New Currency Frontiers

Future trajectory for our species?

2011-08-29T11:04:00.000-07:00

I just contributed to the Human Project on Kickstarter, but I'd also like to open an inquiry here about the direction of our species that doesn't sound like it's included in their plans.

It has to do with the rapid evolution we are undergoing which is creating a capacity shift for humanity that changes all the rules we currently take for granted in our industrial age economy and completes our shift into completely different information age dynamics.

We have an anthropocentric notion of intelligence. Consider, for a moment, the cells in our body. They communicate, collaborate, share scarce resources, work together to build, maintain and manage extremely complex systems, and each one carries a copy of the agreements (DNA) that they use to cooperate. Cells do all those things better than we do, yet we don't recognize that as intelligence.

But what would happen if humanity had a breakthrough in our capacities to do these kinds things together because of the advent of new kinds of "Social DNA?" Social DNA which enables rapid self-organization, organizational adaptation, resource allocation, communication, decision-making and new patterns of collective governance...

What if these breakthroughs freed us from the inefficiencies of bureaucracy, the inequities of centralized financial instruments and computing architectures, and the ineffectiveness of representational hierarchies?

What would the "Human Project" look like then?

This is actually happening. And it's a game changer. We're building it now.

What kind of futures do you see possible with this and other new capacities?

The Deepest Importance of Currencies

2011-07-21T10:21:00.000-07:00

The reason I blog is because there are not many people writing about the topic I'd most like to engage people in. Specifically, it is about currencies as social DNA.

You see, corporations, institutions, governments, and nations are in fact living organisms. This is not a lofty metaphor, but literal truth.

They have a survival instinct to self-perpetuate, they breed new corporations and institutions, and even as the cells within them are replaced, their fundamental pattern continues. And we are their cells.

We fail to see this because of our deep assumptions about organisms as limited to bodies with single physical boundaries. Even though we donate blood, graft and clone apple trees, and have discovered huge aspen groves are a single organism, our assumption about what an organism looks like hasn't changed much. This has us fail to see the new organisms we build and are part of, making it impossible to be responsible for them whether a corporation or an ecosystem.

Instead, we act like changing the mind of their cells (people) will solve the world's problems, but the significant problems stem from the systemic pattern of these social institutions which persist at a layer of social encoding quite distinct from the beliefs and behavior of individuals.

Think about it... It is corporations that are wage-enslaving people in sweat shops, pillaging natural resources, spilling oil into oceans, marketing false needs, etc. If one of these corporations happens to get an enlightened CEO who wants to do things nicer, but won't plunder profit fast enough, then the board and shareholders will replace him with one who will.

Until we learn to rewrite the DNA of these social organisms, we truly can’t solve any of the big problems. And currencies are the key to doing this. They are the formal encoding of currents at the social level. And it is currents/flows that make a living system alive. This is true whether it is a biological organism or social organism.

Learning the power of currencies enables us to re-encode social DNA, rewire social nervous systems, enhance the perceptual systems and upgrade the collective intelligence of our social organisms. Failing to do these things is a fundamental failure to deal with problems at the level at which they actually exist.

The failure of change agents to re-encode social systems (especially ones with as much influence on everything as money has), is what keeps us on this intolerable trajectory of destruction. So far, the biological equivalent to our most "successful" social organism pattern is cancer. Corporations are structured as a cancer. They use all their resources to grow their own resources even at the expense of their host community or ecosystem.

If we don't want to be cancers on the face of the planet, we have to get much better at encoding social organisms. We need to spawn a huge diversity of new kinds of social organisms with new DNA and learn how to truly co-create collectively. In this domain, our own cells have proven to be much more intelligent than we are. They communicate, adapt to unforeseeable conditions, coordinate collective action, carry blueprints for the whole pattern, and share scarce resources so much better than we do that it frankly makes homo-sapiens look like brain-dead idiots.

However, this kind of intelligence isn't a function of IQ, but rather of having or inventing an appropriate language / expressive capacity / channel for this kind of coordination to occur. Guess what I say that language is? What is the medium that we use for formalizing these very of collective capacities?

Currencies of course.

The Central Covenants of Successful Economies

2011-04-03T07:20:00.000-07:00

Our commercial economy is headed for destruction. There are many contributing factors, but in the end it all boils down to the fact that we’ve broken the core covenants, contracts or agreements of successful economies. These rules exist for a reason and you can no more avoid them than you can the principles of mathematics or the laws of physics.

The commercial economy is completely dependent upon the two layers of underlying economies that it is built on. First, there is the social economy inside of which we raise our children, have real relationships and take care of each other. For example, we don’t pay parents to make babies, teach language, potty-train, or devote a couple decades of care and support. Parents “manufacture” the entire labor force for the market economy. They provide talented employees in a much more real way than head-hunting firms, yet earn no commissions for their years of work.

Second, the free-of-charge social economy also relies on its underlying gift economy of nature to provide drinkable water, fresh air, hillsides of timber for building homes, fields of fertile soil for growing food, herds of animals, and ample sunshine without which we could not exist. Nature manufactures our entire food supply and ecosystem – every carbon-sugar our cells require for sustenance – without receiving a penny or so much as a single share of equity in a corporation.

In case you doubt that these are in fact economies, just recall for a moment what an economy is defined as: a system of production, distribution and consumption. There is no question that nature is producing, distributing and consuming energy, organic compounds, biomass, plants, animals, rain and sunshine. Nor that families, friends and society are producing, distributing and consuming language, stories, knowledge, skills and culture.

Now that we recognize these are economies, let’s also note just how successful they are. Despite the setbacks of ice ages, meteor strikes and natural disasters, earth’s “savings account” of biological resources has grown in mass, diversity and genetic abilities for billions of years. Also, in spite of predators, wars, plagues and unsanitary conditions, human societies have grown in population, skills, and knowledge for at least hundreds of thousands of years. The Dow Jones could only dream of such success.

There is a very specific wealth-building pattern at the heart of both of these economic systems that is key to their success. Think of it as the ground wire that allows the electricity to flow through the circuits of the living systems which comprise our planet and society. Value fundamentally belongs to the whole system, not to the parts. Wealth is built and held in the commons.

Rules of the Commons

Any limited resource you take is yours only temporarily and must be returned in full when you’re done with it.
Use what you take to grow the value producing capacity of the commons.

These may just sound like nice ideas, but I assure you, they are neither idealistic nor merely theoretical. Organisms and species ignore them at their own peril. Those that break these covenants deplete their environment and progressively erode their chances of survival, eventually causing their own extinction (or near extinction). However, every species and individual that follows those rules enriches their environment and increases their chances of survival.

Let’s take a look at these principles in action in an economy you’re actually very familiar with – your body. Remember, an economy is a system of production, distribution and consumption. Your body takes the nutrients and sugars in food, distributes them to cells, produces other cells, enzymes, hormones, minerals, amino acids, bones and tissue which in turn keep the whole process going. All resources consumed by your body are returned to the larger ecosystem. And while your body is running, all resources that your organs or cells use are theirs only temporarily and must be shared with the rest of the body.

Do you know what cells that stop sharing their resources with the rest of the body are called?

Cancer.

That’s right. When cells stop sharing their resources and devote those resources instead to their own growth, they are considered cancerous. And unless that pattern of cancerous growth is interrupted, they grow consuming more and more resources until they kill their host.

This is what it looks like to break the rules of the commons.

When you think about that kind of cancerous behavior, do you see any connections to how companies are organized to behave? What do you imagine are the consequences of allowing this pattern of behavior continue?

How long until cancerous corporations, people and countries who keep breaking the rules of healthy economies strip the planet of resources and poison our ecosystems to levels that can no longer sustain human life?

When do we activate our social immune system to reject unhealthy patterns and anybody operating in those ways?

The Deep Wisdom of Worth

These commonwealth economies contain deep wisdom. We have knowledge of the truth of them in every fiber of our being and literally in every cell of our body. Yet in today’s culture and economy we ignore this truth. We diminish it with marginalizing phrases like “Protestant Work Ethic” and deny the desire to provide as much value as we can.

But hard work feels good. It feels good to build something, to make something great happen, or to participate in the flow of energy of physical labor. Accomplishment is satisfying. Yet in the face of this emotional and physical response, we elevate an ideal of being wealthy and just being able to “make your money work for you” which actually means having everyone else do the real work for your financial gaim.

Maybe it is not religious acculturation but rather a biological urge – not a Protestant Work Ethic, but a Biological Worth Ethic. The bees, trees, ants and plants just keep working. They keep doing their part to keep the larger system going. I think they know that their biological "worth" depends on it. If they don’t keep the ecosystem going, there won’t be an ecosystem to feed them. Every creature, every cell, every living system is working to keep these agreements and build greater shared value, except us. We’ve built an entire economy on extracting value for our personal gain.

In our society, the wealthiest people are the ones who "just have money work for them." Typically it isn’t even their money; it’s ours – our savings, investments and retirement funds. They gamble with other people’s money instead of creating actual new value and then we bail them out with more of our tax money when they lose their bets. Sadly "too big to fail" really means "too greedy to follow the rules."

Ironically, we think we’re the most intelligent life-form on the planet.

Gift Transactions vs. Commercial Transactions

2011-02-21T18:00:00.000-08:00

A lot of people seem to struggle with the concept of gift economies. Over the recent few hundred years, we have gotten so acculturated to market economies that we tend to project tit-for-tat exchange onto every interaction and into every motivation. However, I believe this is erroneous. My goal in this blog entry is to remind us of our deep familiarity with gift economies and to provide a clear contrast between them and market economies.

Gift Economies are Alive and Well

When I use the phrase “gift economy,” many people assume I must be hearkening back to some ancient outdated matriarchal culture, a utopian scheme, or a science fiction story; because clearly, that’s not how the real world works. The “real world” is a dog-eat-dog competition for survival where there’s no such thing as a free lunch!

Clearly, such a person has a rather limited grasp on the world we actually live in -- because in THIS WORLD gift economies are alive and well, and we are utterly dependent on them for our survival. In fact, our mighty commercial economy is actually a very small layer which could not function without the gift economies it is built on top of.

Let’s illustrate this through a few examples. What does the sun charge for sunlight? What does nature charge for bringing rainfall to crops, or delivering drinking water through rivers, or for growing our food? What do bees charge for their pollination services? What do parents charge for potty-training their children, or teaching them to speak a language, to read or write, or be moral and social beings?

How well would our commercial economy function without employees who are potty-trained language-users? How far would our markets expand without the hillsides of lumber, oceans of fish, deposits of coal and oil, fertile soil for crops, and forests producing oxygen for us to breathe? Nature gives all of this free of charge -- a gift.

However, gift economies are not limited to nature. For as long as humans have existed on this planet, so have human gift economies. Now, we think of them as families and tribes and forget that they have their own kind of economies. Yet we would not survive to our second day on this planet without these gift economies. What does a mother charge for her milk? What interest rate do parents charge for the food, housing and clothes that they provide to their children? What do our friends charge for companionship and assistance?

If someone believes the only realistic view of the world is one where nothing is free, then they are clearly ungrateful for all they freely receive.

However, gift economies do not function without expectations placed on their participants. In the next post in this series, I’ll explore two very different kinds of gift economies and the contracts or covenants they function within. But in this post, I want to explore the differences in the transactions.

Commercial Transactions vs. Gift Transactions

We give and trade all the time, yet we’re not used to thinking about how giving and trading actually work and all of the actual details of what makes them different.

Suppose I’m building more raised-bed frames for my garden and I realize I need another handful of nails to finish the project. I’ve got some options. I can get in my car and drive the Mega-Hardware-Depot chain to buy them, or I can walk across the street and ask my neighbor Bryan for nails.

First let’s look at the normal market transaction. Anyone with a few bucks in their pocket can walk into any old hardware store and buy a box of nails. You don’t have to know the owner, the cashier or anyone in particular. Once you’ve bought the nails, you still probably aren’t friends with the owner, cashier or anyone in particular (if you are, it was because of other freely-given social interactions, not the simple act of making a purchase). You selected a box of nails for which you were willing to pay the price marked on the box. You paid the marked price (or got them to agree to a new one via coupons or other negotiation). And when you left, the transaction was complete with no particular reason to interact with the people at the hardware store again.

Now let’s look at the gift transaction. If I’m not a good neighbor Bryan is not likely to do much to help me. However, because I am a good neighbor, he will go out of his way to find nails for me. We don’t need to agree on a price. In fact he’d be offended if I tried to hand him a few bucks, or brought him a handful of nails to repay him the following week. The transaction is purposely imbalanced -- something given for nothing in return. Yet it’s also a bit open-ended. It’s an investment in our ongoing relationship, in our neighborhood, and in a community where people do these kinds of things for each other.

So what do these examples show us?

Commercial Transactions / Trades:

Require no previous relationship
Create no substantive relationship
Require agreement about the value of what is being traded
Require a balanced exchange of approximately equal value
Are complete or closed when the equal value has been exchanged

Gift Transactions:

Emerge from relatedness, kinship or a shared sense of community
Strengthen the relationship, kinship or shared community context
Establish no agreement about the value of what is given
Are imbalanced
Are open-ended – they leave something hanging

Consider the differences in these ways of transacting or interacting with each other and the cultural effects they have over time on a community.

In my last blog post, I pointed out how money (or commercial transactions) doesn’t build relationship. The beauty of gift transactions is that they do build relationship.

So think about the cumulative effect of these interactions with the people around you -- a few interactions a day, every day, every week, every month, and every year. In just a few hundred years of more commercial transactions, we’ve almost convinced ourselves that the gift economies of the previous millions of years are a fiction. Even though we still depend on them every day!

And think about what kind of difference it would make to tip the scale back toward more gift transactions. How much more connected would we feel? How much stronger would our communities be? How much time and money would we save?

In the next post in this series, I want to go deeper into the background fabric of these two types of economies. Specifically, what are the contracts, agreements, covenants by with they operate.

Money Can't Buy You Love...or Trust

2011-01-21T17:53:00.000-08:00

Money Can't Buy You Love...or Trust.

Let's lay this out on the table as simply and clearly as possible (continuing Alan's theme about Quid Pro Quo).

1. You hand me $1,200.
2. I hand you a beautiful bicycle.

That's not how I interact with my closest family and friends. We share things freely. You don't need to pay me for meals or for using my car, my camper or my bike. We don't really keep track of things like who bought the movie tickets or paid more than their share at the restaurant.

Of course, we don't have to keep track of those things because we trust each other. We know that we all chip in to take care of each other. This is the way clans and tribes have worked for millions of years of human history. We're deeply steeped in this type of sharing and it comes completely naturally to us.

However, it hasn't scaled well.

As soon as you pass a certain threshold (probably around Dunbar's number of about 150 in your small village) it becomes very difficult to ensure that everyone is a responsible player and upholding their part of the social contract of mutual responsibility.

Mediating Risk

I live in a wee hamlet called Denver, Colorado with a mere 2.5 million people in the Metro area. It's very difficult to know if this fellow, Roger, responding to my Craigslist ad is as generous as I am. So I take the tried and true path of mediating my risk in giving Roger this bicycle by demanding that he hand me $1,200 of symbolic value because I believe others who don't trust me will accept those symbols (dollars) for the stuff of value that they offer.

Through a strange sleight-of-hand, I have transformed my risk from a single individual, to a shared agreement which honors these symbolic units to exchange value. I don't have to know or trust Roger, instead I'm gambling that most people in my community will honor dollars for a quid pro quo exchange.

Essentially, money is mediating my risk in two primary ways:

I don't release any value without receiving an offsetting symbolic value
The value-stability of those money-symbols is distributed across a large group of people

In other words, money lets us transact value even though we don't trust each other.

Guess what... transacting through money doesn't build trust either. By it's very nature, every transaction is based on distrust. It's really quite simple, heaping up piles of distrust does not create trust.

What? What about my brand? My demonstrated reliability? The proven quality of my product?

Exactly... If you bought a car and are happy with it's reliability, that trust was earned by the direct experience of the performance of the vehicle over time. It has nothing to do with the transaction in dollars which simply showed you got to drive away with the car you bought. Trust is earned through building relationship, demonstrating performance and showing goodwill, not by exchanging dollars.

Creating a World of Trust

Money does not require deeper relationship nor build deeper relationship. Commercial economies grew to large scale by using money, but that just allows more of us to interact with each other in the absence of trust. What if we want our interactions to build on each other and create stronger community, greater value and build more trust? How can we make that happen?

Gifts.

That's right, gifts.

Gifts foster trust, build new relationships and are central to our experience of community. If you think of your best experiences of tight, trusting, strong community, I'd wager that at the center of that community is something freely given, freely shared. Whether it's organized around enjoyment of music together, passion for food or commitment to an ideology. a large part of how you experienced belonging in that community, is because you had access to the shared gift.

A monetary transaction is designed to be balanced, and for both parties to be "made whole" by the end of the transaction -- to leave no loose ends. Gift transactions are all about the loose ends. They are rooted in the understanding that the giving party is already whole and not damaged (made unwhole) by the giving. The transaction is imbalanced. And the loose ends left hanging are called relationship, friendship, partnership, goodwill and trust.

We need an economic system with more loose ends like that.

(I'll make another post distinguishing the precise differences between commercial transactions and gift transactions. Juicy stuff.)

Beyond Quid Pro Quo

2010-03-04T13:07:00.000-08:00

Quid pro quo is Latin for “something for something.” It implies an exchange of goods or services that are more or less equal in value. A key underlying assumption in monetary currencies is that once you accept it for something, it will buy something of equal value from someone else who accepts it. Even in a mutual credit system, your balance is a way keeping track of where you are in the quid pro quo game. But, is the quid pro quo game the most efficient way of allocating resources?

Gift economies come in many forms, but usually what we mean by a “gift” is when quid is less tied to quo. Clearly, this is a matter of degree as there are many possible social contracts around gifts.

For gift economies to function properly a certain degree of familiarity and intimacy must exist among the participants. For instance, very few parents keep accounts on how many breakfasts they have given their children with the expectation of equal reciprocity. For parents, caring for their children is its own reward, and we think poorly of parents when this stops being the case.

When you are dealing with people who aren’t as close to you, the quid pro quo game comes more into play. Imagine, for example, two tribes coming together to trade. Each tribe operates with a gift economy inside its membrane, but when trading outside the membrane, there is an expectation of equal reciprocity in trade.

Until the industrial revolution, the majority of economic interactions were in the gift economy. Money has, of course, been around for thousands of years, but most of what people needed was satisfied through the gift economy on the village level. Think barn-raisings, shared child-care, borrowing tools, etc. Only when goods were needed from outside the community did the quid pro quo money game come into play.

Now, we can wax nostalgic about bygone eras, but there are good reasons why this all ended. The biggest reason is that this social architecture has not been able to scale. When a person lives in an urban environment, they tend to lack intimacy and familiarity with most people around them. In place of this intimacy, we make monetary exchanges. It must also be noted that a rich and impressive human culture has been built around quid pro quo social architecture.

However, while the gift economy has not yet been feasible on a large scale, on a small scale, it is actually far more efficient. Imagine how much wealth would be lost if you began to charge your children for breakfast. When and how would that debt be paid off?

What would happen if the gift economy could scale? Would it possibly serve as a far more efficient way to allocate goods and resources? What would it mean to actually live in the much talked about global village?

Quid Pro Quo as a pioneer species

A pioneer species is a species that shows up on new or recently disturbed land. They are quick to arrive, and they create the conditions for other species to thrive. As other species arrive, these pioneers are quickly outcompeted. Pioneer plants will leave their seeds in the soil for when the next disturbance occurs. This kind of succession ecology has worked extremely well for our biosphere.

I would contend that the quid pro quo social contract is a pioneer species in the social realm. Imagine you are meeting someone for the first time. Early interactions with this person are most likely in the quid pro quo space. Perhaps you try to talk for no more than half of the time. Perhaps you alternate who pays for the meals you eat out together. Perhaps you trade a ride to the airport for a day of dog sitting. In all cases, quid pro quo is used because you aren’t familiar with the person yet. As you become more familiar with each other, the ride to the airport probably doesn’t have strings attached, the meals become less formally tracked, and conversation may ebb and flow more naturally. Quid pro quo created the conditions for the other more advanced social contracts to emerge.

So how can we create the conditions for the global gift economy to emerge? What are your thoughts?

The Future of “Open” Depends on Open Currency

2010-01-08T14:58:00.000-08:00

I am going to make a bold claim. If we want the new modes of economic production we’ve seen thus far in the information age to become deeply ingrained in our cultural fabric, we must apply these modes of production to currency itself.

I take as my starting point for this contention a recent post by a musician who’s music I have long enjoyed: DJ Shadow. For those who don’t read his entire critique of music in the age of file sharing, it basically says musicians need to be reimbursed for their work if they are going to keep making good music. And he is right in this assertion. If we want to have a culture where people can specialize in being musicians, we must develop viable ways for musicians (and other artists) to be valued and supported.

One contention of what I will loosely call the “open movement” (even though that is mostly a misnomer), has been that anything information-based tends towards being free because there is virtually no cost to producing it at a large scale, and because information is a “non-rival” good (meaning that if I have it, I don’t prevent others from having it). I believe this logic is correct when it comes to valuing information-based resources in scarcity-based currencies such as the dollar. However, just because a resource such as music is no longer inherently scarce, doesn’t mean these resources shouldn’t be valued.

I fear that we may be accidentally walking into a trap in the crowd-sourcing / wikipedia age of "open." We are correctly realizing that scarce money cannot measure the value of that which is not scarce, but we haven’t yet collectively adopted currencies that can. If we want anything more interesting than the most mediocre culture to survive this transition, we must develop currencies that can enable our collective support of musicians / artists without the need for scarcity as the measuring stick.

Our money forces us into valuing only that which is scarce. I believe the fact that music has stopped being scarce is a VERY good thing, but if we can’t find ways of valuing musicians (and other content producers) in the post-scarcity era, I fear the cost of “open” will far outweigh the benefits.

Already we are seeing a global backlash to this new “open” culture because producers of content of all kinds aren’t being valued. Douglas Rushkoff at a recent web 2.0 convention contended that this culture of “open” (or "free") was largely a way for Google to profit off of the hard work of content producers. In the context of a scarce money system, I am afraid I must concur.

For me, the principles embedded in the “open movement” represent nothing less than the future of human civilization. If we want to see any of the real benefits of this future, we MUST MUST MUST apply the logic of “open” to currency itself. Only then will society have the tools it needs to appropriately value musicians and other content producers.

Societies are complex adaptive networks, and like all complex adaptive networks, that which provides value to the network MUST be reinforced. This reinforcement does NOT have to be done with a scarce currency that forces us into pathological competition with each other. Nor does this reinforcement even have to be done with a quid-pro-quo kind of monetary currency. But the reinforcement MUST occur if we want to encourage the production of value. The time is now for OPEN CURRENCY.

