mechanism

[matslats]

I'm bothered that OCFS has yet to be defined, and, I fear, designed.
In what way is it the next thing after a complementary currency
system? How does it differ from LETS? Why is not 'currency' And what
mechanism is it that satisfies all the criteria in the descriptions.
I want to know how OFCS is going to work, because until I see that
then it is merely a set of requirements, not a proposed economic
system.
In a recent talk in New Zealand, Thomas Greco outlined the questions
we need to ask of a currency, and I repeat them here to help you
express your answer:

Who is the issuer?
How is it issued into circulation?
What is the basis of issue?
How much has been issued?
What are the terms of the contract offered by the issuer?
What does it promise?
What are the limits on issue?
What is the duration on the contract?
What is the form of redenmption?
Are there any fees association with redemption?

[Teddie Goldenberg]

First the questions:

Who is the issuer?

Anyone who wants to create their own credit syndicate is the issuer.
 

How is it issued into circulation?

It is not circulated. Credit is assigned as participants do the work, depending on how the particular credit syndicate works it out.
 

What is the basis of issue?

However the credit syndicate defines it.
 

How much has been issued?

This is always known - credit is created as work is done, so the amount  "issued" keeps increasing.
 

What are the terms of the contract offered by the issuer?

This is defined by each credit syndicate.
 

What does it promise?

The credits represent work done that negates the "debits" accrued when taking ownership of an item or commodity.
 

What are the limits on issue?

Again, defined by the particular credit syndicate.
 

What is the duration on the contract?

Forever.

What is the form of redemption?

Credits are not redeemed, they are forever associated with the individual and thus cannot be transferred.

 

Are there any fees association with redemption?

Not applicable.

And to respond to your questions:

>In what way is it the next thing after a complementary currency
>system? How does it differ from LETS? Why is not 'currency' And what
>mechanism is it that satisfies all the criteria in the descriptions.
>I want to know how OFCS is going to work, because until I see that
>then it is merely a set of requirements, not a proposed economic
>system.

The important thing to remember is that the S in OFCS stands for "Standard." In other words, it's like a basis for creating a LETS (what we call "credit syndicate") that can be easily negotiated with other LETS around the world (in other words, a Global Exchange Trading System). The BIG BIG difference is that LETS are also currency systems whereas OFCS precludes currencies. OFCS is like the VHS format: anyone can make a player that reads the tapes, as long as they follow certain format guidelines.
 

Imagine that for every hour of work that you did, a 1-hour bill was printed with your picture on it, and inscribed with a description of the work you did, the physical objects that were involved, the date, location, and a whole host of information. Now imagine that everyone had such personalized bills, and that a cashier at the store only accepted bills that had a portrait of the customer using it. What happens? The bills would not circulate, and thus, it becomes non-liquid, and no longer a currency.

Non-liquidity is one aspect of OFCS. A multitude of credit syndicates is the other aspect of OFCS: but since all these syndicates have at their core one standard, it enables them to merge or interact on a global scale without compromising their particular values.

I hope this clears up some of the confusion. If you have suggestions on how to better revise the existing documents to make these concepts more clear, please post them.

-Teddie

[Matthew Slater]

Thanks Teddie, these are good answers and tell me much more than anything on the groups. If we can purse this a bit more, I'll compile it all into what I think is a proper first explanation.

I understand what you mean about OCFS being the next thing, and not currencies, but I don't know how they will work yet.

2009/5/13 Teddie Goldenberg <alba...@gmail.com>

Who is the issuer?

Anyone who wants to create their own credit syndicate is the issuer.

Can we talk about LETS schemes instead of credit syndicates?

Does that mean there will be one currency per syndicate?

 

How is it issued into circulation?

It is not circulated. Credit is assigned as participants do the work, depending on how the particular credit syndicate works it out.

Assigning credit is the same as circulation. It's just not money which is circulating, it is credit, which is actually a form of currency. LETS is a mutual credit system. If I owe you 10 credits, you can spend that and then I'll owe someone else. 

What is the form of redemption?

Credits are not redeemed, they are forever associated with the individual and thus cannot be transferred.

 

There has to be some form of redemption, surely. In LETS currency is created when a user goes into negative and redeemed as they earn. On the gold standard, the money could be redeemed for gold (when the US wasn't messing around with it).

And to respond to your questions:
>In what way is it the next thing after a complementary currency
>system? How does it differ from LETS? Why is not 'currency' And what
>mechanism is it that satisfies all the criteria in the descriptions.
>I want to know how OFCS is going to work, because until I see that
>then it is merely a set of requirements, not a proposed economic
>system.

The important thing to remember is that the S in OFCS stands for "Standard." In other words, it's like a basis for creating a LETS (what we call "credit syndicate") that can be easily negotiated with other LETS around the world (in other words, a Global Exchange Trading System). The BIG BIG difference is that LETS are also currency systems whereas OFCS precludes currencies. OFCS is like the VHS format: anyone can make a player that reads the tapes, as long as they follow certain format guidelines.

