve as a model of the project, for the project itself, that we could maybe even match it with funding :)

Do you think that your site ( will suffice?

As we develop the idea, we can simultaneously approach people that can help with development, funding, and buying in to the idea and using it. I'm sure that there are countless people who would be able and willing to help with all aspects of the project. All sorts of NGOs and nonprofits, programmers, and currency groups and advocates.

We should just start with what you already have, and just discuss it centrally.

I would love to do all I can to help form this and create connections. Currently I am a part of the communications and collaboration efforts of the recently formed United States Fab Lab Network (USFLN). This is a decentralized group around micro/personal fabrication, for which we are creating a similar kind of site for introducing and promoting the concept, having member pages, and a collaboration space.

... what do you think?

Openworld said...


I've enjoyed reading your blog - and would appreciate feedback on the personal currency ideas that Douglas Rushkoff introduced in his recent "Radical Abundance" talk.

Below are early stage ideas on how new mobile apps or mashups could support exchanges of (time-based) personal currencies.

In short, growth of Augmented Reality functions on cameraphones will enable individuals to size up opportunities for exchange of personal currencies with interested parties. Taking a photo with an AR-enabled phone can trigger essentially immediate popups of related information about the person in focus.

Individuals can upload personal profiles that would be visible (if desired) to AR-enabled cell phones. These public or semi-public profiles can include a listing of their wants - and of personal offers to make specific kinds of time/skill donations or trades.

When a conversation with another person led to a decision to explore a transaction of time-based services, an AR app or mashup for personal currency exchange would make the related profile information from both parties mutually visible.

Each popup profile could include links to a trusted third party site where one can review or drill into summaries of prior work done and explore feedback ratings earned from past services.

With this information, the parties might agree an exchange rate (e.g. Doug Rushkoff’s 1 hour = Mark’s 3.5 hours) and commit to give one another personal time donation vouchers for the agreed number of hours and types of service.

The time-based vouchers could be converted into services by the agreeing parties, or (upon mutual consent before the voucher was given) by transfers to third parties for projects fitting criteria set out by the issuer of the voucher on his or her AR-linked profile site.

2. If the parties disagreed over the “exchange rate” for their respective time donation offers, the AR personal currencies app would offer a potential solution. It would give the parties the option to hold a real-time auction for a given number of pledged time donation vouchers hours on eBay or on a dedicated spot auction site.

This spot auction – if successful – would set the market value of the individual’s time vouchers in terms of preferred currencies that other party was seeking.

I’m sure that there are a number of issues (secure data sharing, online dispute resolution, digital notarization, etc) that would have to be rigorously developed in an operational AR-enabled personal currency app. But it seems likely that many of the components are within reach to create a mashup of a working prototype.

Look forward to your ideas on how we might proceed on developing a spec for such a prototype - and on allies who may be interested in seeing it move ahead.


Mark Frazier