Currency and Reintegration With Nature

2009-12-28T19:06:00.000-08:00

Non-differentiation, differentiation, dissociation, reintegration. These four steps come up again and again in disciplines as diverse psychology, semiotics, philosophy, ecology, and evolution among others. Spiritual teachings from many cultures describe the ONE slowly breaking into MANY, only to ultimately return to the ONE.

There have been three major economic eras (with a fourth emerging now): hunter-gatherer, agrarian, industrial, and now information. Since we are at the beginning of the information age, it might be useful to have a sense of how our economics will change in the coming years. One lens we have been using in the metacurrency world to look at this question has been mapping these four eras to the aforementioned four steps.

Hunter-gatherers might be considered non-differentiated since their main source of economic well-being was derived primarily from Nature (or land) directly. In the Agrarian Age, labor was mixed with land to produce more food, permanent shelter, domesticated animals, etc. By mixing our labor with the land, the land was able to support a much larger population. During this time we begin to see a clear differentiation of human world from the rest of Nature as well as the emergence of written language. In the Industrial Age, the primary mode of production was capital. Capital is the stuff from which other stuff is made (tools, factories, and ultimately money). While we certainly used tools in the two previous eras, the drive to control the means of production was not the primary economic engine. And, it is no coincidence that the human world became almost completely dissociated from Nature during this era. Before we get into how the information age portends a reintegration of the human and natural worlds, let’s take a quick look at one trait that makes the human species unique on the planet.

Humans, more than any other species, are aware of, create and use symbols. What makes a symbol a symbol is that it signifies something other than itself. The alphabet, for instance, signifies phonemes. If you weren’t aware of how the letters are matched to sounds, you wouldn’t be able to guess by just the letters themselves. This is what makes them symbols. Symbols can have complex interrelationships. Natural language is a means of generating highly complex relationships between symbols to communicate a given idea. While other animals may have a rudimentary capacity for making symbols, there is no evidence that they do so on anything even close to the level of complexity we do.

This ability we have to create and use symbols is EXTREMELY powerful. Symbols are a shorthand for making sense of the world. Since the real world is so unbelievably complex, having a dumbed down set of symbols allows us to gain some degree of mastery over it no matter how ultimately illusory that mastery may be. And this is the key point: symbols are not the things they stand for. As the Buddha said, “Don’t mistake my finger pointing at the moon for the moon itself.”

Humans (and especially Industrial Age humans) have a peculiar relationship with their symbols. While having the capacity to manipulate symbols gives us great power, we have become lost in them. And, this is only possible because there is a feedback loop between our symbols and our actions. Put simply, we frequently treat symbols as more real than reality itself, mistaking the finger for the moon.

While there are examples of this kind of folly everywhere in the industrialized world, the so-called Copenhagen Accord really stands out for me. During this two week debacle, we saw how the symbol of money (and the economic growth implied in its design), has become more important to world leaders than the biosphere itself. I could not imagine a more dissociated worldview if I tried.

We tell stories using symbols of all kinds, and the symbols we use to mark flows are what we on this blog refer to as currency. Currencies help us interact with the world around us, and as such are a VERY powerful kind of symbol. Currencies are frequently so powerful that we care more about the symbol than what we are supposedly symbolizing. Because we treat the symbol AS reality, we create a self-perpetuating feedback loop. This isn’t necessarily a bad thing; if we didn’t base our actions on symbols to at least some degree, we would quickly suffer paralysis as the real world is far too complicated to make sense of. If the currency symbols we create allow us to engage in healthy feedback loops, that is positively great!

So what about the Information Age? Some folks who claim to be ecologically minded reject information technology as a further dissociation between the human and natural realms. While I sympathize with the urge to heal our dissociation, I fundamentally disagree with the notion that information technology is an obstacle to achieving this goal. In fact, I think it may be the best way we have to effectively reintegrate the human and natural worlds.

In the hunter-gather world, a tribe created their system of symbols together. Since these cultures usually had no writing, each person co-created the culture through the telling and retelling of stories. Collectively, a system of symbols was co-created that helped the tribe make sense of the world around them. What’s more, this system of symbols was constantly evolving with the natural world. While some of these stories may seem anthropomorphic, magical, or otherwise childish to us now, it is important to realize that when there isn’t much differentiation between the human and natural realms, anthropomorphism is an identification with rather than a imposition on the natural world.

Currencies used in hunter-gatherer culture were largely status oriented. A talisman to signify being a masterful hunter, a gift that got passed from tribe to tribe to signify peaceful relations, and so on. These currencies were probably co-created in much the same way that the tribe’s oral traditions were, and probably evolved accordingly to fit natural circumstances.

Writing came on the scene at about the same time as the Agricultural Revolution. In almost every culture that evolved writing, it was originally a way of keeping accounts. For example, I give you two cows this season and we draw two cows on a cliff to record the transaction. Over time, this became a way recording what was said.

Writing was important for many more reasons than we can get into here, but one of the most important things about early writing was that only a few elites were literate. And these elites had the power to make their system of symbols immortal. Can you imagine how powerful that must have seemed to an oral culture? Agrarian culture tended to be ordered very hierarchically as the sets of socially accepted symbols were controlled by an elite few. However, since most of the population was illiterate and living on the land, these symbols lacked the power to fully dissociate the human and natural realms.

The Agrarian era was also when the first widespread use of money evolved. While, originally, money may have been a product of spontaneous organization in a market setting, these Agrarian Age monetary currencies usually evolved into being declared exclusively by the sovereign (or his proxy) and many times had his picture on them. Monetary currencies were primarily used for quid pro quo trades (and for taxes), which were becoming more necessary as human settlements got large enough to have anonymous interactions between the inhabitants.

The dawn of the Industrial Age more or less coincided with the invention of the printing press in 1440, although industrialism didn’t gain full steam until several centuries later. This era saw the spread of science, democracy, and capitalism. These were all HUGE advances in the complexity of human symbol systems. The realm of human symbols started to become so complex that people could forget that humans had anything to do with the natural realm at all. While science made nature its central focus of inquiry, it was only capable of studying nature from the outside as observer, fully dissociated.

The printing press enabled universal literacy, so the written realm of symbols slowly became the purview of the general population. However, the power to create new symbol systems remained fairly concentrated in the hands of an economic elite. And their power increased as more people began to live their lives almost entirely in the world of symbols. The merchant class took over the creation of monetary currency in this era with the invention of fractional reserve banking. Consequently, the use of money in the general population increased exponentially, and people increasingly depended on these symbols for their very lives.

In the Information Age, we have the growing capacity for everyone to generate and disseminate symbol sets as networks gain primacy over hierarchies. We have already seen the popularity of blogs, social networks, p2p file sharing, and so on. While these phenomena have all had profound cultural ramifications, I believe the reintegration of the human and natural worlds will be primarily made possible by how we create and use currencies.

We are destroying the biosphere by participating in deeply dysfunctional and unhealthy flows. Since currency affords us a chance to consciously interact with flows, I believe this to be one of the most fruitful avenues to pursue as we evolve. And, as we pursue new currencies, we must look to nature for successful patterns of flow to emulate. Nature likes variety. Clearly, we can’t replace one mono-currency with another and hope that will somehow solve our problems. Nature forms ecosystems rather than zoos, so the variety of currencies we create in the coming years will have to be able to form rich spontaneous interrelationships rather than be segregated from each other in fits of xenophobia. And Nature finds opportunities to build collective wealth whenever possible by virtue of being “open” (Nature is a commons). The design principles used in creating these systems will be also be open (as we have explored frequently on this blog).

The less people are dependent on industrial age money for their survival, the more they will be able to experiment with new currency symbol sets. Many of these will engender harmonious flows in and between the human and natural worlds. And, I would also guess that these symbol sets will have a much better chance of survival than those that lead to the wholesale destruction of the biosphere. How many more small family farms would there be with currencies that weren’t exclusively interested in the short-term? How many more forests? How many fewer GMOs?

To reiterate, this is not about going back to being hunter-gatherers or about giving up the comforts of modern life. Our development as a species, while often troubled, has NOT been something we can undo. As we emerge into species-maturity in this remarkable time, I celebrate the development that has led us to where we are.

Open POS

2009-11-16T10:54:00.000-08:00

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.

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.
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.
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.
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.
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.

Membrane Currencies

2009-10-31T08:23:00.000-07:00

In the previous post, Arthur talked about expanding the range of how we think about currencies. We are all familiar with trade currencies, and more and more people are becoming comfortable with the term "reputation currency" (a Google search for "reputation currency" reveals almost 4000 hits, many of which point the Whuffie), as well as "loyalty currencies," which are token systems like airline miles, and buy-10-get-1-free cards. Other types of currencies we've talked about include "voting currencies" and "performance metric currencies" like grades/credits/degrees and nobel prizes which incentivize and guide participation.

But today I want to share about one of the hot topics in the meta-currency lab: the membrane currency.

As you probably know if you've been following this blog, we think of a currency around here more as a "current see," i.e. something that lets the social organism see and interact with a current, a flow. When looking at natural systems and the flows that course through them (that in fact are their very essence) there is a completely ubiquitous phenomenon that is often hidden in plain sight: the membrane. Membranes are somewhat tricky to define and understand, because in the end, where the membrane of any particular system starts and where it ends, is a matter of how you choose to look at it. This fact, that the boundaries of a membrane are somewhat fuzzy, is particularly interesting because that's exactly what membranes themselves are: boundaries. They are the component of a system that makes it appear to be a separate, complete, and integral system in the context of some environment. Membranes can be seen as that which creates a context, or environment, in which subsystems can be coordinated to into being an integral whole. This is not-withstanding the fact that all membraned systems are themselves embedded in an context or environment which is itself bounded by a membrane.

Membranes are permeable. One of the most important features of any membrane, is exactly the form and shape that it gives to permeability. This permeability, is clearly a mechanism for regulating flows in and out of a system, of coordinating how the inside of the system will see the outside, of limiting/enhancing/controlling/shaping/transforming what gets in and out. Sound familiar? By our definition of currencies, a membrane certainly is one. In fact, I now suspect that membranes are one of the foundational currency types.

In some living systems it's very easy to see the membranes as they map one-for-one with the very things we see. This is simply because they are the physical boundary that makes those systems "things" to our eyes. Animals have a skin. Cells have a "cell membrane." Without them, they would cease to be integral living things. It's harder for us to see the membrane in other living systems. What's the membrane of a bee-hive or an ant colony? The examples of social insects are an important step to understanding membrane currencies. Social insect colonies build both physical structures, but also have functional/behavioral structures that create the integrity of the colony as whole. Wasps build paper shells around their nests, but also guard them from intruders. Bees and ants, not only have specialized casts to ward off invaders, but also have complex identification systems to recognize bees and ants from other colonies. All of these aspects are part of what make the membrane of the colony.

So what does this have to do with currency? As with many things about currency, I credit Michael Linton with being first into deep insight about this. When I first met Michael in 2004 at the E.F Schumacher Society Local Currencies conference he was describing his vision of a multi-currency open money system that included a concept he was calling "domains." Here's one of the images he showed: What Michael was describing in that picture was a network of currency systems. The circles are people, and the colored networks are the different currency system used by the people. But the key thing in the picture is that people are grouped in those gray areas: domains. Michael realized that for a self-organizing resilient currency network to form, there had to be a self-declared boundary system by which currencies and accounts in those systems could be declared and named, such that they would be visible and known to the entire network, but also such that any such group had it's own autonomy and control within that domain. This is a profound insight: naming is one of the key elements that creates the membrane of the social organism. Names are part of what creates the boundary that make a social organism distinguishable as an independent whole. And it's related to the identification mechanisms of ants and bees to know if any particular ant or bee they come across is part of "self" or not.

I went on with Michael to build two functional implementations of the open money system one at http://alpha.openmoney.info and another at http://client.openmoney.info, both of which include a naming system to create contexts for currency accounts. The second implementation is described at: http://openmoney.info/techne/overview.html and you can see there how namespaces (which is what I started calling them instead of domains) were even conceived of as one of the fundamental entity types in the "Mesh".

That work has evolved into the meta-currency platform where again we continue grappling with the naming questions for the network. How will entities be made visible to other entities on the network, i.e. what will currency account addresses be? How do you name a currency? How will that namings be delegated? You can see the design document for our early ideas. But this all came to a head in working on the flowplace. The flowplace design included the notion of a "circle," which was a way to group users and currencies. The circles were completely separate from the currency network addresses (which we were now calling wallets). We conceived of circles as providing a context for action. So any group that wanted to use free currencies to build wealth together, could come to the flowplace, and start by creating a circle, and a bunch of currencies that it would use to measure it's wealth. When you have such circles, immediately you need to address the "security" questions of who gets to add new members into the circle. And then also the question of who gets to create currencies in a given circle, and so on. So I sat down to code these "administration" features into the flowplace, when it hit me that the meta-currency infrastructure we were using to create the currencies in the flowplace, was exactly what I needed to implement these permissions structures for the circles.

How is this possible? Lets go back to our definition of currencies: A formal system for shaping, enabling, and measuring currents (or flows). Well, the meta-currency infrastructure provides a language (XGFL) for creating those formal systems, and in the flowplace I'd already used it to create some trade, performance metric, and reputation currencies. I saw that I could use this same language to specify the permissions that participants of the circle have in regards to the currencies that the circle uses, and that that very specification could simultaneously serve as a naming, i.e. a mapping, between people, currencies and roles in the context of the given circle. After talking this through with fellow currency geeks, we realized that the membrane currency also has a broader naming function in that it is also responsible for creating names for all the currencies in use by the circle, be they currencies that are created by circle for internal use only, or be they currencies created externally. The membrane currency brings such currencies "inside" the circle, by virtue of giving them a local name. Arthur came up with the word "namescape" to describe the resulting naming that the membrane currency accomplishes. This reflects the idea that it's not just a static namespace, or direct mapping, that the the membrane currency accomplishes, but rather that for the social organism, the membrane uses a dynamic naming process to create the shape of the relationship between those currencies and processes that "inside" and "outside" of the social organism. Geeks can check out the progress of the developing membrane currency for the flowplace on github.

So let me try to sum this all up: I am engaged in this work because the social organisms that we are embedded in are destructive of us, the planet, and therefore themselves. Thus our social organisms must evolve, they must be radically transformed. I believe that for this to happen, we must come to see the social organism from the point of view of all the myriad flows that literally are what it is made of. But what gives any organism a level integrity, of self, wholeness, and difference from other organisms? It is a membrane, which is the systemic component that both separates and connects the organism from its environment. The membrane is not so much a static physical barrier, as it is an active process that mediates between "inside" and "outside." In the case of social organisms, the central process that accomplishes this is naming by assigning of roles. (Think of all initiatory ceremonies of social bodies where individuals get new names, or formal markings that assign them to roles). This "membranic" process is itself a currency as it a formal system for shaping, enabling, and measuring these flows of participation.

Perhaps we shouldn't call such currencies "membrane currencies" but rather "integrity currencies." The former is a name for the component in the system. The later is a name for what that component accomplishes.

Critical to expand perception of Currencies

2009-10-29T18:01:00.000-07:00

On the Complementary Currency Skype channel we've got going, there was brief but old standard debate going on about fiat vs. mutual credit currencies.

I chimed in with:

When you expand your perspective about currency beyond only medium of exchange / monetary currencies the need for fiat currencies becomes clear.

For example, debiting a University for granting a college degree as reputation currency starts sounding awfully silly. There are quite valid reasons for fiat currencies.

However, if your goal is to create sustained monetary value, that form of issuance tends to be "bad tech." I think we might be able to transcend some of the dogmatic Mac/PC or Fiat/Mutual-Credit posturing if we consider these broader applications they create sharper contrasts and clearer hues so that we can learn which adjustments effect what outcomes.

Imagine analyzing breeds of apples. There are a lot of differences between them, but mostly a lot of similarities when you compare them to all other fruits. It may be that if we want to nourish ourselves effectively, that we shouldn't rule out all other fruits. They each have their own value and there are things to learn from them that may even teach us a few things about apples.

(Yes... You might accuse me of making an apples to oranges comparison here.)

Later Ernie asked: “I would like to know what you mean by this: ...if we consider these broader applications they create sharper contrasts and clearer hues so that we can learn which adjustments affect what outcomes.”

After a few days I responded:

Sorry about my delayed response. Let me try using what I think is an apt metaphor. The design of any currency establishes a range of possible behaviors of the individuals participating in it as well as a trajectory for the user community as a whole (as a sort of collective entity or organism).

I think this is very similar to the role that DNA plays in living creatures.

A currency organizes connections and interactions between groups of people into a kind of collective behavior which creates a kind of living social organism. The design of that currency (the rules about issuance, transaction, conversion/co-function, retirement/expiration, participant classes, governance, etc.) are the DNA of this social organism.

DNA doesn’t tell us exactly what each individual biological critter will do, but it does define a particular range of possibilities and tendencies. We know pigs don’t fly, bats don’t “see,” fish must live in water, and most humans develop language capacities. That doesn’t tell us what sentences a particular human will say, just like the design of a currency doesn’t determine exactly what transactions individuals will do.

Suppose you want to understand human DNA – map the human genome. Scientists have found it VERY useful to learn from non-human creatures for many reasons. Simpler combinations of variables (fewer chromosome pairs), easier experimentation (eugenics / experimental breeding of humans is frowned upon), greater variety (difference between different animals create contrasts which help identify patterns that might be harder to see between humans who are so similar), etc.

I’m suggesting that as currency designers (even if what you want most is to understand monetary currencies) that expanding our definition of currencies to include non-monetary configurations helps in the very same ways that considering non-human DNA helps in mapping human DNA.

There is greater variety. Contrasts stand out much more starkly. Postage stamps fill a very different niche than grades on tests or bus passes. There are patterns amidst that variety that are direct outcomes of the design of each currency.

People participate more freely. Consider how many hundreds of millions of people are freely participating in currencies like five-star product ratings, eBay reputation, user participation metrics, certifications, college degrees, performance reviews, stocks, stamps, movie tickets, etc. in contrast to how few are participating in general purpose money substitutes (LETS, Berks, local currencies, and even commercial barter).

Failures are less costly. The impact on people’s trust, ability to sustain themselves and willingness to participate in another “experimental” community venture are less severe when people don’t expect to make a living from the experiment. With non-monetary currencies, we can experiment without people losing their retirement funds.

Results can be evaluated faster. One of the things people often expect from a monetary currency is long-term stability as a store of value. But non-monetary alternatives can be used to solve specific problems or meet specific goals then be retired. Even the WIR has barely been running long enough for many to consider it in long-term analysis.

This is what I meant in prior statement you asked about. I think there are many more reasons to consider these non-monetary currencies (such as gift economies are fundamentally more efficient than market economies).

Getting out of the rut of thinking that new “money” is the only real answer yields many opportunities for us. And yes – these broader “currencies” solve real problems that real people are grappling with every day. Money isn’t the only solution to our problems. And as we all know, it is in fact the source of many of them.

Money Simply Facilitates Trade?

2009-10-13T12:09:00.000-07:00

Recently I've had some discussions about our MetaCurrency work with folks trained in economics. For some reason it seems particularly hard for some of them to grok what we're up to. More than once I've been told that working on changing the money system "hooey" and is barking up the wrong tree because "money simply facilitates trades," and that's it. Well, here's another statement: "cars simply facilitate moving stuff." Like the idea that "money simply facilitates trades" it is true for a narrow range of inquiry. But for even a slightly broader range of inquiry both of these statements are false. What's so interesting to is how hard it is in the case of money, to see that that statement is being made in a narrow context at all!

In the case of the technology of cars we know that the details of the technology itself has huge systemic implications. The CO2 produced by the internal combustion engines they run on has large consequences to the health of the planet's ecosystems. The specific effects of cars as a facilitator of moving stuff around vs. for example trains & and various other communal methods, or horses and buggies for that matter, have large consequences to the health of human social ecosystems.

You can't ignore the details of the technology in the case of cars, nor can you in the case of money. Both are technologies who's specifics make huge difference. What's weird is that by and large people don't even seem to think that money HAS any specifics. But it does. The currency alphabet that we've talking about (or currency literacy) is about getting the semantic and conceptual tools in our heads to see those specifics re money, so we can actually create forms of them that don't have the pernicious side effects. On top of that we're claiming that the best way to use such an alphabet is in an open, distributed, and democratic context, not a centralized one.

I see this situation is as if we lived in a society where we had invented cars, but we still had absolutely no idea how the production of CO2 by internal combustion could be responsible for climate change. We have created money, but we don't realize that the form of issuance of that money (debt based issuance), has very large side-effects. We don't really know why there isn't money for health care and education, we don't know why fundamentally our financial systems crash all the time. But it turns out that there are lots of other ways of issuing money into circulation (as there are other types of engines for cars), that don't have the same side-effects. My claim is that many, many of the fundamental patterns of our society are largely driven by the systemics that spin out from that basic axiom of debt based central issuance. If you change that one thing, lots of other things change. But it goes further than that too, just like in the case of cars as "facilitators of moving stuff." You can change out the engines to all be fuel cell electrics and thus solve the CO2 problem, but if we keep cars in place as our main way of moving people around we still have a huge range of social problems created by traffic, commuting, segregation of life into bedroom-suburbs and business centers, etc. And it goes even further, we pave over thousands of acres of arable land for cars. There are safety issues in using cars. They kill people and animals in ways that other transportation systems don't. They consume a scarce fuel resources which sets up other dependency relationships. They are built of metals which are getting increasingly scarce. They change the way people not in cars behave while moving around the world, and the list goes on. Just as it does with money, when you start to dig in deeper.

So I can see how all of this would seem to some economists as "hooey." If you are a traffic engineer, then any talk of switching out engines in cars as if it were meaningful is indeed hooey. It doesn't make a difference in that narrow context of getting cars to flow through intersections.

So although it may be true that money "simply facilitates trades," oversimplifying it in this way completely ignores other very real effects which emerge from money and our decisions about how we issue it, manage it and transact it. Different currencies change the rules about those things and although they may still facilitate trades, they can completely change all the ancillary "side-effects."

Intentional design of currencies is about waking up to the fact that these things are indeed not just "side-effects" but "actual systemic effects" and we should be responsible for them in similar ways that we need to be responsible for all those "side-effects" of using cars to move stuff.

We can't ignore those these "side-effects" and have a livable planet, livable economies or livable communities.

Yet looking at money in this way is completely (and possibly intentionally) outside the scope of traditional economics. Traditional economics seems to look at things like this in terms of "externalities," and certainly there is a loud cry from within traditional economics for accounting for externalities and moving them into the system. And some economist seem to get the deeper issue. Here is a great answer by environmental economist Neva Goodwin to a question about externalities in an article in grist:

The problem I have with classical microeconomics is the failure to account for "externalities" that relate to fundamental human and environmental values. What do you propose to do to incorporate the breadth of human activity and resource use into the economist's paradigm and avoid us living out the "tragedy of the commons"? -- David Hohmann, Bexley, Ohio

Many people who are critical of economics say that the problem is that economists don't take account of externalities. In fact, this is one of the most hopeful areas of agreement between economists and environmentalists. Externalities are costs or benefits that are "external" to the market system -- that is, they don't come back to affect the economic actor that caused them. This is very distressing to economists, because the presence of an externality means that the market is not working as theory says it should. Economists used to mostly ignore the prevalence of externalities -- they can justly be criticized for that -- but since environmentalists discovered the word and began to bring examples to the attention of economists, they have been working hard to figure out ways to "internalize the externalities." If this effort could fully succeed, we would have a world in which any polluting firm would bear the full cost of its pollution, rather than leaving individuals to bear the cost in terms of ill health, etc., and every family whose children grow up to be constructive members of society would be fully compensated for the foregone earnings and other costs involved in devoting time and resources to raising children.

That's the positive part. The negative is that, even while mainstream economists are actively (and sometimes successfully) wrestling with efforts to internalize (into the system of market signals) the costs of economic activity that have been externalized to the natural world or onto societies, there's something bigger going on -- which I suspect is behind your question. There are "meta-externalities" -- unwanted side-effects of the whole economic system on its physical and social contexts -- which continue to be invisible to the theory. Critical meta-externalities show up in the impact of the economic system on the social context. Productive enterprises need a workforce that has been socialized to be able to defer gratification, to think independently and sometimes creatively, and to be honest and responsible. Citizens and politicians need to care about the long run, and to be able and willing to address intelligently the myriad highly complex issues that face modern societies. But the sales efforts within modern enterprises are focused on a different set of requirements. From the sales point of view, the self-interest of business is served by a culture of instant gratification and simplified thinking that urges material purchase as the answer to any discomfort. A serious, as yet insufficiently recognized, set of meta-externalities are the selfishness, short-term thinking, cynicism, and impatience with complexity that are cultivated in the populace at large -- even though these are not characteristics that will best contribute to a healthy society or a healthy economy.

The heart of the difficulty in seeing this issue, I think lies is in the fact that traditional economics rests exactly on that "system of market signals" as the central feedback loop necessary for governing flows of goods and services. It's fairly easy to see how pollution is an externality, and how by pricing mechanisms like cap & trade, it can be brought into the market signal system. But as Neva Goodwin says, what about the meta-externalities of the very information signaling system you use to bring those externalities into the system? They will necessarily remain invisible without a level jump.

That's the idea behind the MetaCurrency project. It's a level jump that allows the side-effects of the signaling system itself to be taken into account, by putting the signal system itself into play.

Currencies are Numerical

2009-09-20T13:40:00.000-07:00

I am going to make another soft claim about currency. Namely, that all currencies are numerical by nature. Now, having said this, I fully endorse the idea that things like marriage licenses and USDA Organic Certification are currencies through and through. IMHO, both of these instances are numerical since they describe binary states. I either have been certified organic by the USDA or I haven’t. 1 or 0. I either have a marriage license or I don’t. Again, 1 or 0.

With USDA Organic Certification, there is a long and complex process before the currency can be issued. The USDA inspects a variety of things about a given farm /product, and, based on a formula, determines whether what is being inspected deserves the USDA seal. However, the seal itself does not tell the whole story. The USDA seal is a shorthand for the public, so we may efficiently take in information about our food and base our purchasing decisions on it. If the USDA produced a ten page document for every farm / product it inspected detailing the complexities of how that product is produced, we would have much more complete information at our disposal, but most of us would not have time to make sense of it all.

I would assert therefore, that a currency streamlines information into a numerical representation, so sensible decisions can be made on the fly without knowing the whole story. While currency can profoundly increase the coordinative capacity of a group, some of the potential perils should be obvious.

However, before we get deeper into this, let’s take a moment to ponder the nature of counting. What is it about the eggs on my kitchen table that allows me to count three of them? Why do we apply the term “three” to these eggs? I would suggest that counting anything presupposes that we are able to filter for similarity of both pattern and context.

First, these things on my table all match the pattern “egg.” A piece of wood in the shape of an egg does not count since it doesn’t fit several of the key egg criteria. If I had two chicken eggs and an ostrich egg, I would still count three eggs (assuming I knew what the ostrich egg was). The ability to count presupposes my ability to recognize a given pattern as distinct from another pattern. It also presupposes that I can make adjustments to the pattern I am counting to fit my needs. For instance, I want to make a cake, so I am counting chicken eggs and not ostrich eggs.

Second, the eggs I am counting are on my kitchen table. I am not counting all the eggs in my house, in my community, or in the world. I am making a semi-conscious choice about the context of my counting. And that context is also adjustable. If I don’t have the right number of eggs on my table, I can expand my count to my house. If I don’t have the right number of eggs in my house, I can expand my count to the store, and so on.

So a necessary prerequisite of currency is the ability to count instances of a given pattern in a given context, but that is not the only characteristic of a currency. I can count eggs on my table, but how do I communicate that information to my community. Does the community agree on the definition of an egg? On a trusted “egg”spert to determine if what I am counting are really eggs? On whether the egg is on or off the table? And so on. Implicit in a currency therefore is a community agreement on how to count.

In the case of the number of eggs on my table, probably no one cares that much. But in the case of USDA Organic certification, a great many people care. So how to count involves an authorized issuer of the currency, i.e. the farmer can’t issue his own USDA seal. And, hopefully, there is openness about the pattern of what is being counted (i.e. the standards that the USDA has for its seal). And, there is openness about the context (i.e. the USDA is looking at my farm and not my neighbor’s).

Let’s look at one more example of how this numerical definition of currency works. An 18 year old is home for the summer from college and needs some pocket money to go out with his friends. The elderly woman next door needs her lawn mowed and offers to pay him a little to do so. While, the money isn’t very good, he has always liked his neighbor and agrees to do so. After the lawn is mowed, she invites him in for a lemonade. They talk a little about college, life, girls, etc. She gives him a hug, thanks him, and he is on his way. Let’s think about what value is created in this transaction and what currencies we might use to express it.

The most obvious value created is that the lawn is mowed. Our 18 year old does not do as good a job as a landscaper would, so he is paid less for his labor. Using dollars as our only metric, less value is created than would have been with the landscaper. However, a social bond is reinforced that wouldn’t have been otherwise. And, more importantly for the purposes of this discussion, this social bond may have implications for the rest of the community. For instance, the more connections with her neighbors the elderly woman has, the less resources from the community at large may be needed to care for her. She may even be healthier since she is happier. The benefit of our 18 year old having good relations with his elders may also have community benefits. He may be less likely to commit crimes, or more likely to accept helpful suggestions from his elders in other contexts.

So, let’s think about how to encode this important value for the community in a currency. We have already encoded the value of the lawn being mowed through the use of a monetary currency, so let’s look at some of the others. What about the value society receives by having to put up less resources to care for this elderly woman?

Perhaps there is an acknowledgment currency that is issued by the elderly for positive experiences they have with their neighbors. A simple public thank you. We count the number of thank yous received from the elderly, and are able to provide some benefit in return (perhaps a free bus token for x number of thank yous). Perhaps we don’t offer anything in return, other than public acknowledgment. If, later on, the 18 year old tries to get a job working with the elderly, this would be a useful metric to have. In either case there is an authorized issuer: the elderly. And we COUNT the number of thanks issued thereby.

Or perhaps we track the number of hours people put into caring for the elderly. We might be able to use these hours as a partial payment for care of our own parents (Japan currently has a system very similar to this).

Or perhaps we offer tax breaks to those who have amassed a certain number of hours since they have alleviated the public burden of care.

As you can see there are a number of ways to measure the value created in this transaction, but I think you will find that they all involve counting in some way or another. If they didn’t, the elderly woman could simply post a blog entry telling the story of her experience. While that might be a valuable thing to do, I do not believe it is currency until we have counted it using our filter of pattern and context.

In the case of counting thank yous, even though the thank you itself may be subjective, we are counting instances of it in a given context, and so have a number that has some quantitative meaning. We may apply different filters to our counting these thank yous so our data takes on fuller meaning. For instance, we may count only so many thanks yous from a given person a month to prevent cheating. And so on.

How we count what happened gives us the ability to adjust our actions to fit the story being told.

Currencies≠Games

2009-09-18T09:32:00.000-07:00

The following is a reprint of an email I recently sent to some of the other metacurrency folks. I would love to hear thoughts.

Lately, I have been reading some pretty amazing books on games and game design. These books have really helped get my thoughts in order about currency, games, and so on. So I would like to take a minute to go deep here. These are some pretty foundational questions I think we must address (or at least consider).

First, after reading these books I have come to a soft conclusion (meaning I could be argued out of it :) ) that currencies and games are NOT the same thing. Some (but not all) games USE currencies, and some currencies exist outside the context of a game. So let's revisit our definition of currency: a formal system that allows a community to interact with a flow. I still think this definition is accurate, but let me restate it from a different perspective:

A shorthand way of recording information about something that HAPPENED in such a way that other people who understand (or use) that currency can adjust their future actions to appropriately fit the story being told.

So, there is WHAT HAPPENS and THE STORY WE TELL ABOUT WHAT HAPPENS. There are two categories of rules in games. Rules that tell us what may happen. Rules that tell us how to record what happens.

Many of the first kind of rules have nothing to do with currency. For instance, in baseball, for a pitch to be counted as a strike, it must be in the strike zone (between the knees and the shoulders). That is a rule that is outside any currency. For the purposes of the currency, we just need to know that the umpire issues strikes. The umpire is the person who may officially tell the story of the pitch. That story is then recorded in a currency: the strike. There are also rules about how the story that can be told. The umpire cannot, for instance, tell the story that "the pitch was pretty good but kind of a cheap shot since the pitcher looked like he was throwing a fastball but didn't." The umpire may only say strike, ball, etc. The game of baseball FLOWS from the stories we are allowed to tell about it.

What is complicated about this situation is that the rules about what MAY happen are often contingent upon the STORY we told about WHAT DID HAPPEN. This is the marvelous interplay and feedback loop between currency and action.

So, games MAY employ currencies. To me, the currencies in the game of baseball are things like runs, hits, errors, strikes, balls, outs. They are the things that tell the story (in shorthand) of WHAT HAPPENED. In other words, what are the important things to record in the game of baseball so that other players know what to do next?

So, by this definition, I am doubtful whether chess employs any currencies at all. What do we count in the game of chess? What story do we tell about the game that allows the players to adjust their next actions? There is a board and pieces. That is sufficient in and of itself for the player to make their move. They don't need to know the history of the flow. There is no story other than what is on the board now. We don't keep track of how many pawns are lost, what their relative value is, what the SCORE is. There is NO SCORE. Therefore there is no currency.

I have been struggling for a while to figure out why the entire legal code isn't a currency. I think this explains it. The legal code is about what may happen. Currencies are about how we record what did happen and communicate it to others. There may be rules about how we record what happened. There may be rules about what we may do that are contingent about the story we tell, but they are external to the currency.

Let's take a simple example. I try to make a purchase with a credit card, and my card is declined. There is no rule about what may happen as a result that is internal to the currency. The vendor may decide without breaking the rules of the currency to give me the product anyway since she knows me and trusts that I will get her back tomorrow. Or the store may have a strict rule about not giving people stuff when they can't pay. But again, the rules about what happens as a result of the story are EXTERNAL to the rules that govern how the story is told. The whole of the game includes the rules that are both internal and external to the currency. So a currency CAN be part of a game. And a currency may not have a game associated with it at all (i.e. the card is declined and the store doesn't really care since the owner just won the lottery and is feeling generous).

There is lots more to say about all this, but that may be sufficient to ponder now. :)

Currency Quips for later development

2009-08-21T07:33:00.000-07:00

I wrote these responses in the comments thread on this article about The End of Social Movements. There are some currency issues in them that I want to capture for later deeper discussion, so I'm reposting here so I'll know where to find them.

Money and Power Pathologies

Will – I think you make a good point that they’re ability to fool us, does not make them the same thing in essence. And I even like your lunch money metaphor.

So consider this: We start making alternative lunch money. It is only accepted at our own food carts, and participation is completely voluntary. The corporate theives/bullies/thugs/raiders can only use it for lunch in that community and there’s only so much lunch they can eat.

However, if they can’t use it to buy up real estate, bribe politicians, make speculative investments, build their empire of power an anonymity, then it isn’t worth their time and energy to steal.

Humans are susceptible to a particular kind of magical thinking that verges on pathological. Specifically, it has to do with having a magical item that give you a kind of universal power. For alchemists and conquistadors it was gold. For modern Americans it is MONEY.

You can hold it in your hand, and use it to get ANYTHING! This is a temptation that attracts the greedy, the power hungry, the corrupt. Heck, it attracts almost all of us, but some go too far while under its spell.

The sooner we learn that we actually do NOT want our currencies to be universal power objects, the sooner we can get back to having those currencies be designed to fill different niches and meet the needs of our distinct communities and repel the conquistadors.

Rushkoff didn’t say it in this piece, but much of this boils down the the corporatization of our money. It’s time to think for ourselves about currency. The bill of goods they’ve sold us about it is bogus and is designed to feed their hunger and increase their wealth.

We can learn a lot from from nature. Notice that each organism has its own currency / circulatory system. And that the lifeblood is mostly not interchangeable. Human blood is not the same as dog blood or tree sap. The more universal items of value (such as water and air) are not scarce.

What would currencies and economies look like if instead of being designed to benefit a few power-mongers, they were designed to support diverse communities and people?

On Gift Economies

Mika, Rushkoff isn’t saying Pirate Bay doesn’t function well as distribution system, but that it is more anonymous than he’d prefer. He already has the Internet as an efficient distribution system and will give the book to whoever asks for it.

This whole article is about being connected on a human level, staying grounded, not being swept into abstract movements or corporate entities. So his desire to be connected as a human to the people that want his book is completely consistent with his thesis.
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I can't speak for Douglas on this point, but I can speak for myself.

Gift economies function according to different principles than commercial economies. In a commercial transaction no relationship is required nor inherently created. Anyone with 3 bucks can buy a box of nails at the hardware store and remain anonymous if they choose to. It is a tit-for-tat exchange which ends the moment it is done.

However, if I walk across the street and ask my neighbor for a handful of nails, it is a completely different transaction.

- It requires relationship. If I'm a bad neighbor he may not go out of his way for me.

- It is a GIFT, not an exchange. Don't fall for that lazy thinking that *everything* is an exchange. He doesn't want me to hand him 3 bucks or to bring a handful of nails back next week after I bought more. He's not trading it for the "feel-good" or to have me personally indebted to him.

- It is an investment in a SOCIAL CONTRACT. Gift economies function by social contract. If you're a good "citizen" according that contract, then we're good with each other. My neighbor is investing in a neighborhood ethos where we do this stuff for each other. It's a pay it FORWARD, ACROSS and only occasionally BACK economy.

So... why does this matter. Because social contracts exist between PEOPLE WHO KNOW EACH OTHER. Given our current paucity of robust reputation currencies, they have not traditionally scaled beyond family/tribe/village.

But this is a core part of the economic shift we are undergoing! We are using information age technology to create wide-scale social contracts, reputation currencies and gift economies! This completely breaks out of the box of all traditional "economic" models which assume everything is about exchange.

Anyway... these are my words not Douglas', but I'll bet the spirit of it is at the core of his desire to have an actual connection with people he gives his book to.

Anyone who wants to remain anonymous and disconnected can feel free to BUY a copy. But... What's possible if we stop hiding behind money *pretending* to be independent and start acknowledging our joyous interdependence?

When we set the money-making aside, we tend to take pretty good care of each other.

Money and Anti-Inflation

Lastly, this one is a response on a Facebook discussion to a question about value reference currencies.
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One of the primary applications of money is as a MEASURE of value. All other measures have a reference standard which define them. That is why we don't worry about inflation or deflation of meters, inches, liters and grams every year.

By pegging a monetary currency to some standard (whether a sophisticated basket of commodities like the TerraTRC or an everyday commodity like an egg or loaf of bread) we can eliminate one of the vagaries of today's fiat currencies (value fluctuation). This is the primary reason that so many people (Austrian School of Economics and more) want a gold standard.

However, there is a difference between requiring that money actually be backed by a scarce commodity and pegging a currency to a value reference. Just because there is an official meter rod kept in a controlled environment in a laboratory, doesn't mean that you can trade your own meter stick in for it.

When we make a shift toward currency models designed for sufficiency instead of scarcity which don't vary drastically in supply, then currencies can be pegged in practice to eggs without having to actually be redeemed for them. (e.g. mutual credit systems which always have a net zero units in circulation yet the "supply" expands or contracts based on demand as we extend credit to each other).

Specifically to your original question, I find it difficult to believe that corporations will use actual Terra because of its demurrage aspect. You could write an international contract and use Terra as a value reference without ever needing to be in possession of a basket of commodities which is decreasing in value. I think that approach may have greater chances of success in being adopted.

Portland Pursues an Open Platform

2009-08-07T09:50:00.000-07:00

Very exciting news from Portland, OR! City Hall has declared interest in building an "open platform" to enable multiple different currency efforts. In the last week three currency related efforts (CEN|PDX, The MotiveSpace Coalition, and the PDX Timebank) have collaborated in drafting a document that defines some basic requirements for such a platform. The city hasn't agreed to these requests yet, but they want to know more. I will most likely be meeting with them next week to discuss it further.

However, even if the city doesn't end up supporting this effort financially, I believe this is still a significant step forward. These three efforts have very different missions and currency designs. And, despite these differences, all have recognized the potential in having a common, open platform upon which to build their systems.

While this specific effort is currently in Portland, I see no reason for it to be limited to any geographic area. I would like to see these basic requirements endorsed by a wide variety of currency efforts around the world, so we can build a strong use case for this approach. Currencies (in the broader sense of currencies) will be stronger when they exist in a global context interlinked in a rich ecosystem of processes rather than as stand alone clubs.

What follows is the text of our document. Please feel free to express support in the comments section if you think this approach would be useful to you.

The Challenge:
Dozens of groups around Portland, including CEN|PDX, the MotiveSpace Coalition, and the PDX Timebank, are developing innovative programs which measure and mobilize resources and capital. We refer to strategies, systems, or programs such as these as "wealth building processes" - that is, as innovative new processes which track the creation and exchange of value, within a specific community of users.

Examples of wealth building processes:

Buyer loyalty programs (such as choose local programs, point systems, rebate systems, etc.),
Reputation systems (such as user reviews, consumer ratings, etc),
Exchange systems (such as commercial barter, CEN|PDX, Time-banking),
Asset sharing systems (bike sharing, tool library, car sharing, office space sharing),
Cooperative asset building programs (such as MotiveSpace's Community Asset Funds program).

Each of these processes track flows of economic activity, and structure incentives which reward community friendly behavior. One of the largest costs common to all of these processes, is the development of a robust, secure, and user-friendly information infrastructure which enables their programs, and maximizes their reach.

Vision:
To create public infrastructure (a Community Wealth Building Platform) for the city of Portland that reduces the technical costs for groups developing wealth building processes, and allows groups to easily interact with one another in a rich ecosystem of processes. We believe the city of Portland can leverage its interest in creating an open platform to the benefit of numerous groups by embracing the requirements outlined below.

Goals:

The Community Wealth Building Platform must be able to address the specific requirements of existing initiatives such as CEN|PDX, MotiveSpace, PDX Timebank, and others.
It must minimize the cost of adoption by participants, in particular merchants and end-users, which implies leveraging mobile phone, POS payment, and web infrastructures.
Beyond its initial development costs, the Community Wealth Building Platform should look to its own community of users for its administration and maintenance costs.

Basic Requirements:

Accessibility: An "open" platform is one where the means by which wealth building processes are created and transacted in are open to all, and not contingent upon participation in any given program. Any organization or individual wishing to devise and track a wealth-building process must have equal access to all Community Wealth Building Platform user interaction interfaces. These interfaces may include but are not limited to, magnetic swipe cards, smart cards, SMS, web interface, and RFID chips. Community buy-in will be leveraged by engaging a broad swath of groups.

Configurability: An Community Wealth Building Platform must encourage the creation of new wealth building processes rather than predefine the scope of what is possible. A wealth creation process should be defined by the types of accounts within it, and the relationships and interactions that are possible between those accounts. In the interests of making this platform as easy to use as possible, predefined options should be available, but users wanting to innovate must not be limited by them.

Skinability: Not every group will share intent, style, or values. It is therefore paramount that this platform allow groups to brand their use of it however they like, without forced association with other groups.

Integratability: Data generated with these wealth building processes should be able to be seamlessly integrated into existing portals.

Openness: In addition, the platform itself must be able to evolve to suit the needs of its users so that it can stay relevant in the long run. Making the platform open source and creating open APIs for third party innovation are key to realizing this goal.

Organic Cross-Referencing: In order to build the richest possible ecosystem, wealth building processes should be enabled for cross-referencing. In other words, groups or individuals should be able to build wealth-building processes on top of other wealth building processes through reference. For instance, one group’s reputation system measuring a business's performance in sustainability might effect the credit limit of that business in an unaffiliated commercial barter system. Users and groups can choose whether or not and how much of their data to make open. By allowing the users to define the way wealth building processes interact, a rich fabric of interrelated wealth building tools can emerge.

Group-specific authentication schemes: Access to the Community Wealth Building Platform should not be contingent upon hard authentication. Rather, authentication should be defined by the groups who use the platform. For instance, a user may be required to give their SS# or EIN# to participate in a commercial barter network, but not have the same requirement for joining a loyalty program or time-bank.

Integrated Marketplace Connector: Groups will have specific needs for enabling their marketplaces. For instance, a marketplace for a tool library will have different needs from CEN|PDX. However, these marketplaces should be connected using standard formats whenever possible. This would allow search between marketplaces. An API for third-party developers would allow data to be filtered in a variety of ways. The level to which an offer or request is open to the public should be up to the users.

Privacy levels: Data in the system should be able to be restricted to people who are participating in a specific process, or made be open for all to see. Choices about the openness of data should be left to the users and groups. Groups should be able to define multiple layers of privacy specific to their needs.

Dollar Cost to Users: Access to the platform should not be contingent upon a fee structure. Individual wealth building processes may have pay-per-use structures, but the platform itself must be entirely free and open to both users and innovators.

Maintenance and Administration: The Community Wealth Building Platform provides multiple avenues by which to remunerate administration, and maintenance of the platform. Contributors to the platform should be incentivized using the same processes the platform enables.

Distributed Architecture: The Community Wealth Building Platform should be resilient, in that if a single server crashes, this wouldn't affect other servers or the ability to interact within the system as a whole. Similarly it should be easy to add new technologies (POS, 3rd party add-ons, etc) to the platform without affecting other portions of the platform.

OPEN RULES

2009-07-18T12:10:00.000-07:00

This post is part two of a four part series about OPEN CURRENCIES. In part one, I talked about the need for an "open transport network." For the purposes of this post I will assume that as a base.

So what happens after we have a transport network in which any currency is allowed to make transactions? That sounds great, but as we all know there are countless different types of currency. How can we make sure the transport network knows how to deal with them all?

CURRENCIES AS WEALTH-BUILDING GAMES

Before getting into how a transport network could interact with rules, I want to make an assertion. On this blog, we define currencies as "formal information systems that allow communities to interact with flows." Doesn't that sound a little like "keeping score?" When we keep score, we measure a flow of something that happened in a game. We then base our game play on the record of those flows. With this in mind, we make the assertion that the rules that define a currency share a deep structure with the rules that define a game. A currency is a game we play together to build wealth (thanks Eric for that insight). Our community decides to count things in certain ways that make visible the things that our community values. From this point of view, monetary currencies make up only a tiny part of the currency spectrum (thanks Art for that analogy). The currency spectrum includes everything from voting, grades, diplomas, Fair Trade Certified badges, movie tickets, etc.

So why go into a rant about the expanded definition of currency here? Because, what really makes all these currencies interesting is how they interact. My credit score tells the bank how much and under what terms to lend me money. Two currencies interacting in a formal structure. So let's consider this in the light of OPEN.

The first aspect of OPEN RULES is that the users should know the rules of the games they are playing. Do you know how your credit score is calculated? I don't. I didn't agree to that game, and I don't even know the rules. In fact, how could I legitimately consent to play a game, unless I knew the rules?

Consider this: there are two types of games. One is where knowledge of the rules is not expert knowledge, and mastery comes from understanding the patterns of the game. Chess is one such example. The rules are pretty simple, but mastery is not. The other type is when the rules of the game become so complicated that mastery of the game is synonymous with mastery of the rules. Are these fun or even fair games? This how bankers (and lawyers) gain their power. They know more about the rules than the rest of us.

So, the first part of OPEN RULES is the premise that in order for people to legitimately consent to be part of any social game (or currency), the rules must be readily available and relatively easy to understand (not in legalese).

GAMES EVOLVE

Let's return to the analogy of chess. Chess did not always have the same rules. In fact, it has been evolving in stages since the 6th century. It wasn't until the late 15th century that the rules of chess, as we know them today, came into being. Consider how this evolution happened. Did a monarch decree that all chess must be played a certain way? No. Did an official "chess committee" form, research the best possible rules, and then impose them on the rest of us? Clearly not. Instead, the players themselves were constantly experimenting with new rules, and sometimes these experiments caught on because they made the game more fun. Chess has open rules. I am free to use a chess board and make up any rules I like. If enough people like my new rules, they will play the game that way. The game of chess is still evolving to this day. Check out these modern experiments: four-player chess, 3d chess

Currencies need to be able to evolve in the same way: not controlled from a central committee, but emerging from the creativity of the users. Open source software allows programmers to "fork" a piece of software if they want to change something. If the changes are liked by the community of users, they are adopted. Open Rules in a currency allow users to "fork" a currency in the same way. If I don't like the rules of a given currency, I can start a new currency with rules I do like and invite others to play with me. If those rules allow us to build more wealth, they will catch on in the same way that new rules of chess caught on. It might also be the case that the currency evolves to fit two separate niches, and that's fine too. There will be an endless variety of currencies that fill specific niches.

Another reason why Open Transport is paramount is to ensure that new experiments aren't excluded. But how can an Open Transport network accommodate an endless stream of new rule sets? There clearly needs to be a standard (and extensible) language in which we can express rules. This is analogous to HTTP and HTML. HTTP transports resources, and HTML is the language browsers understand that tells them how to display resources. We need a "currency browser" that gives users the ability to play in any type of game they choose. This "browser" or client, could live on a cellphone or a computer, but wherever it was, it could interact with other clients. Think about it, I can use my iPhone to post a picture to Facebook, and Firefox on my laptop allows me to see the picture later.

This language for expressing currency must not be owned by anyone. It must be completely open to all, so evolution in the language itself can proceed in the same way as evolution in the currencies that are expressed within it.

The MetaCurrency project is germinating just such a language. For more information click here.

In short, we believe allowing people to self-determine when generating, choosing, and adapting rule sets will unleash an unprecedented wave of social creativity. We clearly need new and creative approaches to counting, valuing, and exchanging resources if we are to solve 21st century problems. We must not shoot ourselves in the foot by making closed rules that don't allow for evolution. The "complementary currency" community must not make the mistake of turning itself into a specialized class who exclude new approaches from closed systems. We need to let in any and all rule sets and trust that durable solutions will emerge over time. We need OPEN CURRENCY NOW!

To be continued...

OPEN CURRENCY NOW

2009-07-07T16:08:00.000-07:00

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!

Blog Keywords by wordle

2009-07-04T20:24:00.000-07:00

I like some of the random phrases which emerge. They present a nice summary.

Open Letter to the folks at River HOURS

2009-06-28T16:06:00.000-07:00

Today I received an email from the good folks at the Gorge Local Currency Cooperative in Hood River OR. They had just finished putting on a public screening of THE MONEY FIX in their community. Their currency, the RiverHOUR (modeled off of IthacaHOURS), is featured in THE MONEY FIX. For those of you who haven't seen the film, there is a clip of Francis Ayley (of Fourth Corner Exchange) criticizing the fact that these types of currencies have a central issuance, and as such may accidentally create scarcity. It seems that some members of the GLCC steering committee were concerned about the negative portrayal of their system.

I struggled with how to respond to this. I have the deepest respect for this group, and learned a great deal during the process of filming them. It was certainly not my intention to cut down any of their efforts, but rather to foster open and frank discussion about what sorts of social contracts (aka currency) people choose to live under. I believe the response I ended up writing might also be of value to the broader currency community, so in the spirit of openness, I am sharing it now:

"...There are several points to make here that might help illuminate my reason for putting in Francis Ayley's less-than-glowing critique of RiverHOURS. I offer these in the spirit of building towards what I am assuming is our shared goal of creating a space in which the dysfunction in our social body caused by the monetary system (and in particular artificial scarcity) might be collectively addressed and healed.

"I have observed that the currency community at large usually frames its discussions in terms of comparing the relative merits of different currency designs. This is, IMO, a very healthy thing to be discussing as long as it is within a broader context of embracing multiplicity. However, this debate usually takes place within an unconscious assumption that there is A single best alternative to FRDs. In other words, currency designers compete to create THE alternative to money. As a result, fierce ideological, and often less than friendly, competition emerges within the currency community.

"I believe that this competition emerges from the shared (and largely unquestioned) perception that there is a scarcity of early adopters, and that we in the currency world must compete for their attention. Sometimes there are several groups doing currency within a given community, and they enter into a competitive relationship for capturing "market share" (people willing to adopt a new form of currency). This type of competition leads to sectarianism and group-think where basic assumptions often go unchallenged and all involved systems stagnate. This, in turn, leads to what I call "mutually assured irrelevance." To put it simply, I have observed that the same fundamental assumptions about scarcity are often just as rampant inside the currency community as they are anywhere else.

"IMHO, one cannot replace a monoculture with a monoculture. One of the primary dysfunctions of our current system is that it discourages creativity. We get our money from THEM. THEY are the experts. THEY tell us what social contracts to live by. Replacing one THEM with another THEM is of no interest to me. I think it is fair to say that no one has figured out how to do currency on any kind of wide scale. The VAST overwhelming majority of currency systems quickly fail. It would be enormously misleading to pretend otherwise. Instead, I see new forms of currency as being in their infancy (perhaps akin to early aviators who were viewed by the general public at the time as doing something curious, but of no great value). Seen from this point of view, early plane designs were quickly shed in favor of THOUSANDS of more effective designs.

"So, to me, rather than using THE MONEY FIX as a form of advertisement, which attempts to hide the dysfunction of most of these early systems, I revamped the film with the goal of inspiring people to imagine new forms of collective social agreements (aka money). I believe we in the currency community can no longer afford to be committed to AN alternative or A particular design. Instead, I see our role as supporting the emergence of THOUSANDS of new designs that will form healthy ecosystems as they interact.

"Why have an assumption about the scarcity of people willing to adopt new ideas? We use credit cards, frequent flyer miles, movie tickets, bridge tokens and hundreds of other forms of currency every day without even noticing. I don't see why community currencies should be any different unless they are couched in ideologically off-putting rhetoric. From the context of multiplicity, negative critiques of a given design are no problem at all, but rather help foster the emergence of better designs.

"For an expanded discussion on this point I recommend you read this blog post:

"I put in the remark about RiverHOURS because statistically, systems patterned after IthacaHOURS don't tend to last that long. RiverHOURS seems to be one of the most successful of this kind in the world (which is a testament to the awesomeness of all of you). However, systems based on mutual credit have had a higher success rate (although also quite low), so I wanted to encourage people in the direction most likely to succeed based on the data we have so far. That having been said, I believe systems based on mutual credit are not the be all and end all. I am actually most interested these days in currencies designed to foster scalar gift economies such as has been exhibited on Wikipedia (but that is a whole other discussion).

"But rather than be drawn into a debate about the relative merits therein, I would invite everyone (HOURS based, and mutual-credit based alike) to drop the notion that there is AN approach, and embrace the fact that there can and should be MANY approaches to building healthy social agreement structures for exchange within the communities that they serve. As currency practitioners, I believe it is our job to support the empowered collective emergence of AS MANY AS WE WANT OR NEED..."

I go on to say that I hope that THE MONEY FIX can be part of fostering an ongoing conversation within any and all communities as they look towards adopting new social agreements that allow them to build wealth together. It seems to me that the conversation about multiplicity is one that is long overdue in the broader currency community.

A Cluetrain Question

2009-06-16T20:59:00.000-07:00

In honor of the 10th anniversary of the cluetrain manifesto I'd like to pose a question:

If markets are conversations what language do we speak in them?

We've all heard the phrase "money talks," and despite all 95 tenets of the manifesto that are all about the things we want to say to businesses and hear from them (i.e. the conversations we want to have) it seems to me that by far the loudest voice in the market is still money's. I think that reason for this, is that more and more, the players in the marketplace are not people, they are social organisms. People speak human languages, like English, but corporations and other social organisms do not. We think they do, because we experience ourselves talking to customer support representatives, and sales people, and so on in our everyday human languages. But the social organism itself does not speak our language. It does, however, speak "money." It may be funny to express it that way, but I think that that's actually the accurate syntactic place to put money in a sentence, i.e. anywhere you could put in the word English, or German, or Spanish, when the speaker or listener is a social organism.

Money isn't the only language social organism speak, just as we humans don't just communicate with spoken language. Both types of organisms, social and biological, have evolved many different expressive capacities. Humans have a quite a range of emotional, and physical, phenomenal, etc. expressive capacities with which to communicate with other members of our species, and even with other species. But for us to communicate with social organisms, and they to us, the largest channel is the formal information token systems that encode the social agreements that bring social organisms into being in the first place. We've actually created a huge range of such tokens (besides the monetary ones we are used to): passports, grades, credits, degrees, coupons, airline-miles, tickets, stamps, green-cards, licenses of all sorts, olympic medals, boy scout badges, taxi medallions, permits, buy-ten-get-one-free cards, and so on. All of these things are utterances of the social organisms in which we are embedded. In all cases these utterances are in some way related to the flows that constitute the social organism itself. These tokens systems are about making those flows visible, and about shaping them by creating incentives.

The full promise of the cluetrain manifesto will only come into being when the underlying patterns and structures of all of these different types of utterances are understood and unified into a new expressive capacity. Right now the social organism is like a primitive creature that makes one-off memorized statements about things that matter to it. The promise of a market in which we as humans can have meaningful conversation with the social organisms that share the market with us depends on evolving that expressive capacity of social organisms into something that is much more like a language, where we understand how to create sentences and paragraphs that enable us to more deeply shape the flows that constitute the social being. Though the social organism doesn't understand English, we can understand this new expressive capacity, perhaps not in its entirety, but certainly in how it affects us in our own corner as a part of the social organism. That's the whole point of it.

My hope is not that protocols of the meta-currency project is such a language--it's not--but rather that the meta-currency protocols will provide things at a more lowly linguistic level, i.e. like a parts of speech, or maybe the idea of punctuation or things on that level. The "language" itself will only arise once we start making lots and lots of currencies and learning really how start using them to build the flows that will make us thrive as a social organism. Then, I think, the vocabulary and syntax of that language will emerge. The vocabulary might be entire currency types, and the syntax might be recognized natural patterns of how to join together different currencies that are targeted at shaping particular kinds of flows. And then the actual sentences in that language, the actual expressions in the expressive capacity, will be when we use those grouped currencies to actually solve the flow problems we need to solve, to limit the flow of CO2 into the atmosphere, to sustainably be able extract flows of fish from the ocean or add flows of nutrients into the farmlands that grow our crops, or manage the flows of people in and out of cities, children through education systems, etc. etc.

So thanks to the cluetrain for the conversations. And here's to the emergence of the new expressive capacities that will allow us to really have them.

Another Level of Wealth

2009-06-11T10:04:00.000-07:00

The name of this blog evokes a feeling of pioneers seeing a new landscape for the first time. This is appropriate because the currency landscape that is coming into view from over the horizon is indeed completely new, but a big part of pioneering is not just about discovering the new, but also in discovering that the familiar itself is also subject to being re-seen. The light of such re-seeing yields much of the newness the new currency frontier.

Wealth, is one of these familiar concepts that I've been re-seeing over and over again and have recently seen yet another part of that I'd like to share in this post.

A few years back, Jean-Francois Noubel introduced me to the idea that there are three levels of wealth: tradable wealth, which is a subset of measurable wealth, which is itself a subset of acknowledgeable wealth. If you assume the simple definition that wealth is well-being, then these levels are readily apparent: 1) There is tradable stuff I need to maintain my well-being, things like food & shelter. 2) There is non-tradable stuff (which is however objectively measurable) which accounts for a large part of my well-being, things like health, and education, productive capacity, etc. 3) There is non-tradable and non-measurable stuff (which is however subjectively acknowledgeable) which also accounts for equally large portions of my well-being: my friendships, the beauty I experience, civil society and culture, etc.

In thinking about what's behind these level, what makes it so that they exist, what occurred to me is that these levels arise out of some very simple truths about systems. This understanding, this re-seeing of wealth, from a systemic perspective, was crucial for me to be able to put together and actually understand what I was seeing in the emerging currency landscape. I first wrote of this here: http://openmoney.info/sophia/ but I'll summarize it again:

Systems have boundaries through which inputs to the system and outputs from the system must pass in order for the system to be able to maintain itself. Systemic well-being depends on maintaining a flow these inputs and outputs. Tradable wealth corresponds with this aspect of systems. In living biological systems, the food and water are two of the most essential inputs to the system. For cities as systems, the inputs include raw resources for building it's structures. For corporations as a system, humans are part of the inputs necessary for survival.

Systems also have emergent patterns that are properties of the system as a whole. In biological systems one of the most familiar such emergent patterns is health. Health is not something you put into a system, it's something that emerges as a property of the whole. We can objectively measure health in many ways, i.e. how well can the system perform certain functions (can you run 1 or 10 miles), how much abuse of certain types can the system withstand (how often do you get colds, i.e. how often do you fail to repel invading viruses), etc. For cities and corporations as systems we can measure things like productive capacity. These systemic properties are one of the major indicators of the well-being of the system. All systems work very hard to do things that help maintain and strengthen these patterns, in fact you can think of the inputs and outputs to systems all being in service of maintaining these emergent patterns.

Systems never exist in a vacuum. They are always part of an environment and they exist in relation to other systems in that environment. The pattern of those relationships is also part of the well-being of any particular system. The quality and beneficiality of those relationship to a system will vary from system to system. There is no objective measurement of the well-being of the pattern of relationships, rather it is system specific, or we could say that it is a subjective experience of a given system. But systems can certainly acknowledge, and in many cases even rank the qualities of these relationships from their point of view. We are intuitively familiar with this: we can acknowledge and even rank our friendships, our experiences of beauty, etc.

So, the levels of wealth correspond with these basics of systemics. Tradable wealth is about system's inputs and outputs. Measurable wealth is about the properties of systems as a whole. Acknowledgeable (and rank-able) wealth is about relationships between systems. True wealth exists when all of these levels of systems are in harmony. None is primary over the other. It is interesting to note out have direct experiences of systems that have differing wealth at each of the levels. Many well "wealthy" people who travel to poor countries to do service projects come back astounded having learned of their own poverty of relationships after experiencing levels and qualities of community richness. This a case of a deep mismatch between tradable and acknowledgeable wealth.

This re-seeing of wealth allowed me to more deeply understand the currency landscape. Currency is the primary tool we use to facilitate wealth building in general. Whereas money is a specific version of this tool we invented to facility tradable wealth-building. But we've been trying to apply it to building measurable and acknowledgeable wealth. There are deep problems in trying to do so. The properties of money as we know it now, are keyed (more or less successfully) to the properties of inputs and outputs to systems. What ever you want to say about debt issuance of money, and the Federal Reserve, at least it is intelligible to think that it makes sense to match the scarcity of the information tokens to the scarcity of the stuff that the tokens facilitate in exchanging (inflation is a marker of a mismatch between them). But it is entirely unintelligible to think that you should use the same scarce information tokens to facility the building of non-scarce systemic properties like health and education. And the fact that we try to do so sheds light on why there is never enough money for health-care and education, to say nothing of the arts, and civic-society and all those other parts of our society that are about inter-systemic relationships themselves, rather than systemic inputs or outputs.

This re-seeing is also what led me to understand the fundamental importance of the multi-currency universe. Even though there are clear discontinuities between the different levels of wealth, there are also many many shades of gray within and between them. Relational wealth goes from clearly rank-able (as in friendships) to only acknowledgeable (as in love). Tradable wealth comes in many different types, as in material stuff of varying scarcity, and time, which is scarce but all of us have the same amount of it. We need specific tools geared to building wealth at each of these shades, and more importantly in coordination with each other. I.e. related currency complexes that simultaneously allow for trade, measurement, ranking and acknowledgment so that we can build integrated wealth. Once again: understanding wealth in this new way has thus allowed me to deeply see how money is just an example of the greater pattern of currency, which are the tools we use to build wealth at all levels.

So all of this I've understood for a while, and is what led me to building the Meta-Currency project as an embodiment of a platform for creating such integrated wealth building tools. But in a conversation with Arthur Brock last week, we had yet another re-seeing of wealth. A new level of wealth became apparent as part of further thinking about what seems true about systems in our universe.

It appears that our universe is set up so that new entire types and levels of systems are continuously emergent. Systems not only have inputs and outputs, have patterns that are properties of the system as a whole, and exist in relation to each other in an environment, but also, entirely new systems constantly emerge out of smaller systems. Atoms emerge as sub-atomics complexes, molecules emerge from as atom complexes, single-celled life emerges as molecular complexes, eukaryotes emerge as procaryote complexes, all the way up to societies emerging as cultural complexes which emerged from tribal complexes which emerged etc.

At any given moment in a systemic complex, there is possibility of the upward spiral of emergent systemic newness that will be beneficial to the whole of that systemic complex. Possible Wealth is thus the next level of wealth. So what is the currency of possible wealth? What helps facilitate the building of possible wealth? Elsewhere in this blog we've defined currencies as "formal information systems that allow communities to interact with currents or flows." So a currency that facilitates possible wealth should be one that is built to interact directly with all those flows that lead to emergence. But I'm pretty sure I haven't understood the ramifications of this, and that the currencies of possibility are still over the horizon. More newness to come!

2009-06-03T21:17:00.000-07:00

Alan's done some great work putting together movies that describe the MetaCurrency project. Here they are for your delectation:

Introductory Video (with multilingual subtitles)

Thanks so much to all the contributors who have helped translate our video!

In more detail...

Open Transport

Open Rules

Open Data

Differentiating "Open Source" and "Open Currencies"

2009-05-12T21:50:00.000-07:00

Alan’s last couple of posts have attempted to address confusion Openness and what we mean when we talk about that with respect to currencies or the new economy. Responses from various folks indicate that more clarification would be useful.

Let’s start by talking about Open Source Software.

Basically this means the source code of a software program is available and licensed in a way that would allow people to download it and adapt it for their own use, and possibly republish modifications for others use.

Open Source is a HUGE BREAKTHROUGH in terms of an Information Age gift economy. Software developers have learned that we can actually produce better software which evolves and adapts more quickly by freely sharing the product of our labor and asking others who use it and adapt it to also share their changes back to the community.

This is a huge strategic advantage over closed and proprietary software applications. In the currency space, Cyclos is probably the most feature-rich and mature example of an Open Source application. It continues to evolve and grow because of the Strohalm Foundation and a supportive base of users and geeks. However, it is built in the traditional siloed computing paradigm.

Traditional Siloed Computing

The traditional approach in pretty much all computing and information technologies is to separate applications into very distinct silos. This means, we run our applications in a very controlled environment (whether the original source code is open or closed). We keep our applications secure by limiting access to our server and databases.

If somebody penetrates the "castle walls" which protect our applications, they can wreak all kinds of havoc: change permissions, modify source code, delete files or records, modify data in the database, change accounts or passwords, etc.

This whole approach creates an inherent power imbalance between a very clearly defined "us" and "them." There are those who control the server, applications and settings, and then there is everyone else (such as users of those applications). The people who can go inside the castle walls control everything, the people outside the walls don’t.

Currently all software applications, whether open source (like Cyclos) or proprietary (like Paypal, banking software, the Visa Network, ACH or GETS) operate inside this siloed approach.

Why We Need Open Computing

What we are undertaking with the Metacurrency project is no small feat, because we are talking about a whole new architecture for software applications and information technologies. And this is why we’re spending so much energy clarifying what we mean by OPEN.

What happens if you want to write a check against your bank account, but there is a discrepancy between what you believe your balance is and what the bank says? Who is the authority? Who decides whether the check clears? Who decides what fees you’ll be charged if it doesn’t? What interest rates you’ll earn or pay? What other random fees and charges may happen? What the rules are and when they change? How much you can withdraw from an ATM in a single day? Etc…

The short answer: THEY do. Your only option is to move to another bank. Another bank where you'll be in the exact same position again. One group of people holds all the cards, makes all the rules, sets all the policies. And you have no authority to represent your own account, your balance, the rules you’ve agreed to, etc.

So, I ask you... If we are making a whole new model for currencies, do we want to repeat that pattern? Are we going to just trust that well-meaning, community-minded folks will never abuse the inherent power imbalance built into that approach to computing?

There's a reason for the saying: "Power corrupts. Absolute power corrupts absolutely." Currencies are extremely powerful tools. If we want to break the pattern of humanity serving currencies and instead have currencies serve us, then we must break the architectural pattern of power imbalance which gives one group ABSOLUTE POWER and withholds it from the bulk of participants. It is an inherently corruptible structure. If we build the new economy on this inherently corruptible foundation, can we expect any outcome other than corruption?

Exactly how naïve are we?

We need a whole new model of computing which allows BOTH individuals and communities to be sovereign entities and maximizes the freedom of independence of both for a truly Open Economy.

Currencies Are Like Games

We find that currencies operate very similar to games. Currencies are a shared set of agreements about value, counting and transacting with each other just like games function by a shared set of rules, scorekeeping and making plays. Players choose which games they want to play, their strategies, their own moves and they should be able to see the part of the game relevant to their play. Each player is sovereign.

The rules may evolve, but players should not be able to change them willy-nilly. The rule-changing function operates at a different layer of governance than players making plays. BOTH levels need to have their own sovereignty. College football and professional football leagues can and do make different rules. And it’s important for players, spectators and referees to know the rules the game is being played by at any time.

If you want to play football with a group of friends in the park, you all can make your own rules deciding to play touch football instead of tackle. Each community of play is also sovereign. But a player on the field never make decisions via community governance, they choose for themselves where to run, throw or block.

Should the game of currencies provide any less? Under the current system, you are playing a game of earning dollars, but for most of the players, the rules are not visible, the state of the game is not visible and they are not even an authority able to represent plays they’ve made or their current status in the game.

Imagine trying to play chess where the rules change without your knowledge or consent, you can’t see the state of the board, you don’t know what plays your opponent is making, you aren’t even authorized to represent the plays that you yourself have made, and you're not allowed to quit the stupid game. Does that even sound fun?

Our Approach to Open Computing

We identify three core components for an open, distributed, and decentralized approach to computing and currency architectures:

1. Open Transport: A protocol which can be used for participants to directly interact with each other and for any currency to interact with any other currency.

2. Open Rules: A means of representing the rules so players know what game they’re playing, what plays are valid to make, how those plays are handled and how any game/currency interacts with other games/currencies.

3. Open Data: A tamper-proof way of distributing data so there is no centralized point of failure nor power imbalance between the participants and the management/governance of a currency.

Digging Deeper into Open Data

Alan has mostly spoken about items 1 & 2 (using the metaphor of HTTP and HTML). This metaphor falls a bit short because, generally speaking, web pages don’t alter the state of other web pages, but connected games or currencies do. As mentioned, this certainly includes the ability to have universal IDs, but that is fairly negligible part of the problem we're addressing (so we don’t even mention it in our list). We can use something like OpenID for now, but in the long run we need a completely un-enclosable namespace with no central or top authority. [But that is a conversation we’ll reserve for another time.]

I believe that the most groundbreaking part of the model has to do with item 3 – Open Data. Instead of managing data integrity and security through exclusion and obfuscation, we need an inclusive architecture THAT BUILDS INTEGRITY AND SECURITY INTO THE STRUCTURE OF THE DATA ITSELF. (Sorry for shouting, but I want to underscore that last point.) That is the only way to transcend the technological power imbalance between admins and users which is inherent in siloed computing architectures. [See previous post about Open Data]

The mechanisms for doing this involve new technologies that have never been assembled in this manner before. It means having a distributed, segmentable data engine which can store chains of linked, digitally-signed transactions. You can sort of think of this as using the digital signature validation that GIT uses for source code repositories, but for a distributed database application. It would also be helpful to the means to run signed instances of distributed applications and embed them in this distributed data engine.

This enables you to validate any play (via its digital signatures and copies from various players, governance bodies or 3rd party notaries/auditors) and to see the state of play for any player. However, this does not necessarily mean complete transparency of all data. You can encrypt secret data into the transactions, or couple private entries in your own private data store to transactions via their transaction id as a foreign key. This is just like how in some games, you receive cards that are face-down, for that player’s eyes only. Other players can see that they’ve received a card (that a transaction was made), but cannot see the content of that card.

If the governance of a currency gets bogged down in bad politics, makes bad decisions about rules, or even gets shut down, the players can pick right up where they left off with their own tamper-proof account statuses by selecting an old rules version (or forking with a new version) and deciding to continue the play. In this kind of true peered architecture, there’s no way to force a game to shut down as long as there are players that want to keep playing it.

Twollars as a Open System

Twollars gives us a glimpse of this power. You can define a new currency and anybody can use it via a public transaction medium (Twitter). Everybody can keep their own records (or record ALL transactions in the currency), transactions are transparent in the twitterstream, and if the twollars tools went away, you could keep using twitter on your own and track the transactions yourself.

Twollars have an open transport, and completely transparent transactions, Unfortunately, they still rely on centralized Twitter servers, the method for defining rules is rudimentary and not transparent to users, the data is not distributed, there is no accommodation for privacy (cards face-down), you have to compete for names in a limited twitter-account-namespace, and the currencies don't interact with each other.

Even so, it's a beautiful step toward an open transaction architecture. Through it, you can begin to imagine new types of currencies and easy ways of transacting which don't involve too much effort for the start-up team or currency participants.

Final Conclusions about Open Currencies

Open Source Software in siloed architectures still creates closed games with a clear division of us/them between system managers and players.

Openness is NOT the same as Transparency. Privacy can still be accommodated as appropriate to the rules of the game being played.

New platforms and data structures are required to for truly Open Currencies, and we’re busily building them.

I hope this helps with the outstanding questions. :)

P.S. Not to confuse matters, but we are also releasing all of the Metacurrency tools and platforms as Open Source Software. We also believe that is still an important part of Openness.

MetaCurrency and Cyclos - Clarifications on Open

2009-05-12T12:58:00.000-07:00

It has been requested that we try to describe the nuances of “open” and how the MetaCurrency Project compares with Cyclos in this department. I am not sure I am the best person to do this (Arthur and Eric are definitely more qualified), but here is my best attempt to describe the various types of openness we are talking about.

Open source is great. This means being able to openly access source code, change it, and share changes with a community of developers. Very awesome. And for Cyclos’ open sourceness I heartily applaud it.

However, when people set up an instance of Cyclos, they are establishing a place where users have to set up an online identity (or account), and that ID is only relevant to that currency. I can’t use my ID to participate in other currencies or access other currency platforms (like GETS), so it is a closed network. I also can’t use my ID to set up a new currency with access to the same user base. This means that if the governance (no matter how inclusive) screws up, the users become scattered. People wanting to trade become dependent on a structure that may not serve them, because the currency is operating in a informational silo.

In contrast, if I could use my ID (or account) to establish new currencies or participate in any existing ones, the ecosystem of currencies could freely evolve. It wouldn’t be a huge deal if one currency turned out to be flawed because anyone using that currency would be connected to the broader network and could simply play a new game.

Before SMTP, email was similarly challenged. I could email others using the same service provider, but I couldn’t email people outside the service. So, open standards are the key. When SMTP was invented, email took off. When HTTP and HTML were invented, users could suddenly get ANY information resource from ANY server, and the world-wide-web was born. Closed networks (like Prodigy) didn’t provide that kind of dynamism, so they quickly disappeared.

The MetaCurrency Project is doing the same thing for currency as HTTP and HTML did for the web. It is establishing a simple protocol for defining a currency game, and making a play in that game. So anyone using a currency service provider will be able to play in any game they choose or start new games of their own design. That is very different from anything that has come before in the currency world.

What really excites me about this new world is the implicit invitation to developers to make client software that serves different needs. Firefox, Safari, Chrome, and Flock are all browsers that serve different needs, but they all use HTTP and HTML. Java, flash, php, etc. are all things that evolved to work along side html as the needs arose. I imagine an analogous pattern will manifest with currency. Developers will come up with new client features that we can’t even imagine yet. People will find uses for currency in places we never dreamed of. Did Tim Berners-Lee fully anticipate how much was going to come from http and html? Probably not. A tidal wave of innovation was unleashed by the openness of the web. Similar innovation will be unleashed by openness of a currency protocol.

So, Cyclos could become more open by adopting these open protocols, enabling it to communicate with ANY other client using the protocol. It would also be more open if it allowed users to create their own currencies rather than depend on administrators to do so.

I hope this clarifies.

HTTP and Metacurrency

2009-05-10T15:30:00.000-07:00

For anyone not paying attention to the Internet (and since you are reading this blog, I consider that highly unlikely), the last fifteen years have seen a massive transformation in almost all nooks of society due to this marvelous invention. The Internet itself has been around for decades in various guises, but it wasn’t until the advent of the World-Wide-Web (from now on “WWW”) that the Internet gained mainstream acceptance.

The WWW was built on a few remarkably simple yet profound principles. At the core of the WWW is HTTP (hyper-text transfer protocol). HTTP is simply a way of having one person using a computer connected the web make a request for any information resource on any server also connected to the web. In other words, it is a way of saying “Hey, I want this information resource.” and then being able to receive the reply “Okay, here it is.” Requesting information from any computer on the network sounds horribly mundane, but think about how different that is from previous forms of mass communication. Previously, all mass communication had to pass through gatekeepers. The New York Times’ famous motto does more to illustrate this point than anything else: “All the news that’s fit to print.”

In other words, some authority or middleman had to approve your message for mass communication. Sure, there was freedom of the press, and, in theory, you could start a newspaper that printed the things you wanted to say, but how many people could realistically do that? Doing so was cost prohibitive for 99% or more of the population. HTTP changed all that. What sounds simple, “I want this information resource” / “Here it is”, is actually at the core of a new paradigm in publishing. Anyone anywhere can now instantly request any information resource on any server connected to the web. This ability enables direct communication between the consumers of information and the producers of information. A third party is no longer needed to mediate this exchange.

Today, we see the results of this amazingly simple yet profound pattern of communication. The newspaper business is about to go bankrupt. The music industry is in a similar predicament. Even advertising is floundering. Fundamentally, the democratization of communications has taken a GIANT step forward. All because of “I want this information resource” / “Here it is.”

Let’s now look at how this relates to currency. As Eric Harris-Braun has posited, let’s consider for a moment that a currency is a game we play among each other with an agreed upon set of rules. If we think of all currencies in this light, the equivalent statement of “I want this information resource” / “Here it is” would be “Here is a game I am playing” / “Here is a play in that game.”

Right now all our currency games are mitigated through an authority or middleman just as publishing was before the WWW. With dollars, banks are in charge. With commercial barter, commercial barter companies are in charge. Even with time-banks, a relatively benign form of currency, there is a central organization that is “in charge.” In theory, we can create our own currency providing organization, but in practice, who among us has the time? Doesn’t that sound a little like newspapers before the WWW?

Does this mean that the advent of a "MetaCurrency Protocol" (analogous to HTTP) will mean that currency systems won’t need people whose job it is to perform maintenance on the currency (brokering transactions, strategically signing up new users, etc)? Of course not. What it means is that anybody will be free both in theory AND in practice to start new currencies whenever they deem it necessary, and to effectively engage potential users of that currency.

Currently, if we want to trade goods and services, we need to use a currency created and administered by a them. We can’t opt out of these systems, because to do so would be to lose the ability to trade. This means we are coerced into playing currency games we may not want to play, or for that matter even know the rules of. In the new model, if the managers or the rules of a particular currency aren’t serving the needs of the users, users can go elsewhere without forfeiting their ability to trade. For example, I can still read the New York Times, but I can also get news from blogs. I don’t NEED the New York Times (or its analogs) for news anymore.

In short, this new “MetaCurrency Protocol” (or MCP) will create the same fundamental transformation in the domain of currency as HTTP did in the domain of publishing. Think of the possibilities. We have only just begun to discover our true potential as a species.

Please see “The MetaCurrency Project” for more details. Big thanks to Eric Harris-Braun and Arthur Brock whose work on same have illuminated these possibilities.

The Meaning of Open

2009-05-06T13:49:00.000-07:00

I have been doing my best in recent weeks to drum up enthusiasm for creating an “open” economy. Here in Portland, I travel in both tech savvy and tech challenged circles. My experience has been that while the tech community really embraces “open” as a practice, the non-tech community seems a little bewildered. And what’s more, both communities seem to have confusion around applying the word “open” to anything currency-like. So here is my attempt at clearing the cobwebs.

At its heart, “open” is about creating a new commons. In medieval Europe, there were common grazing pastures in many settled areas. These “commons” were not owned by any person or entity, and were used by all the residents to graze their animals. For a variety of reasons, beginning in the late 13th century, these commons began to be “enclosed” by less-than-common interests. The “tragedy of the commons” refers to what happens when individuals over-exploit the commons, each in their own short-term best interests, to the detriment of the group’s long-term interests.

Since this period of time, a major political debate has existed about how to “govern” the commons. Left-leaning people usually think the government should be in control of the commons, and right-leaning people usually think private commercial interests should. Legitimate arguments abound on both sides of this debate. Conservatives argue that the government can’t be trusted, and that the free market is the best way to govern everything. Liberals argue that the government is the only defense against the havoc the free market can wreak. However, in both of these scenarios, the commons really doesn’t belong to us anymore.

In recent years, the commons has been mostly in the hands of a “them.” Whether that them is a government or a business, it is still a them we give up our sovereignty to. It took the development of software to remind us that there is a third way.

Since software is so darned complicated, it became very common among programmers to share bits of code. In fact, the only way much software is even possible at all is through sharing and recycling code that has already been written. Few in the coding community wanted to completely reinvent the wheel every time they sat down to write a new piece of software, so everyone benefited. Hence was born, “open source” (source as in “source code”).

This new kind of commons is different from the old kind since it is no longer tied to the physical world. A commons of land is finite and bounded. A commons of knowledge is neither.

Wikipedia is the most often cited example of this kind of knowledge commons. The Wikimedia Foundation does not take ownership of the content of wikipedia. The content belongs to everyone. Anyone can duplicate all of the content and set up a parallel service should they so choose. So while the Wikimedia Foundation may administer the site, fundamentally they are not a them. Should they start mishandling the site, a new site with identical content would pop up overnight. This openness keeps The Wikimedia Foundation honest, and working for the benefit of all. Compare that with government. Sure, if we’re lucky we can vote out a bad leader after four (or eight) years, but do we have the ability to change the agenda? Not really, and certainly not in a particularly dynamic or responsive way. Government is a them. Wikipedia is an us.

So how does this all relate to open currencies and open economies? Tom Greco refers to the space in which money operates as the “credit commons.” In other words, the credit commons is the common space in which we make rules for issuing and accepting IOUs. So far, this commons has been exclusively created, governed, and managed by a them, be it the government or banks.

Even well-meaning community currency practitioners are all too often a them in their own communities. When the them messes up, the community pays the price. Open currencies remove the need for a them. We will only need an us. Of course, there will still be people whose job it is to help maintain the currency, but they will have that job because they’re serving the community, not because the community has given over its sovereignty to a them.

If The MetaCurrency Project is based on openness, is it different from the open source CC software, Cyclos? Enormously. Remember Prodigy? Prodigy was a closed proprietary attempt at the World-Wide-Web. While it gained some traction in the early 90’s, there really wasn’t widespread adoption of the Internet until http and html enabled the open network that is the current World-Wide-Web. What would have happened if Prodigy had been open source, but still only operating in a closed network (like Cyclos)? Probably nothing. What enables the web is the ability for anyone to request any resource anywhere in the network using open standards of communication. Open. Who would use a service that only gave them access to some of the content that’s out there? Unfortunately, that has been the pattern in the community currency world. Creating lots of small, closed (and sometimes proprietary) networks. I would assert that until a comparable set of open standards exists for the community currency world, it is unlikely to be of any more significance than Prodigy.

That is what the MetaCurrency project and open currencies are all about.

We use currencies to keep records of currents...

2009-05-04T15:49:00.000-07:00

I originally posted this to the Complementary Currencies discussion group on Skype in response to a question from Christoph Hensch. But it probably merits inclusion here.

Christoph, I believe we are in the lazy habit of thinking that the flow of the currency itself is the one that matters instead of the actual flow of goods, services, resources, knowledge or participation which flows COUNTER to an exchange currency.

Those real-world currents shaped and enabled by currencies are what make them so valuable and powerful.

The currency itself is actually just a flow of information. But there are two reasons we myopically focus our attention on the currency flow as if it is the one that matters.

1) We are big-brained, symbol-using creatures, and it's much simpler to us to deal with those nice clean symbols than the actual sloppy flows (dollars are easier to account for than time, various units of various things and other stuff which doesn't even unitize well (such as the state of relationships)) and

2) The REAL flow is an event which happens in a moment and is gone. If you were NOT there to witness the service being performed, the good being exchanged or the participation of that person, then once that moment has passed, the only consistent way we have of knowing what occurred is the record we keep of the event. We use currencies to keep records of currents.

I believe this is the single MOST CRITICAL CONCEPT for currency practitioners to grasp. It allows us to break out of bad habits of thinking about currencies in very outdated ways (such as believing they have or should have intrinsic value because precious metals were once used as coins). This allows us to see currencies for what they truly are: formal systems which shape, enable and measure currents which allow communities to interact with those currents.

Let me paint a more concrete picture. Imagine being out for a walk in the snow, and you see a set of small animal tracks where it bounded out from under a hedge and crossed a field toward another shrub. Then you see them end in a sudden deep indentation, with some wingtip marks on extending out from either side. These tracks tell a story -- a flow of resources and relationships that took place in that field.

Of course, the story itself has passed. All we have left are the tracks. But the tracks can tell quite a lot to the right set of eyes: what types of animals were involved, how long ago it happened, which direction the bird flew off, etc. This is the role that currencies play in our economy. Actual currents of resources and relationships occurred and currencies are the tracks they left behind. The tracks are very informative to the right eyes, so we use them to make business and policy decisions.

Different currencies leave different tracks. The design of the currency makes certain things visible and leaves others invisible. It also determines who has what ranges of movement and track-laying powers.

LETS and Time Dollars have flows of currencies as units are transferred from account to account even if they are a mutual credit currency with a NET total of zero units at all times. Individual account balances are not necessarily zero, and the changes of these balances tell a story about relationships and resources as they moved within the community. It is those counter-flows which the currencies enabled and also the different mobility and track-laying powers that they gave to people who may be disenfranchised from dollar access.

The real power that we gain from these insights is that MONEY is not the only kind of CURRENCY. There are many other currencies that we use. We know that we use currencies as a medium of exchange, but also as units of account or measure, as stores of value, and even as tokens of status, worth or reputation.

Our real power as currency practitioners comes in understanding how we currently use these tools in our communities to lay value-tracks and all the ways that currencies can (and should) be used to track our stories of value.

We value excellence in a chosen domain. For many, winning an Olympic Gold Medal stands as the ultimate symbol of achievement within a sport. But it is not the gold that makes it valuable. In fact, different gold medals have been traded and sold. Their price has been determined by who won it when and how noteworthy their accomplishments were. Olympic medals are a token of status currency which tell us a story about races which have long been run.

Even though they can’t be traded, the points, scores and times achieved in each Olympic competition are also currencies which tell a more detailed and nuanced story of participation which has passed. The possibility of winning a Gold Medal shapes the flow of participation of millions of athletes all over the world. Scores are our official way of keeping TRACK. There is a formalized system of agreements about what counts and how it is counted. Certain people or roles are the ones allowed to ISSUE scores and medals. You cannot issue them yourself.

Anyway, I don’t want to wax at length about the various non-monetary currencies we actually use and why they are in fact currencies, there will probably be disagreement enough over this one example.

But let me leave you with one thought. There is incredible power in this model of understanding currencies which is largely untapped. Money is so powerful, because it is a currency, not just because it is a medium of exchange. Currencies are the means by we collectively interact with real flows of real resources. Healthy design and implementation of truly powerful currencies at all levels of endeavor gives us so much more than we get from money substitutes.

I look forward to partnering with you all in that context.

MetaCurrency Video (6 min w/ transcript)

2009-05-03T14:40:00.000-07:00

The MetaCurrency Project from alan rosenblith on Vimeo.

F: Why is the open source economy important to talk about now?

A: [0:12] 25 years ago, if you had a decent sized business and had to choose technology platforms for increasing the productivity of your business, streamlining your operations, that kind of thing, the safe choices were obvious. [0:26] Generally you went with one of the big players who was likely to be around and setting the standards, because everything at that time was proprietary. [0:35] So you didn’t want to go with some smaller shop that then wouldn’t be around to support your business, [0:42] because fundamentally what you were doing was tying significant value of your business and its operations to another business, another proprietary company.

[0:54] And today, the choices are very different. One of the things that has happened is that open source software has given us a completely other kind of decision to make. [1:05] It’s still possible to choose to go with a proprietary system, but it’s also possible to choose open systems that let you have more choice. [1:16] If you need to customize it, adapt it, or take it in a different direction, you’re not reliant on some third party to be able to do that because you have direct access to controlling the software itself. [1:29] And we don’t think about money that way.

F: Hmm I hear you. [1:33] How should we be thinking about money or currencies?

E: [1:39] What currency is is an endless debate, but I want to offer you a simple analogy. And that is simply to say that a currency is a set of agreements that add up to a game. [1:50] And there are players who have agreed to play in that game together using those agreements. [1:55] So the standard game that we think of when when we think about currency is the game of equitability. Right? [2:05] I have to earn money before I can take resources from the community. So I go out and earn my keep, I get money, and then I can take something back from that community by using that money to buy my food. [2:18] That’s a game we play, and that game is deeply embedded into our society. [2:23] Unfortunately, as all of us are seeing right now, that game and the structure of that game is not leading to equitable wealth-building. [2:33] And people have taken control of the production of these forms of money, and left us in a pretty bad state. [2:41] So we are in place where we need to have a newly open, democratic, easily available place to create new currency games and play them with each other.

F: [2:55] Do we have the infrastructure to use open currencies now?

A: [3:00] Currently we don’t have the tools to have open currencies. Our whole economy at the moment operates in closed proprietary systems. [3:10] When we look carefully at it, what that really is all about is information management and managing the integrity of that information. [3:20] That’s what we’re trying to do with the metacurrency project is create that new infrastructure.

F: [3:24] So what kind of new infrastructure is needed to have open currencies?

A: [3:30] There’s really three new components we need to have the tools for open currencies. [3:40] One is an open transport system for the currency messages to be sent over, as opposed to right now the Visa network is a closed proprietary thing. [3:53] The electronic banking funds transferals is a closed network just among the banks. So one thing is an open transport. [4:03] Another is opening the rules. What type of currency are you participating in, and under what ground rules? [4:11] And do you know when they change? And then the last thing is open data, [4:16] because right now, and this is kind of the norm in the computing space as well, but right now the data is protected also inside of a vault, behind big castle walls. [4:29] And you can’t represent your data as an authority. The bank is the official source of your data, and with that comes a lot of power imbalance. [4:38] They decide who has access to it. And if we want to be able to reclaim that power and choice, we actually need the technology infrastructure to support those three things: open transport, open rules, and open data.

F: [4:54] Eric, you want to add?

E: [4:57] One aspect of why you want an open rule system is transparency, so that you can tell when it’s been changed. But I think much more important with open rule systems is the openness of being able to add new rule sets in. [5:10] And the capacity of saying, “okay I like this rule set, but I also want to add this extra rule set to it. Gee, who wants to come play with me?” [5:19] And in the geek world we call that forking, right? That’s part of an open source project. What makes it so valuable is that you have a whole program, and if the people who are going down the line of developing it are neglecting what you need, you can change and add that yourself. [5:35] And if it falters, you can go and set up a new one. And that whole capacity to fork is absolutely essential to open rules. [5:45] And that capacity has to be built into the infrastructure.

F: [5:51] Hmmm, I thank you. It’s a great energy that you are carrying. You have the evolutionary impulse going with you. [6:00] You’re surfing that wave and opening new paths and possibilities for the new economy.

Open Source Social DNA

2009-04-25T11:15:00.000-07:00

Biologists have known for a while that DNA plays a critical role in determining how an organism develops. Many have called it the blueprint of life. While this analogy does partially reveal the role DNA plays, a “blueprint” implies a plan generated from an outside source. Recent research has suggested that DNA works more by facilitating patterns of chemical relationships that play out over time, and in the process create the organism as a whole.

This distinction may sound small, but think about a blueprint. Everything is planned out ahead of time by the architect, leaving no room for spontaneous creativity on the part of the building itself. Hence, the building is not alive. If there is one thing we know unequivocally about life, it is that it is fundamentally creative. While DNA can set up patterns of interaction, it cannot dictate with any certainly how an organism will react to unpredicted environmental stimuli. Organisms face unique and unpredictable challenges all the time, and as such must constantly evolve both their genomes and the neural connectivity in their brains.

So what does all this have to do with currency? Groups of humans that have a shared purpose can be thought of as a social organism. Genomes, brains, and immune systems are all examples of adaptive networks within a single organism. And, memes serve a similar function in social organisms, since languages allow the formation of adaptive social networks. Ant colonies, bee-hives, and dog packs are all examples of social organisms in the animal world using rudimentary memes to enable group communication. Single organisms become part of social organisms through various forms of coordination. To explore all the ways this can happen here would be unnecessary since there have been countless excellent books and blog posts written on the subject. However, for the purposes of this blog post, it is interesting to note that one of the most influential forms of social coordination in our society is currency.

We know with certainty that different types of currency create different tendencies in the types of collective behavior human social organisms exhibit. A currency design cannot predict this collective behavior in the sense of a blueprint, but rather it sets up a series of possible discrete interactions that, when taken as a whole, manifest as a collective behavior. Nothing can predict with accuracy how a social organism will react to a new set of circumstances. However, once it experiences a certain threshold of stress, it usually evolves new social contracts and currencies that fit the new circumstances. In this light, currency can be thought of as a one form of social DNA.

Sexual reproduction gave eukaryotic cells the ability to have much a greater range of creativity than their prokaryotic forbearers. Creativity and novelty were introduced into the DNA in each generation, and successful adaptations were passed on to subsequent offspring. Our current social organism has many fudmental flaws that can be traced to the fact that our current monetary system is stuck. It keeps reproducing the same dysfunctional behavior in the social organism, and it badly needs to adapt. But it doesn’t just need to adapt into a newer version of the same fundamental process. It needs to adapt the way it adapts. Open source currencies will do for social DNA what sexual reproduction did for biological DNA. They will radically increase the ability of the social organism to adapt to new and changing circumstances. What’s more, we will almost certainly need this capacity to deal with the challenges the 21st century has in store. Please visit The MetaCurrency Project to see how we might actually make this happen.

Reputations

2009-04-12T14:24:00.000-07:00

I do not claim to be an expert on reputations systems. There are many who have gone way deeper on this subject than I. Instead, I hope to seed a conversation about the complex interplay between reputations currencies, exchange currencies, and the marketplace. While there are a whopping variety of reputations currencies in play today on the web, I see two basic categories.

Do I live up to my promises?

When two parties come together to make a transaction, both sides make a variety of promises. As a player in a given marketplace I get a reputation about whether or not I live up to my promises. Some of these promises are explicit and some are implicit. The seller explicitly promises things about their goods or services, such as “This mouse works with USB.” If I get home and the box has been incorrectly labeled, I am legally allowed to return it, since the seller’s explicit promise has been broken. If the seller frequently breaks their explicit promises, they earn a bad reputation and buyers avoid them (they may even be sued). Ebay makes excellent use of this principle with their “thumbs up / thumbs down” system that allows buyers to rate sellers.

On the buyer’s end, the story is a little more complicated. In some marketplaces, the promise might have to do with timely payment. When I receive an invoice, I have until a certain date to settle my account. If, as a buyer, I stop settling accounts on time, I develop a bad reputation.

However, if we look a little deeper we see there are explicit promises backing up the exchange medium itself. Money is an IOU, and, as such, someone had to make an explicit promise to a bank to pay back a loan (with interest) in the future for it to be issued in the first place. While that kind of explicit promise is at the foundation of exchange currency, we rarely perceive money that way. If I develop a bad history as a borrower of money, my credit rating (a reputation currency) is negatively affected, and I lose access to exchange currency.

Reputations outside the explicit promise

Let’s say I own a pizza place. I advertise that, because I care about the environment, I will only employ people who deliver pizzas with their bicycles. You care about the environment too. You order a pizza, but when you get it, the delivery person is driving a Hummer. You feel cheated. Part of what you were paying for was benefit to the environment. This is an example of the first kind of reputation. I as a seller broke my explicit promise.

But what happens if everything is the same, except I didn’t promise bicycles for delivery vehicles? You might still be outraged that a Hummer was the delivery vehicle, but I didn’t promise anything to the contrary. This situation is an example of the second kind of reputation. This kind of reputation may have been what Adam Smith was talking about with his prescription for successful markets: there must be symmetrical information between buyers and sellers. I didn’t know I was supporting a pizza place that used Hummers. I accidentally caused an environmental externality that could have been avoided if I had had access to better information. We could solve this problem by introducing a reputations currency that measured buyers’ perceptions of sellers’ ecological impact. Buyers who cared could go to only those sellers who also cared (or more precisely, imbued buyers with that perception).

Complications

This situation gets murky very quickly, however. What happens if, in the above scenario, I advertise that I, as a pizza seller, care about the environment, but don’t make a promise about delivery vehicles? Perhaps I compost all my waste, or recycle soda cans, or use environmentally friendly cleaners. Since, you as a buyer sitting at home don’t see those behaviors, you are not getting the whole picture. Again, we have asymmetric information.

I might incur an unfair reputation as an ecological monster, since the people who contribute to my reputation don’t see most of my environmentally friendly behavior. A buyer-issued reputations currency would therefore bias me towards enacting environmentally friendly practices that were visible to buyers. However, many of the most important environmental practices might not be things that buyers normally see.

Enter the third party rating service. I, as a seller, can choose to be environmentally audited by a disinterested third party. An auditor gets a thorough look at all my practices and issues credentials to me based on them (another reputations currency). However, there is a tricky balance in this transaction. Since I, as a seller, probably have to pay for this service, I want to make sure there is a good chance I will receive the credentials in question. Therefore, I am biased towards hiring less stringent auditors. However, buyers are not served by this arrangement, and if word gets out that the auditors aren’t stringent, the auditor loses its reputation as an auditor. This means that auditors are trying to appeal to sellers as likely to grant credentials, while simultaneously trying to appeal to buyers as stringent.

One way to solve this dilemma might be to have the buyers rather than sellers pay for the auditing. However, sellers still need to grant access to the auditors. They might only want to grant access to auditors who are less stringent. And if auditors don’t get access to a broad enough swath of businesses, how can they charge buyers for their service?

Also, there are clearly situations where sellers make implicit rather than explicit promises. I might, as a seller, imply something about my practices or my product without making an explicit promise about them. Into which category should we put reputations around these promises? Due to the subtle nature of these reputations currencies, an open source development process that includes the communities that make use of them is the only way to ensure they can be sufficiently dynamic.

Domains of Trust

One final complication: Let’s say we are aggregating reputations about the first kind of reputation (do I live up to explicit promises?). Because (in a hypothetical near future) we have transitioned into a fully open data context, we can see the Ebay seller rating of someone as we buy something from them on Craigslist. But, does an Ebay rating have any meaning in a Craigslist marketplace? It does, IF AND ONLY IF, the rating can travel in the other direction as well, and I incur a consequence on Ebay as a result. If I transact with someone on Craigslist, and they decided to trust me on the basis of my Ebay rating, I could very easily abuse that trust unless they have the ability to post a rating about that transaction back to Ebay. Therefore the consequences of my actions must be applied across all relevant domains.

This gets even more complicated though, because how do we know that the person on Craigslist is rating me based on the same criteria? If they weren’t, we would be comparing apples and oranges, and my Ebay rating would cease to have any meaning at all. The only way to solve this problem is to have open standardized reputation currencies that could be imported and exported across domains. Meta-currency project, here we come!

Value, Values and the New Economy

2009-04-08T08:36:00.000-07:00

Currently value is primarily associated with scarcity. Things like breathable air and drinkable water do not become valuable until they are scarce. This is clearly a problem if we want to have values which reflect the real value of things within a living system.

Also, our models of wealth are completely upside down. Real wealth (derived from "weal" referring to wellness) is not a function of how much stuff you can accumulate. This is like thinking that becoming as fat as possible is to be healthy, or that cancer is a model for healthy systems. (Cancer uses all of its resources to grow more cancer until it kills its host.)

Real wealth is a function of how quickly people's needs are met. You only NEED a few things at a time. You don't need the car when you're not driving it, or the extra house, or the boat or the closets full of clothes you're not wearing. You just need access to those things at the time that you do. This means that scarcity should be dealt with exactly the opposite of how we currently do. Currently, scarce things become costly and hoarded by the wealthy so that even fewer people have access to them. We need currency systems which optimize effective sharing of scarce things so that they can be where they're needed precisely when they're needed.

Money does not do that.

In fact, commercial economies don't do this very well at all (although capitalists loudly exclaim that they do).

As far as I know, the most efficient models for doing this are gift economies. Things are given to who needs them most when they are needed, rather than hoarded by whoever can acquire the most and always underutilized.

To people thinking inside of traditional economic mindsets, this sounds ludicrous at first, but consider this everyday phenomena: Families. Can you imagine if all the things that are shared within families needed to be transacted through commercial exchanges. I need to use the car to run errands, so I have to negotiate a price and pay you for 45 minutes of use. You need to use my shower. You want to watch my TV. Shall we charge for square footage of foodstuffs stored in the refrigerator? Think of how much less efficient a family would be if it didn't operate on a gift economy but actually had to negotiate and process payments for every item shared.

We are one big family. We live in a big house called Earth. We share our house with all other life on the planet, and in turn it shares with us. Our whole commercial economy is built on plundering this gift economy. What does the earth charge for oil, trees and fish? What does the sun charge for growing our food?

So, our challenge lies in designing currencies that facilitate gift economies so that we can maximize the efficiency of our resources and have healthy models for wealth instead of cancerous ones.

There is no such thing as a value-neutral currency. (Yes, I'm speaking of currencies not of markets.) Every currency embodies particular values. It does this by what it measures and what it ignores. Taking care of your own child is not valued in our commercial economy. But as soon as you pay someone else to do it, it becomes a part of our GDP. It is taxed and measured. Only then does it become "valuable."

If currencies are tools for facilitating currents or flows, having one global currency would be like all organisms having one shared bloodstream. There are good reasons that human blood is different than that of fish or tree sap. Currencies can and do (even if we fail to recognize it) fill value niches to support a great diversity of living social systems.

We are witnessing the death of our industrial age economy, and all of its embedded values and financial systems. This is a good thing, because it has become a cancer that is destroying the planet, our lives, our health and itself. About 98% of daily dollar volume of financial transactions occur in the speculative markets (stocks, bonds, currency trading, futures, derivatives, insurance, etc.) rather than in the productive economy. And we think this doing us a service? And this isn't going to skew the whole system out of balance? And that the people who gamble with our money deserve to be paid 100+ times more than people who take care of our kids?

I've got a post brewing about the principles and dynamics of the new economy. I'll try to get it up here soon.

Monetizing Social Media with Community Currency

2009-04-06T15:05:00.000-07:00

Recently, I have been reading a number of blog posts about how to monetize social media. Twitter, for instance, has yet to monetize its service even though it has rapidly become integrated into our social fabric. Despite Twitter’s leagues of users, if they tried to charge for their service, people would likely switch to one of its free and open source competitors (like Identica).

The traditional approach to monetizing social media has been to sell advertising (as on Facebook or YouTube), but this puts the social media providers in a slightly antagonistic relationship with their user base. In addition, advertising itself is becoming less relevant when word about the existence and quality of products can spread so easily. Just look at Yelp! Social media has empowered word-of-mouth over traditional mass advertising, prompting the neo-marketing mantra “the best advertisement is the quality of the product itself.”

This leaves social media providers in a difficult position vis-à-vis monetization, since one of their few viable income streams is rapidly being made irrelevant by social media itself. So what can social media do to be financially sustainable?

To answer this, lets first look at why people don’t want to pay for these services. No social media provider will ever be able to charge for its services in scarce dollars since there will always be free alternatives. But what about charging in a currency that is not scarce by design? What if people had a completely different relationship to the money they had to pay? What if this new money was backed by the reputation of the users of the social media itself? Social media has already empowered user-generated reputation to the point of threatening the relevance of advertising. What if it could do the same to banks’ exclusive monopoly on issuing money?

This new process of issuing money would have to be open, distributed, and transparent. ‘They’ wouldn’t be issuing the money, but rather ‘we’ would. The social media providers would simply be the platforms on which these agreements were tracked and played out.

Traditional advertisements work by generating a sense of scarcity for whatever product is being advertised. When the quality of the product itself replaces perceived scarcity as the primary reason people want to buy, consumerism can, at long last, mature beyond adolescence. Similarly, when money itself is not kept artificially scarce by a ‘them," a new sense of sufficiency will make the prospect of paying social media providers seem more than fair. For anyone who thinks this would be “funny money,” Facebook is expected to have 200 million users by the end of 2009. If Facebook were a country, it would be one of the biggest in the world.

Imagine a mutual-credit-card without transaction fees and with little to no interest. People could pay for any social media service with the currency they helped enable. Given social media’s colossal user base, providers could pay their expenses with this near universally accepted money. Sounds much better than what banks can offer.

Permaculture / Currency as Language

2009-03-26T09:59:00.000-07:00

I spent two years working on a small organic family farm, and was certified in permaculture while I was there by Scott Pittman (who is in THE MONEY FIX). Scott taught us to see biological systems in terms of flows and patterns. If you want to describe the state of a non-living system (such as air in a balloon), you use Newton’s laws, the laws of Thermodynamics, and chemistry. Once a system becomes living, however, these laws are insufficient to explain its behavior.

Ilya Prigogine coined the term “dissipative structure” and used it to describe life (among other phenomenon). A dissipative structure is a pattern that is stable in conditions far from equilibrium. To understand this, think of your body. Your body is still you, even though every atom will be completely replaced every few years. What constitutes you is not your physical “stuff” but rather your pattern. This is the realm of the biosphere. Patterns. And permaculture helps us understand and interact with these biological patterns of flow.

However, there is another layer when we talk about human behavior, and that is the layer of meaning or mind (Noosphere). If we want to grock human behavior, an understanding of biological patterns is insufficient in itself. Humans base their behavior on concepts in addition to biological needs. How would I use biology to describe or predict the effects of the Constitution? Shakespeare’s plays? The Beatles? All of these phenomena exist in the domain of meaning, and as such have a powerful affect on our behavior.

In the domain of meaning, we need the structure of a language to interpret those meanings and resonate with each other. Fundamentally, we use language to coordinate our behavior as a group. There has been a great deal of research on the deep structure of natural language (spoken or written word), but there are many other kinds of language. Music, art, dance, etc. are also types of language in that they provide a framework for mutually understood (and extensible) meanings between artist and viewer, and that those mutually understood meanings allow a resonance. Does that make all of these things currency? No.

We all think of speech as language, and many of us think of art as a language, but how many of us think of currency that way? If we do start thinking of currency as a language, we quickly see that it is much bigger than just money. We see that the same thing that gives money its linguistic qualities also bestows those qualities on grades, reputations on Ebay, movie tickets, etc. In fact all of these social systems can be unified by a single deep structure. I think Eric’s definition for currency hits pretty darned close to the mark: “formal information systems that allow communities to interact with flows.” Think of it as permaculture of the mind. ☺

Why the "currency" in the the meta-currency project?

2009-03-25T19:57:00.000-07:00

In this blog post, Guillaume Lebleu takes a stab at defining the word currency, and recommends keeping it fairly tightly bound to its traditional meaning around "a form of payment in a trade". So I thought it would be helpful to say some words about why in the meta-currency project we use the term currency in different and broader sense.

First a short digression to build a metaphor: There are three realms of the physical world that on the surface appear quite different: light, sound, and waves on water. Under the surface, however, they are united by the general patterns described by the mathematics of wave mechanics. Once wave mechanics was understood, and we had a language to express those patterns, not only could we look at these phenomena with totally new eyes, it also meant that we could engineer physical systems that do incredible things to synthesize these realms: sound can be converted to into physical or electric representations, recorded on wax cylinders, transmitted over light waves, etc. etc.

What we are claiming in the meta-currency project, is that the seemingly different social phenomena of monetary exchange, eBay reputation points, grades, coupons, airline-miles, etc.., are similarly expressions of a common pattern. They are all:

formal information systems that allow communities to interact with flows

And we call those systems currencies, i.e. trade currencies, reputation currencies, loyalty currencies, performance metric currencies, etc. In each case the flows they interact with, or the ways they interact with flows may be in different realms of social manifestation, just as sound, light and water waves all have wave properties in different realms of physical manifestation. But what we have found, is that once we recognize this common pattern, we experience a paradigm shift: we change our focus from the information tokens, to the flows themselves. We begin to actually be able to see these flows, and see how the flows are what create wealth, and how the information tokens just help us interact with the flows.

Thus, the goal of the meta-currency project is to create a new expressive capacity, a "flow mechanics" that amplifies our ability to see and shape the flows that underlie healthy social systems. This is much like how "wave mechanics" is an expressive capacity that gave us amplifies our ability to build physical systems.

In an e-mail to me Guillaume created a metaphor to illustrate the difference between currency and reputation systems as part of describing why he's not comfortable using the word currency for both. He said: "currency is the water in the conduit, the reputation is the filter in the conduit, but the filter isn't fluid." This metaphor certainly works to an extent, but it doesn't reflect the paradigm shift that I've described above. I think the metaphor is more powerful if it is expanded thus:

The flow of water is necessary to life in a house. We need lots of integrated tools to shape how that water flows. We need pipes to direct where the flow goes, we need valves to keep the flow going in the right direction and in the correct amounts, we need filters to keep out crud from the flow, etc... All together, we call this plumbing. It's an integrated system.

Our goal is to create a platform that will allow communities to build the social plumbing that allows them to interact in all the necessary ways with the many types of flows that will make them radiant and healthy communities. I am totally convinced that such a platform must be flexible enough to carry information about more types of interactions than just trade, precisely because the paradigm shift that I have experienced is about the underlying unity of the patterns and processes involved.

So, my current sense is that claiming an expanded use of the word currency is a powerful strategic move to help awaken the understanding of this paradigm shift. Using old words in new ways is a time honored technique to get us to change our thinking, and that's exactly what's needed. Guillaume does make an excellent point in the post about the how the word currency when translated into other languages doesn't carry with it the flow connotations we have for it in English. That is a serious strategic issue, but I'm not sure how important it is that if we expand the meaning of currency in English that we also have to do so in all other languages. If it doesn't work in a particular language why not find a different word in that language that does? Strategics I think are always language and culture specific. But please note, that I'm not wedded to forcing the word currency into talking about all these types of flow shaping tools. It's just the best I've heard so far. The point is that what I want to focus on is flow shaping information systems for communities to build wealth at all levels, because they are all integrated. But who knows, maybe the best strategic move is to call it the meta-plumbing project!

I want to reiterate that I'm not talking about using this language to explain how to use Twollars, or time banks, or eBay ratings, or any particular currency that is created using the platform. That makes no more sense than talking about wave mechanics when trying to explain how to use a microphone. But to build and design a microphone and the devices it is attached to, we had to have developed and gained fluency in the language of wave mechanics.

Just one more thing: This sounds like an overwhelming task, and really long term. At one level it is, in that the fullness of what will come of it is huge and will only appear in the long term. But getting started is not that hard, or that long term. I believe that at the very least, the crucial components of the kind of expressive capacity or language of flow needed to build this kind of plumbing are actually achievable short term. That, actually, it is like wave mechanics which boils down to some very simple relationships. There are few underlying basic relationships out of which all such flow token systems (including money exchange ones) can be built. These relationships become the basis of the meta-currency technical platform we are building, at the heart of which is the meta-currency protocol. More on that very soon...

The Footprints of Flow

2009-03-21T20:52:00.000-07:00

Alan’s recent of posts (about P2P Currency and Currency Platforms) outline a trajectory that points in this direction, but I want to specifically spell out one thing that is so different about what we’re building than any other currency projects we’ve seen.

There are some fundamental shifts that must be made in currency infrastructure for us to break free of the constraints and dysfunctional patterns of the past, and I don’t believe that any prior platforms provide for these necessary shifts yet.

I’ll let Eric write about how MCP and SGFL are also a complete departure, but I’m writing about the one that has been consuming my attention: Intrinsic Data Integrity.

Intrinsic Data Integrity

No, you didn’t space out in your computer science class and miss this term; I’m totally coining this phrase. There are a few other names for it that I’m considering, but for now, I’m calling it Intrinsic Integrity.

There were times when whole villages hid behind castle walls and great moats, and when the borders of nations were defined by defensible boundaries like rivers, coasts, mountain ranges and Great Walls. Closing something off behind high walls and tight defenses is certainly one approach to security.

However, we’ve discovered that there are much more effective methods to ensure security (even if many of us are not conscious of it). Notice that today, there are very few people living behind castle walls, and few nations focused on defensible borders. We’ve replaced walls with laws and moats with tort. Rather than erecting walls to hide from hordes of savages, it turns out we’re much safer having people internalize rules and laws. They suddenly cease being “savages.”

But when it comes to dealing with computers and data, we’ve mostly ignored this lesson. We lock our data behind passwords, permissions and firewalls, relying on that one type of security when we could have the data internalize rules which keep it secure. There are a few instances where we do this like when we use CRCs (Cyclic Redundancy Checks) to ensure a downloaded file hasn’t been tampered with, parity bits in RAID arrays, or check sums on network packets. However, we don’t generally structure the data we use for decision-making ways that ensure its integrity.

One great example of software that does do this is the distributed source code management tool called git. Instead of a tightly controlled central repository where you protect from unauthorized people committing changes to it, git allows anybody to download the source code for a project (for example, the kernel of the Linux operating system), make modifications to the code and then commit the code again!

This would be very dangerous to do with typical software or databases. Imagine if you could download your bank’s internal software or your bank account data, make changes to it, and then recommit it again. Everybody would be changing their bank balances all the time. With git you can’t alter something without adding a completely new commit which records your signature. If you tried to make a sneaky unsigned change to existing data, it would longer match with the signatures attached to it. This makes it safe for people to change to the Linux kernel and yet ensures they cannot introduce flaws or security holes because it will break the signed data patterns.

By implementing Intrinsic Data Integrity, you can allow people to have a completely authoritative copy of their own transaction history. This data could be specifically shared with the parties of each transaction, or shared with third party notaries or auditors, or possibly open to public review. New ways of analyzing and aggregating the data become possible, because the original data is available in a linked and signed chain. Just like you can notate the moves of a chess game and replay them to recreate the state of a chess game, you can replay the signed transactions to create the state of an account or the whole currency system at any point in time.

Tracks in the Sand

Humans are good at seeing objects; but we’re not so good at direct apprehension of flow. Flow is really only visible to us when it is embodied in something. We typically create a story from the movement of stuff and the after-effects on objects to perceive what is flowing. We see the Grand Canyon and rebuild the long story of erosion that etched it. We see mouse tracks in the snow which end in a sudden deep indentation having wing marks on either side and reconstruct a story of a flow that occurred.

If currencies are the tools for shaping, enabling and measuring currents or flows, then a linked chain of digitally signed transactions are the tracks those flows leave behind so that we can understand the story that the flows are telling. If we later learn about patterns we want to study, we can always go back to the original flow-tracks and look for them. Each participant in this kind of currency becomes a sovereign individual empowered represent their current status and complete history.

Openness is about more than open source code

Consider Wikipedia. It is more than an Encyclopedia which uses Open Source software. There are millions of sites and wikis built on such open source tools. But the Wikipedia folks made a decision right up front that has encouraged many thousands of people to invest their time, expertise and money in supporting that particular project. They made all the data freely available. I don’t mean just readable via web pages; you can download their whole database and create your own fully functional copy of Wikipedia.

Why is that so important? It is an explicit promise that your investment will never be lost because of bad policies, poor decisions, internal politics or failure to adapt to the needs of the community. If someone can do the job better than Wikipedia, then they can just take the all data and start doing so with better policies, incentives, interfaces or whatever. The cost to branch the project to another, possibly more fruitful path, is extremely low. This looming possibility also serves to keep them honest and responsive.

A closed currency system (behind castle walls) where individuals do not have the sovereignty to fully and accurately represent their own activity history ensures that the investment of account-holders dies with the authority managing the castle walls. The integrity of the data relies on the ability to defend the walls and requires complete trust of the individuals who get access to the data inside the walls. Once a single individual abuses the trust or the walls are breached, all the data becomes questionable. This makes it almost impossible to gracefully transition data from a failed project to new endeavor.

A Walled Currency Will Eventually Fail You

Let’s pretend for a moment that there are two possible outcomes for any currency system – success or failure. I’m going to completely forego defining success, so you can view it as massive adoption, high volumes of activity, universal liquidity, meeting the needs it was designed for, or whatever. If the individual participant does not have sovereignty which includes full “ownership” of their personal data either outcome ends up being a loss for them.

If a bad currency design fails, the value embedded in it is lost. However, currency failure may happen for reasons independent of the validity of the currency design itself: bad timing, bad governance, inadequate leadership, lack of funding, lack of promotion, poor infrastructure, internal strife, etc. Whatever investment of time, energy, learning, goods or services that each participant invested is completely lost and generally cannot be usefully ported to a new iteration of an otherwise good currency. If some people still like the original idea even though it was steered awry, they are forced to start over from ground zero.

On the other hand, currency success tends to lead to continued use, reliance and influence. As this cycle continues the currency gains more and more power and influence in its community or economy (consider the dynamic of national currencies). In a silo/castle-wall system, the people who control it also grow in power and influence. It becomes harder and harder to consider alternatives to the currency system because it seems so vital. Eventually, imbalances emerge. The centralized access and control leads to corruption of leadership and inequitable treatment (even if unintentionally via Pareto Effect). Or needs of participants change but the system doesn’t adapt effectively. In any case, the only way to break free from a successful closed currency appears to be through painful and disruptive collapse.

Currently, we have the privilege of experiencing the collapse of a “successful” currency first-hand.

The only real way to avoid those dysfunctional dynamics is to have the underlying infrastructure optimized for easy forking, evolution and adaptation with each participant having the capacity to migrate toward systems which provide better solutions.

Never Surrender!

We have surrendered the power to make money to the government. Then of course, the power hungry have figured out how to get the government to surrender money-making powers to them.

In America, the bankers have "stolen" money-making power 6 times. We've taken it back from them 5 times. I suggest this time when we take back money-making powers, we keep them. We should not surrender them back to the government or any oligarchical group.

Intrinsic Data Integrity ensures that we can maintain our sovereignty as individuals even when we gather together in communities and groups to create currencies. The other protocols of the metacurrency platform separate functions and powers so that there is much more of an open market for the various activities in a currency. The functions performed inside the closed banks, such as authentication/identity, transacting, auditing, managing security, granting access, enforcing rules, changing rules, maintaining the state of the system, assessing fees, storing records, charging interest, providing interfaces, etc. are broken into separate functions many of which an individual can do themselves, and for the others they can select from various providers who have the technical capacities. This prevents abuses of power by any one group.

Where Privacy and Openness Meet

You may wonder if we can make these footprints visible and still honor people’s privacy. Yes. We can share data and still ensure privacy, but many systems may not and should not do so. Transparency is a very powerful tool for spreading awareness and mutual trust. Most currencies would be wise to tap into that kind of power and clarity.

If, however, you have reason to safeguard privacy there are a number of solid ways to do so. The most obvious one is to encrypt the core parts of a transaction that you don’t want publicly visible, and leave only the outer layer of linked signatures visible. In this case, you don’t need to worry about whether the various “owners” of their transactions are protecting them behind high walls. Let them loose but build a tiny wall into each one.

This post covers the theoretical application of Intrinsic Data Integrity and its importance. I’ll have to follow it up with a geekier post illustrating technical aspects of its implementation.

I’m excited about the larger implications of the power shift from enabling currencies with Intrinsic Integrity.

I’m still trying to sort out how this is like giving social DNA the “organic” material to really evolve our social “bodies.” There’s more to come when I can explain that.

Metacurrency grammars and Twollars

2009-03-19T05:59:00.000-07:00

In the metacurrency world, one of the key things we need is a grammar to that allows us to specify what a transaction will look like for a particular currency. Yesterday Art & I had a wonderful conversation with Eiso and Mac from Twollars about how this might be accomplished in a mult-currency Twollars universe. Twollars is based on parsing tweets from the public timeline looking for a particular format that indicates that the tweet is supposed to be a transaction. Here's an example tweet that Twollars recognizes:

Give @artbrock 2 Twollars because he's brilliant

Grammatically this translates to:

Give [subject] [quantity] Twollars because [reason]

Twollars could become deeply multi-currency if instead of there being just that one hard-coded grammar, anybody could specify a grammar for the Twollars server to recognize as a transaction for their currency. All that's needed is to throw in a hash tag to specify the currency. Here's an example:

Twollars: #zippybucks Give @artbrock 2 because he's brilliant.

The meta-grammar here that the Twollars server could parse is:

Twollars: #[currency-name] [transaction]

And then the [transaction] part gets parsed by the currency specific grammar which is:

Give [subject] [quantity] because [reason]

Now there's one other thing that has to be added for this to work, and that is a notion of what state a transaction is transforming. I.e. what's the aggregate result of many transactions. In the case of the current Twollars, the state is the balances of tweeter and the tweetee, and the transformation rules are simple:

1) Tweetee balance is incremented by [quantity]
2) Tweeter balance is decremented by [quantity]

But this too should be up for grabs and specifiable by the currency creator. The way Twollars has started out, users are issued 50 Twollars to begin with. This means that the total amount of thanks that can circulate in the system is 50 times the number of users. Think about it. Does that really make sense? Not really because my capacity to be grateful and acknowledge value given to me isn't hard limited like that, which is not to say that it's infinite. Eiso and Mac have very good reasons for starting out Twollars as they did, so I'm not knocking that at all. I'm just pointing to the fact that in the multi-currency world we want communities to be able to specify the circulation properties of the currency as suites them best. So, lets imagine a different "thanks" currency where you can "give" different words of gratitude (or ingratitude for that matter) and instead of a balance in that currency, what you have is a count of those words given and received. Here are some sample transactions:

Twollars: #thx Thanks @zippy314 for his amazing...
Twollars: #thx Appreciates @fer_ananda for her....
Twollars: #thx Scolds @artbrock for ..

Now when specifying such a currency we need to give both it's grammar:

#thx = [action:Thanks,Scolds,Appreciates] [@] for [description:what]

and define what the states are, which for this currency are simply 6 numbers, the count of thanks/scolds/appreciates given and received, and also give the transformation rules which are just:
1) Tweeter [action word given count] increased by 1
2) Tweetee [action word recieved count] increased by 1

Of course the Twollars interface should hide almost all of the underlying details of the states and transformation rules, by giving us a simple AJAXy way of defining our little transaction grammars and choosing various state transform options, and it would all be really easy, fun and cool. From the sounds of it, you might see something like this on Twollars no too far in the future…

Here are some more examples of other such currencies that Art & I came up with:

A simple LETS currency:
#lets = [action:Pay] [@] $[qty:int] for [description:what]

State transform: qty adjusts Balances

Example:
Twollars: #lets Pay @artbrock $2 for currency consulting

A Kilowatt Hour currency:
#kwh = [action:Energize] [@] with [qty:int]kwh for [description:what]

State transform: qty adjusts Balance [where balance max = infinity & balance min = 0]

Example:
Twollars: #kwh Energize @artbrock with 2kwh for currency consulting

A LOL Cat acknowledgement currency:
#lolcat = [action:can haz cheezburgr, cant haz cheezburgr] [@] forze [description:stuff]

State transform: action adjusts Counts: e.g. 20 can haz. 0 cant haz

Example:
Twollars: #lolcat can haz cheezburgr @zippy314 forze cieling cat prayrz

A currency for rating political debates:
#DebateVote = [action:rates] @obama [rating] stars @mccain [rating] stars

State transform: rating adjusts Average

Example:
Twollars: #DebateVote rates @obama 4 start @mccain 1 stars

Intro to Currency Platforms

2009-03-16T11:47:00.000-07:00

I was recently forwarded a question about the difference between LETS, time-banks, and Open Money. I struggled hard to find the right response and decided that the fundamental shift was from “currency designs” to “currency platforms.” What follows is my attempt to describe that shift.

LETS, time-banks, commercial barter exchanges, and HOURS (Ithaca or otherwise) are all currency designs. Open Money is a currency platform. Those in the currency design world have tended to focus on coming up with the best design to maximize the chances of success. There was good reason for this focus since roughly 90% of attempts at implementing currency systems quickly fail. The most successful designs have been built around the concept of “mutual-credit” as in LETS, time-banks, and commercial barter. While each of these employ different subtleties, the core design principle is the same.

Even when currencies employ the relatively successful core design of mutual-credit, the odds of success are still slim. More importantly, however, is that the cost of failure is high. Until recently, if you wanted to harness the power of currency creation for your community, you had to invest many long hours in organizing. Frequently, these hours were uncompensated and underappreciated. Given the odds of success, only the most zealous even bothered to try.

To date, currency designers have tended to try to find the design that will finally take the idea of community currency to its full potential. The goal has been to raise the success rate thereby making those long hours of organizing worth it. However, what if instead of success being more likely, failure was less costly? Enter the currency platform.

As Michael Linton has pointed out “we all belong to many tribes.” This means that there are countless communities we already belong to that might benefit from some kind of currency strategy. But who in these communities is likely to spend the hours of organizing needed to implement such a strategy? What if creating a currency was, as Linton says, “as simple and easy as starting an email group?” Then, there would be little to no cost of failure. If people used the currency, great. If not, no one sacrificed long hours to make it happen. By lowering the cost of failure, countless numbers of communities will gain access to the power of currency creation without the risk of anyone wasting their time on a wild goose chase.

Some of these currencies will be measured in hours (as in a time-bank); some will be measured in the national money (as in LETS). Some will involve complex formulas for calculating credit limits; others won’t have credit limits. Some will have open account balances; others will have private account balances. The specifics of the design will depend on the needs of the community in question, just as the specifics of how email groups are implemented depend on the needs of the group.

This evolution represents a PROFOUND shift in how currency designers will operate. For those wanting a taste of what this might be like, Twollars is about to release a multi-currency platform. While still in its infancy, Twollars will allow users to generate their own currencies by simply defining a hash-tag for them. Hopefully, other currency platforms such as Open Money will also soon be operational (and interoperable), so we can really get this party started.

Twollars (why they are an important step forward)

2009-03-11T13:17:00.000-07:00

About a month ago, Eiso Kant and Mac Taylor released Twollars. Twollars is a twitter-based “thank you” currency that allows users to join by simply participating. To participate, you only need tweet in the following format: Give [amount] Twollars @[twitter user] for [reason]. The Twollars server continually searches the global twitter stream for text matching this description. It downloads the tweets (to prevent them being deleted), and tallies a user balance based on the tweets the user has given and received in this format. The user balance and transaction history is completely open, meaning anyone can see it. This helps prevents fraud. After all, how different might have Enron behaved if their books had been open?

Eiso and Mac have set the arbitrary amount of fifty twollars (TWs) as the starting balance for anyone participating. They have also proposed a non-profit fundraising component where Twollars donated to charity are matched by conventional money donated by a business once a certain Twollars threshold is reached.

However, what makes Twollars an important evolution in currency design are not the surface level details. Twollars is using a very popular existing platform (Twitter) for transacting and accounting. Most currency efforts to date have depended on a separate platform specifically designed for currency exchange. While this has yielded some limited results, people who want to participate have been forced into walled gardens. Twollars gives added functionality to an existing user identity thereby lowering the entrance barrier. There are numerous Facebook applications that make use of this principle, and many of them could be thought of as a kind of currency. However, few people think of them that way, and their use value is somewhat questionable (do I really gain any value from having a sheep thrown at me?).

Community currencies have frequently charged a yearly fee (in conventional money) for membership in their “currency club.” With the advent of Twollars, this approach has become outdated. Lowering the cost of failure for participating in a community currency will likely make the idea far more appealing for the potential user. The fact that Twollars is on an existing platform, where the use of the currency promotes the currency itself gives Twollars a viral quality that other currencies simply don’t enjoy.

Even more significantly, according to Eiso, they are close to releasing a version of Twollars that allows for user generated currencies. People would be able to define their own currency by simply defining a hash-tag for it. For instance a Portland based time-bank focused on the film community might use “#pdxfilmtb”. The Twollars server would tally transactions bearing this hash-tag separately from others. A simple mutual-credit architecture would give the power of a time-bank to any and all people willing to participate for free. Here finally we see the dawning of what many of us have been waiting for: a free, multi-currency platform that demystifies money / currency, and empowers the user to define their own economic exchange networks.

Eiso and Mac are also very wisely using the K-I-S-S principle (keep it simple stupid). Many of us (myself included) in the currency world have a tendency to over-complicate matters, especially when it comes to the user experience. Someday soon, we will need a nuanced platform that can describe any currency imaginable, but for now a simple mutual-credit architecture (like LETS or a Time-banks) will be able to engage a wide array of people who haven’t considered the possibility of using community currency before.

In addition, Eiso and Mac have both been very open to the ideas and input from other members of the currency world. By releasing their beta version and soliciting input from the community, they have adopted one of the key success strategies of social web innovators. I can’t overemphasize my enthusiasm for the Twollars project.

Congrats!

P2P Currency

2009-02-18T10:27:00.000-08:00

If there is one over-arching trend in the information age, it is towards p2p architecture. P2P is more efficient since resources are not needed to maintain access hubs (think Skype, Limewire, etc). The evolution towards p2p is a continuation of what happened to scribes when the printing press was invented. Before books could be produced on a large scale, it made sense to have a class of people who devoted themselves to literacy. However, when the printing press came on the scene, universal literacy was enabled. This transition was slow by today’s standards, but it was very real. See Clay Shirky’s book “Here Comes Everybody” for a great description of this evolution.

While I am sure this is not news to most of you, its relation to the issuance of money bears some careful thought. The evolution that happened in reading and writing during the Renaissance is about to happen with how we issue currency. Almost all currency designs to date (dollars included) depend on either a scarce commodity (such as gold or paper notes) or a centralized authority to issue and/or track the currency (barter clubs, time-banks, etc).

The IRS classifies the latter as “Third-Party Record Keepers” and provides users with 1099B forms to make sure they stay above board. Fundamentally, p2p architecture in currency design will mean the obsolescence of third-party record keepers. Information about account balances will not need to be held and tracked in a central location, and participation in such systems (and the creation of new ones) will no longer be dependent on any form of central authority. But how is this even possible? Let’s take a deeper look at what the historic role of banks has been.

Banks have performed two main services since their inception. The first was to be a safe place to store gold, silver, or other commodity money. Since money no longer has any relation to precious metals (thankfully), and is issued entirely as credit, this function is no longer needed. The second service banks provided was and is far more significant. Banks have the authority to determine whose IOUs are meaningful and whose aren’t. Put another way, banks are the arbiters of trust in our society. Given the current state of affairs, one thing is clear: banks have failed miserably at this job. The reason is quite simple. They had a conflict of interest between being the arbiters of trust and making a profit. But who should be the arbiter of trust in a given community?

The answer is that, given how much information technology has evolved recently, the members of a community can be their own arbiters. Since the advent of Ebay it has been clear that online communities are capable of policing themselves. In Ebay’s case, the concern was whether sellers (or buyers) could be trusted to make good on their various promises. Instead of implementing a complicated and costly authoritarian scheme, Ebay let the users police themselves through reputation. Being a trustworthy member of the Ebay community provides users with more value than cheating the system. This simple process has proved the ability of online communities to police themselves according to their own unique criteria. What enables a seller to trust a never-before-met buyer is what will soon make possible the issuance of money on a p2p basis.

At heart, money is a promise (or IOU) to provide goods or services at some point in the future. Determining who will actually make good on their promises has heretofore been the primary function of banks. However, the advent of reputations systems like Ebay’s opens the very real possibility that people can determine for themselves who is trustworthy. So how does P2P currency differ from currency as it has been implemented thus far?

Money thus far has been a promise VOUCHED for by an authoritative body (such as a barter-club or bank). The central shift is that money will become a promise VOUCHED for by the community of users. The specifics of how this process plays out will be different for every community. The users of a given money will determine the basis for a reputable promise themselves. As this architecture becomes more commonly adopted, millions of currencies will take root worldwide. Issuers will be able to use real-life relationships in their communities as the basis for currency issuance. So will this be more reliable and cost effective than the current model?

The unqualified answer is YES! Who is better qualified to vouch for potential currency issuers than those who conduct business with them? Think how different this is from today’s model. People will be able to consensually participate in currencies rather than being held hostage by an authoritative them. P2P architecture will at long last bring democracy to the domain of money.

Data Structure for a Currency Platform

2009-02-10T12:54:00.000-08:00

What follows is my attempt to describe what might be necessary for an extensible currency platform that takes into account (no pun intended) the subtleties of flow language. Eric Harris-Braun has already looked into this problem deeply and has developed the “mesh + churn” of Open Money. Please see those materials for another angle on these issues.

A currency platform will need several components to be fully functional. Let’s go through them in order.

1) Account – An account, as I am defining it, is the place where information about ONE currency is aggregated and transformed for output. In a mutual-credit currency, my account would do a summation on my transactions within the currency, and tell me whether my account balance was positive or negative. In a “thumbs up, thumbs down” reputation currency, my account would display the average of the ratings given to me by my trading partners (1 for thumbs up, 0 for thumbs down) as a percent (80% thumbs up). The account is an aggregation of transactions that happened within a particular domain, transformed to be relevant to the user within that domain. I will call this transformed informational output the "account balance.” Accounts could even use account balances in other currencies as input when calculating their own balance (think Dow Jones Industrial Average). To summarize, an account is what interacts with other accounts.

2) Transaction – A transaction is an interaction between two accounts. It is a record of what happened and describes a mathematical relationship between the two accounts. I.E. On February 10th 14:50 “account A” pays 50 to “account B”. This transaction describes the relationship between the two accounts, and records the time it occurred. Transactions could be transferable (debited to the payer, credited to the payee), or non-transferable (not debited to the payer, but still credited to payee) such as a reputation transaction or a thank you. In order to have the maximum extensibility to this platform, receipts for all transactions within a currency could be aggregated on a server(s) (such as Twitter). These receipts would contain all the information about that transaction specified by the currency. Third party applications could be written that would derive other metrics from this aggregated transaction history, and project that information into new accounts (as allowed by the rules of a given currency), and even new currencies.

3) Currency – A currency is set of rules defining the types of accounts, how their balances are calculated, and how these accounts can transact with each other. A currency could have multiple different classes of accounts. For instance, a mutual credit currency might only allow businesses to be issuers of the currency (allow their balances to be negative). This stipulation would necessitate multiple types of accounts within the currency. A currency would define these different types of accounts and their privileges.

4) Currency Complex – A given currency defines just one domain of measure. However, most currency environments depend on several different currencies interacting with one another. For instance, a “thumbs up, thumbs down” reputations currency can be used in concert with a mutual credit currency to give visibility to the reliability of the potential trading partners using the mutual credit currency. Many different currencies could be cross-referenced to produce a rich and resilient tapestry. Because currencies are modular within the currency complex, currencies can quickly evolve in an extensible way. Rules for currency could be contingent on metrics both inside and outside a given currency. For instance, let’s say you wanted to have a credit limit in a mutual credit currency be dependent on the user's volume of transaction in the currency multiplied by the percent of "thumbs up" ratings. The user would need two accounts within the mutual credit currency, and an account in a second reputations currency. The user's buying power in the mutual credit currency would be a sum of all transactions. The user's transaction volume would be the sum of the absolute values of all their transactions (calculated in separate account). The user's history in the "thumbs up, thumbs down" currency would be calculated as an average. The credit limit for the first, could be linked to the second and the third (credit limit increases to 1000 when you have conducted 10,000 worth of business with 90% thumbs up).

5) ID – A person using this platform will need to have some sort of identity boundary on the currency platform. This is distinct from having an account, since an account, as I am defining it, is merely the place where one currency is aggregated. An ID will be able to have multiple different types of accounts within one currency, participate in multiple currencies within one currency complex, and participate in multiple currency complexes. The ID simply allows multiple different currencies to be grouped and displayed according to user.

Flow Language in a little more depth

2009-02-08T15:54:00.000-08:00

Building on the previous blog post, I would like to go into a little more depth about some aspects of the flow language. This is, of course, all subject to debate and interpretation, so in this matter I only write my own opinions. I apologize ahead of time if this gets a little esoteric sounding.

In much the same way that, in natural language, a sentence has the basic structure of [Subject | Predicate], a flow statement also has a core structure. There are four main classifications of elements that make up the flow language: Holon (a.k.a. noun, subject, account, container), transactions (events), patterns (emergent), and rules. Each of these can be defined in the following way:

A holon has a definable boundary within which it processes input, according to rules, for use when transacting with other holons.
A pattern emerges from an aggregation of transactions between holons governed by rules (and possibly further defined as a larger holon).
A transaction is an interaction between holons governed by rules.
Rules govern both the interior processes of holons and the interactions between holons.

Notice that the primary distinction between a holon and a pattern is that the holon has a definable boundary. A pattern simply emerges. A holon is defined as something distinct from something else. A flow statement must define a starting level holon (i.e. an account), and define rules of transaction with other such holons. Patterns may emerge as a result.

A set of rules has two main parts. The first defines what level holon to start with (account, individual, group, etc) and how input to the holon is processed internally (i.e. account balances summed or averaged). The second part defines how that holon interacts with other holons both at same level and at higher levels.

Patterns emerge from aggregations of transactions between holons unfolding according to rules. In biological systems, DNA defines the processes for massive numbers of local interactions that, when aggregated, produce a global living pattern (unfolding according to the rules of chemistry). Because, the living being is an emergent property of local interactions, the whole PLAN for the living being is not needed, but rather simply a defined process of interaction. See cellular automata for more on this subject. In a similar way, rules governing the interaction of holons at the linguistic level can create emergent global patterns of flow.

In the flow language, there is a somewhat fluid relationship between holon and pattern. One can easily translate the emergent patterns into new holons to be further interacted with. I.E. a pattern of poor grades at a school is recorded and used to determine the school’s funding (much to their dismay). Aspects of the emergent "grades pattern" are defined as a new holon, and used to determine future aspects of transactions (funding). It is this rich interplay between holon, pattern and rules that constitute currency. Deciding which patterns to put a boundary around (and turn into holons), could very well be a collaborative process within a community, itself unfolding according to rules.

Holons AS Accounts:

I propose that for the purpose of creating a data structure that can in some way express the flow language, the holon be thought of as an ACCOUNT. I understand that this word has several meanings depending on context, but I think its multiple meanings are appropriate to describe its functions. An account for money is usually thought of as an account in a bank. However, an account can also mean a history of something that happened, as in “The witness gave her account of what happened.” A third, and more modern, meaning is an account on a particular server, as in a Yahoo! account, or a Facebook account. This third meaning seems to have more to do with tracking the activities of an particular identity rather than tracking a particular type of activity that identity engages in. For instance your Ebay account records several different metrics (transactions completed, percent positve feedback, etc). For the purpose of this discussion I am calling each of those metrics as recorded within a UNIQUE account. The ID (identity) is the collection of accounts that pertain to a given person. So in these terms you have an Ebay ID rather than an Ebay account. These might seem like nitpicky details, but the reason for drawing these distinctions will soon become clear.

Returning to the original meaning of the word “account” as a history of something that happened, I would propose that at heart all human flow systems have something to do with recording transactions, and enabling people to project their own actions into the future based on the history of those transactions. Let’s consider money. Money records (in theory) your history of doing things for other people. If you have money, you have done more for others than you have received from others. If you are in debt, the reverse is true. If you are elected senator, the votes are tallied in your column (or account). These votes reflect the preferences of all the eligible voters. Even a meta-currency (or currency derived from other currencies), such as the Dow Jones Industrial Average, makes visible a history of transactions and gives people something to resonate off of when projecting their behavior into the future. So in all these cases, the account is simply a way of aggregating a history pertinent to a particular domain of interest.

More soon.

READ THIS FIRST

2009-02-03T14:53:00.000-08:00

It occurred to me a few days ago that this blog might be quite confusing for some folks. So far, we have not posted a clear overview of exactly what it is we are all discussing and exploring. I thought it might be helpful then to try to put into down-to-earth language the basic tenets of our (the contributors to this blog's) thinking.

Over the last six months, my work as a documentary filmmaker has allowed me to be in an ongoing dialog with Eric Harris-Braun and Arthur Brock about currency related issues. These conversations made clear to me that the core money issue goes much deeper than I had ever thought or imagined.

For me, their central revolutionary insight is that many social tools / institutions that we have previously put in different categories may actually share a common deep structure. The best way to understand what we mean by a "common deep structure" is to make a comparison to the concept of universal grammar in natural languages. Universal grammar is the deep structure of grammar that all natural languages share. While natural languages differ in an almost endless variety of surface ways (phonemes, written symbols, grammar, syntax, etc), all of them share the same deep structure.

What Arthur and Eric realized is that there is another type of language that humans use to coordinate group behaviors. We are all very familiar with the manifestations of this other type of language, but we don’t usually think of them as languages. Money is one (and in some ways the most obvious) manifestation of this language. Other manifestations include voting processes, grades, diplomas, reputations systems (like on Ebay), task management systems, movie tickets, and even brand labels.

What all of these social institutions have in common is that they establish flows of human action / information / meaning that, when taken together as a whole, create complex group behaviors. This includes identifying goals and milestones (both personal and at the group level), distributing labor among the members of the group (deciding who does what), creating personal and group accountability, determining the permissions and privileges of individual members if the group, and evolving the terms of these interactions as the need arises.

While we can describe piecemeal the particulars of a given flow, the complex behaviors that arise out of interacting layers of feedback become nearly impossible to describe or even imagine within the structure of conventional language. These complex flows may require an entirely new type of language to succinctly communicate; a FLOW language. For this reason, we have begun exploring the universal grammar of social contracts and the flows of human activity they enable.

As Jean-Francois Noubel of The Transitioner points out, as our society has tried to deal with complex social and environmental problems, it has become increasingly clear that our current form of collective intelligence is sadly inadequate. By understanding the deep structure of group coordinating systems, we hope to design a virtual platform that allows for the creation of a variety of new social tools that coordinate the behavior of groups while still respecting the autonomy of the individual (all open source style of course). These new tools for expressing, understanding, and influencing social flows are what we are referring to when we use the word CURRENCY.

Widening Currency Definition is Speading

2009-02-03T08:32:00.000-08:00

Just a fun aside, to take a break from the scheduled program of cool-deep convos on flow language:

LaVar Burton, the actor that played Jordy LaForge on Star Trek TNG, now has a blog and in his very first blog post, he talks about compassion as a currency we have as humans to help us get through these challenging times.

http://levarburton.com/?p=3

"Curses, Compassion and Gettin’ Kicked to the Curb…"

I love the fact that people are widening their idea of currency. You can bet LaVar's blog will be well-read, and so the concept will spread and have yet one more exposure. Nice.

Predictable Living Systems

2009-01-28T20:39:00.000-08:00

A non-deterministic system is not quite the same as a non-predictable one. This is where probability comes into play and makes me think we're really on the right track with currencies as tools for expressing/modeling complex, living systems.

[BTW, I still can't post replies, so I'm making this a main blog post even though it started out as a reply to Alan's post "Do currencies describe living systems?"]

Rain falling on a hillside is non-deterministic. We could never be sure about the path any drop will follow. However, taken as a whole with hundreds of thousands of drops, we can probably predict rather easily where water will run, where it will puddle, where much will soak in, etc.

That is what makes the design of a (monetary) currency SO IMPORTANT in the way it shapes behavior. It is non-deterministic -- it doesn't take away the free will of the actors. You might choose to burn that $20 bill in your wallet, but chances are good that you'll spend it... in a fairly bounded range of ways.

The design of a currency is like the shape of the landscape upon which the rain falls. Each drop follows its own non-quite-predictable path as each person performs their own not-quite-predictable transactions. But one of the things that I think fluency in flow language will make clear to us, is that taken as a whole, the probable pattern is VERY CLEAR.

Like with dollars being issued as debt which bear interest... That interest will compound, daily, forcing exponential growth until the debt load is growing faster than the economy can expand which causes collapse of the currency. The outcome is really as plain as day to anyone who looks at flow pattern.

However, it is not quite as clear exactly what day that collapse occurs. Or how hard the fall will be, because those factors are outside the inherent rules of the currency and are more like your chess game factors of how much sleep the players got or if they're playing for a big prize.

Even some of the pattern outside the explicit currency rules is visible when in play. The Bush administration as it greedily centralized wealth into the hands of the few, accelerated the collapse severely. Offering a "bail-out" which did more of the same (by handing it directly to the bankers) didn't slow the unraveling. Obama's bailout approach, which spreads short-term wealth around, will slow the collapse, perhaps for months or years.

However, they both are rooted in the same unsustainable core principle of dollars as a Ponzi scheme requiring us to perpetually mortgage our future with present debt. We cannot bear the tax burden to repay the "stimulus." It extends the downward spiral of compounding debt toward sure collapse.

Non-deterministic system --> Certain outcome.

Of course, this way lies madness for predicting on an individual level. It reminds me of Skinner's behaviorism and likely why his kids ended up institutionalized. Just because you can consistently get a pidgin to turn left to get you to release food does not demonstrate much flow language wisdom. The model is too one-dimensional to operate outside of a very artificially constrained environment.

Just like in most economic plans or corporate compensation plans where people think they're causing predictable behavior through monetary reward...but the plan is too one-dimensional to connect to the various layers of incentives of a whole human. This becomes painfully obvious when worker productivity drops instead of rises, or consumer confidence still falls even after $350B of bailouts. :)

Do currencies describe living systems?

2009-01-27T16:10:00.000-08:00

I have been pondering this question about whether a CURRENCY is a set of rules that play out into the future, the state of a whole system at a specific time, or a representation of flows over time that manifested in the past. Linked to this question, is the question of whether a CURRENCY is deterministic and allows prediction about the behavior of systems as a whole, or whether it is open ended and only sets up a ground upon which interactions can play out.

Perhaps we should think about chess. Chess has a set of rules that govern how pieces interact with one another, and it sets up a start point (board at opening) and end point (checkmate) for the system. The rules of chess allow for the manifestation of around 10^100 (a 1 with 100 zeros after it) different games, but the rules say nothing about which game will be played at any given time. The rules of chess are non-deterministic, but they set up boundaries of interaction, i.e. no rook ever moves diagonally. If we want to actually predict the way a particular chess game will manifest, we will have to study intently the history of the players and how they have chosen to deal with given situations in the past. We might even take into account whether the players got enough sleep before the game, and whether there is a lucrative prize for winning. In all cases where we are trying to predict a specific game, we need information that cannot be found within the rules of chess.

Let’s look at a more biological example. Think of an ant colony. The behavior of the individual ants is relatively simple and probably determined in some way by the ant’s DNA, but the actual manifestation of a particular colony is highly complex and non-deterministic. This makes the ant colony quite different from a computer program, which will run the same every time. See Wikipedia's article on cellular automata for a great explanation of how this process differs from conventional computer programming.

A good place to look to unpack this issue further is Ilya Prigogine’s theory of life being a dissipative structure. According to Prigogine, life is an OPEN system far from equilibrium. A non-living system is one that comes to rest as all interactions are played out. This resting point is its state of equilibrium. Systems that are closed tend towards equilibrium, but in living systems equilibrium is synonymous with death. A system is dead when no more interactions are occurring between its constituent parts. This means that life must inherently be energetically OPEN to sources outside the system. Think of the earth as a whole. The earth is open to energy from the sun, and the sun is what keeps the whole earthly dance moving. This means that life is a pattern that maintains cohesion in a constantly changing stream of matter and energy.

The other big piece of the definition of living systems, is that they can adapt themselves to changes in the environment. Warm-blooded animals maintain their body temperature across a wide range of external conditions; ants have adapted to live on six of seven continents, and so forth. A good place to read further on this is Wikipedia’s article on self-organization.

So how does this relate to the metaphors we have been using so far to explore the flow language? Let’s look a circuit diagram. A circuit diagram represents a system that is not evolutionary. Sure electricity moves through the system, but the structure of the system itself does not change depending on the conditions. Even if there are complex relations between the parts in a circuit that do allow it to change to match some external conditions, the determination of how the system will manifest cannot change except by outside agency (the electrical engineer). Hence, it is completely deterministic. Here is where we see the difference between living and non-living systems. In contrast, a living system modifies its own internal structure to adapt to external conditions in novel and creative ways. What is probably going on in living systems is something akin to a bifurcation in a chaotic system. It is inherently unpredictable for this reason, and is determined by conditions within the boundary of the system rather than external conditions.

What makes this all especially complicated is the fact that living systems are within the realm of the biosphere, where as currency is more in the realm of the noosphere (mind). This means that meaning becomes part of the system. In biospheric systems, meaning isn’t really all that important to determining flows, but in noospheric systems meaning is an essential component. I think of currency design as permaculture of the noosphere.

To sum up, in my humble (and very possibly wrong) view, a CURRENCY is a set of rules that govern a particular flow within a complex open system in a non-deterministic way. As multiple currencies interact, even predicating outcomes in the short-term becomes less and less feasible. However, this doesn’t mean that we can’t make useful statements about the system derived from these rules. One feedback loop a currency complex can have is the communication of the state of the whole to the parts. This information flow affects how the parts behave and helps create cohesion in the system. This view of the whole is the holoptic view. In fact, it is the ability of the parts to know and interact with the state of the whole that may give the system meaning as a whole in and of itself.

Systems Theory on Wikipedia

2009-01-26T17:59:00.001-08:00

Maybe if I had a degree in Systems Theory, I'd be able to know what we (society) know about mapping systems.

Although, as I read the Wikipedia article (linked above), they seem to still be doing actors-objects, just large groups of them. True? Not so much relation-of-relations or all-verb kind of thing. Or is there that kind of thing in Systems Theory?

Anyone want to call a professor?

Flow Language Continued

2009-01-26T14:13:00.000-08:00

In the hopes of improving our understanding of what a flow language is all about, I want to share an excerpt from an ongoing email discussion with Arthur Brock, Eric Harris-Braun, and Katin Imes. Arthur had the following response to my last post about flow language basics:

"...I wonder if we are talking about some sort of "container." Each container has rules for how it holds things, transforms things and transacts them with other containers. A container is defined by boundaries or membranes...
...In a monetary currency, an account is a kind of container and can transact with any other account it is connected to. If you need to transact across banks, countries or currencies, there are rules about the transformational containers the transaction moves through, the fees/overhead of those transformations, and how long it takes for funds to become available... ...A currency (as a word in flow language) is a model or map of the interaction capacities of a set or multiple sets of containers..." - Arthur Brock

Thanks Arthur for this excellent summation! These containers (or accounts) are bounded and have rules that govern what happens inside them, as well as what happens as they interact with other containers. I think it might be worth looking at the subject / predicate form in this light a little. Words in many ways seem to be containers. The sentence, "The sky is blue." puts the sky in one container (differentiated from the ground), and relates it with blue (differentiated from other colors). It interesting to note in this context that in reality the color spectrum is continuous rather than separated, integrated rather than differentiated. We have merely drawn lines in certain places in the spectrum and defined those as colors. So a subject / predicate sentence draws one container (subject) and relates it to another (predicate). Even in the case of "The sun rises." we have a container around the idea of rising and know that there is some quality of action that can be differentiated from other actions that is similar to what the tides do and what bread does.

So a flow language probably still needs containers of some sort, but what makes it different from subject / predicate is that instead of mapping linear piece-meal relationships between containers it maps a collection of relationships that when perceived / expressed together make up a greater holon of some sort. To the extent it needs to define containers, it differentiates, and to the extent it maps wholes, it integrates. It is these rules for interactions between subjects (and indeed the rules that define the subjects we are dealing with in the first place), that are the CURRENCY.

This is distinct from the actual manifest state of the system at any given time, and from the list of potential states of the system. The currency is instead the process through which these states may be realized. Particular processes will, through playing out, create basins of attraction around certain system states. I am reminded of the butterfly effect. The butterfly graph of the Lorenz attractor in phase space shows a bounded state of possibilities for the system, but it can't predict what state the system will be in at a given time, and indeed there are an infinite number of potential states.

So, these subjects are integrated into a new whole that is bound by these interactions between them. It is the rules themselves that enable the integration into a larger whole. Without a coherent rule set, the parts would simply be heaps rather than new wholes. It also might be the case that not every rule set produces coherent and functional wholes, but that determination seems like it would have to play out over time. Again, I am reminded of chaotic systems that, over time move towards basins of attraction. Different currency rule sets, would likely create different basins of attraction.

This concept is made more complicated by the fact that a representation of the state of the system as a whole could be in a container as a part of its own system. This is analogous to the play itself being a character in the play. The ability of systems to represent themselves to themselves becomes an important way for the system to feedback on itself (and maintain stability). The rules governing the system (or one CURRENCY within the currency complex) would include rules about how to represent the whole as a subject within the whole. This might be a round about way of describing the nature of a holoptic view. If subjects can interact with the whole, then that representation of the whole becomes a discreet part within the whole itself. The holoptic view would have to filter data about the whole and construct some sort of representation of the whole with that data that the parts can interact with. This is kind of mind bending stuff, I'd say!

One system-flow view: circuit schematics

2009-01-26T07:53:00.000-08:00

Here's an idea for how to express systems and flows: use a parallel set of symbols and methods as used in electronics for schematics. When an engineer looks at a schematic of a circuit, he doesn't see nouns-predicates, he sees a flowing system with modifiers and transformations.

(Check out a crystal tester circuit schematic. Read the Wikipedia entry on schematic diagrams.)

A circuit modulates and flows electricity to create a desired effect. The current, electricity, flows in predictable (but not always intuitive) ways through the components. An electronic engineer can look at a schematic and "see" what the circuit does.

What if we could schematically diagram the Community Way system, for example? Would it become obvious to see that it only runs a short period of time (3-6 months)? Would it be easy to calculate the transaction fees required for overhead and system management? Would we be able to see the same effects as the spreadsheet numerically showed us, only in a flow diagram?

Would the symbols be directly equivalent to the most common electronic components? Capacitors store an amount of current and will release it back into the circuit when it becomes the largest store & potential. Resistors drain away power (converting it to heat). Transformers change the characteristics of the currency, shifting voltage (pressure) and current.

All of these things are present in ecological systems, transport and goods trading systems, and monetary systems. One question would be, what would be the "battery" or supplier of electricity in a monetary-circuit diagram? More over, what would actually be the electricity or motive force? What is actually in motion in a monetary system?

I think this would be a worthy perspective to add to the thought experiment and our exploration.

Reaching to Systems Expression with Language

2009-01-25T19:30:00.000-08:00

Eric mentioned something that I think stirred something within me. He said, to paraphrase and apply all my filters to it, that we are at a catch-22: we can't imagine what we really need to get to the level of holoptic systems thinking until we can be thinking at the level of holoptic systems. A tangent quote (was it Einstein?), "The current scope of problems cannot be solved by the same thinking that created them."

I want to find methods for getting my brain to inhabit the world of bigger-picture, whole-systems thinking. Not subject-predicate language but relation-of-relation language. Not discrete component language, but whole-system-at-once language. But how to get there?

We are handicapped as humans in this place in time because we really don't think systematically at all. My way of saying this is that we are a very clever race, but we aren't very smart. Examples I give here include things like:
-- we can build a ceramic internal combustion engine that'll run 100,000 miles without a tune-up, but the problem of rush-hour traffic stumps us.
-- we can build MRI machines that can sense physiological events as tiny as changes in the brain in real time, yet we instantiate and operate a health care system that has doctors frustrated, consumers bankrupt, and insurance companies complaining.
-- we can operate thousands of intricate and capable satellites and put a man on the moon, yet we don't seem to even be able to decide if global warming is real concern or not.

Humans are great at Descarte-style details, but we really rather suck at working systems gestalt. Predicting emergent effects of even moderately complex systems just plain boggles us, and even near-time extrapolations of basic systems behavior seems beyond our common capability as thinkers.

So how do we get our brains to inhabit a higher level of thinking about the concepts of systems? Language is one way. If we had an 'alphabet' of systems primitives, we could string them together into words and then sentences. It may need to be a really radical departure from what we think of now as language; for example, a holoptic-systems language might be all verbs and relational words only, no nouns. For in a way, in the systems flow view, there are no nouns or things, there are only processes.

Is this kind of language-thought required to implement a distributed-multi-currency management system that works? No. Might it help in the design of competent currencies and systems that manage the relationships between currencies (currency complexes)? I would say definitely.

Will we figure out a flow-language - or as Eric & Arthur call it, an expressive capacity about flow systems - in time to have it available as a tool for design of a distributed-multi-currency system? I doubt it. Is that any reason to stop cooking efforts at a flow-language, even just as a brain-builder if nothing else? Not at all!

All aboard for the Magical Mystery Tour.

Flow Language Basics

2009-01-23T17:20:00.000-08:00

I wanted to summarize a fascinating conversation Eric Harris-Braun, Arthur Brock, Katin Imes, and I all had yesterday. Arthur and Eric have been developing the idea of a "flow language" for a while, but on the call we were all trying to make sense of what this new type of language is actually all about. The following is my crude attempt to describe the basics.

The purpose of a flow language is to enable the expression of flows in a system as opposed to discreet causal events. The standard form of language is subject / predicate. This structure makes differentiation between objects / actions very easy, but integration of those objects / actions into coherent patterns within wholes very difficult. Individual relationships can be easily isolated, but patterns in the whole are very difficult to express (or even perceive). A flow language makes these larger scale patterns visible and able to be engaged with efficiently.

The most basic “word” in a flow language is a currency. A currency allows one flow to be described. For instance, if we were going to describe the flow of water in an ecosystem, we would want to know how the water cycles through the ecosystem as a whole and how this flow affects the different parts. These parts are the core units, the relationships between which describe the flow in the system. Think of these units as accounts. A currency only exists as a series of relationships between accounts. Accounts are analogous to "letters" in the flow language since they make up the most basic unit, but they lack meaning in and of themselves.

Boundaries between accounts can be arbitrarily drawn. For instance, in the currency describing the water cycle, we could describe three accounts: land, ocean, sky. There are certain basic relationships between these accounts. We know that water does not flow from the ocean to the land unless it goes through the sky first. We know that the sky can rain water onto the ocean or the land. And that the land can transpire water to the sky or run off into the ocean. While this is a very crude mapping of the water cycle, the relationships between these three accounts do tell us something useful. We could easily get much more granularity by drawing account boundaries with more differentiation. For instance, we could draw a grid on the land, each square with its own account. This might allow us to see which parts of the land transpire the most water, and what parts allow it to run off. There is of course a series of relationships between these accounts that could be described (non-proximal squares of land can’t directly have water pass between them without going through the sky first). We could also draw account boundaries between species, or even between individual life forms. In any case, the account is the “letter,” and the currency is the “word” (describing the relationships between the accounts).

If we want a sentence in flow language, we must look at the interplay between currencies. To continue our metaphor, we might also look at the flow of nitrogen in our ecosystem. We could similarly divide the space into the necessary (and sensible) accounts, and examine the relationships between them. Perhaps where nitrogen accumulates, we see more plant life, which in turn allows the land there to hold more water and transpire it directly to the sky without running off to the ocean. It is these interrelations between currencies that allow for the full construction of a flow sentence. For now, I have been calling a “flow sentence” a “currency complex.” As dozens of currencies interplay with each other we see that more and more complex flow sentences can be constructed.