Careful there is a piece of commercial software called GETS

 

Imagine that for every hour of work that you did, a 1-hour bill was printed with your picture on it, and inscribed with a description of the work you did, the physical objects that were involved, the date, location, and a whole host of information. Now imagine that everyone had such personalized bills, and that a cashier at the store only accepted bills that had a portrait of the customer using it. What happens? The bills would not circulate, and thus, it becomes non-liquid, and no longer a currency.

Ok but you didn't finish the story by saying how this is useful. Just like if everyone started their own currency, you could only accept currency from people you trusted. So how does non-liquidity help anyone?

 

I hope this clears up some of the confusion. If you have suggestions on how to better revise the existing documents to make these concepts more clear, please post them.

I hope you're finding my questions worthwhile. Could you also point me towards something of the history of this idea? To what extent has it been tried before?

[Teddie Goldenberg]

On Wed, May 13, 2009 at 11:33 PM, Matthew Slater <mats...@gmail.com> wrote:

Who is the issuer?

Anyone who wants to create their own credit syndicate is the issuer.

Can we talk about LETS schemes instead of credit syndicates?

Does that mean there will be one currency per syndicate?

No - the idea of a "standard" is that every syndicate uses the same normative units - time (in hours), energy (in Joules), and byproducts (pollutants, in kg). The reason for having multiple syndicates is twofold:

1 - people may want to set different financial rules to fine-tune the overall credit syndicate's economy
2 - people have different ideas about what constitutes "work"
 

How is it issued into circulation?

It is not circulated. Credit is assigned as participants do the work, depending on how the particular credit syndicate works it out.

Assigning credit is the same as circulation. It's just not money which is circulating, it is credit, which is actually a form of currency. LETS is a mutual credit system. If I owe you 10 credits, you can spend that and then I'll owe someone else. 

I have to insist that it cannot be circulated. Nobody can "owe" someone credits - I cannot spend the credits that you've earned. My credits are my credits and yours are yours. They cannot be transferred, owed, borrowed, spent, or given. This is hard-coded into the software and the system in general.
 

What is the form of redemption?

Credits are not redeemed, they are forever associated with the individual and thus cannot be transferred.

 

There has to be some form of redemption, surely. In LETS currency is created when a user goes into negative and redeemed as they earn. On the gold standard, the money could be redeemed for gold (when the US wasn't messing around with it).

The credit represents things you've done, not physical artifacts. Since the things you've done exist in the past, and we don't have time travel, the credit is immutable. It stays with you forever and ever.
 

Imagine that for every hour of work that you did, a 1-hour bill was printed with your picture on it, and inscribed with a description of the work you did, the physical objects that were involved, the date, location, and a whole host of information. Now imagine that everyone had such personalized bills, and that a cashier at the store only accepted bills that had a portrait of the customer using it. What happens? The bills would not circulate, and thus, it becomes non-liquid, and no longer a currency.

Ok but you didn't finish the story by saying how this is useful. Just like if everyone started their own currency, you could only accept currency from people you trusted. So how does non-liquidity help anyone?

Just as local currencies are worthless outside of the town it's being used in, the credits have no value outside of the credit syndicate, preventing capital flight. Non-liquidity is just an accident of the system, really. The main idea is that people simply work, earn credit, and the goods that they take ownership of have negative credits (debits), and the OFCS backbone tracks all of this. The credit syndicate they're part of sets the rules on how much they debit they can own, what work is acceptable, and other details. There's no need for a currency.

I'll turn the question around: how does liquidity help anyone?
 

 

I hope this clears up some of the confusion. If you have suggestions on how to better revise the existing documents to make these concepts more clear, please post them.

I hope you're finding my questions worthwhile. Could you also point me towards something of the history of this idea? To what extent has it been tried before?

It really hasn't been tried before, to my knowledge. This group is about developing the software, documentation and marketing materials, as well as creating simulations to test the theory. We'll also be trying real-life tests of the system as well.

[Matthew Slater]

Slowly you're telling me more, but I'm still having trouble piecing it all together.

Can you write a story about what happens to people's credit when they work and buy stuff. It's too soon to talk about software until these basics are really hammered out, IMHO. Here is what I understand so far:

Syndicate A defines a soft unit of currency called loaves, where 1 loaf is worth a loaf of wholemeal bread.

Jack does some gardening for the community and the syndicate credits his name with 5 credit-loaves.

Jill bakes 20 food-loaves of bread 

On the way home jack picks up a real-loaf and his loaf-credit goes down 1

At the end of the day 5 of jill's loaves go unsold.

Syndicate B defines a harder unit of currency called leafs of gold.

Jack wants a new porch on his house...

Currencies are valued according to universal things which means that Jack's gardening time IS somehow comparable to Jill's baking time. This idea is essential to human cooperation. So when you talk about non-liquidity I think you mean something different.

Question. In this example is Jill paid for her loaves created or for loaves sold? If the former, then there are issues about who says what work is worth if no-one benefits from it. If the latter then the credit is effectively transfered at the moment when Jack purchases the loaf.

Liquidity is when Jill is 'paid' by Jack for the 'sale' of the loaf, and jack's balance goes down by one and jill's balance goes up by one. It's very useful because then you a real amount of value which just moves around reflecting what people value.

Matthew

2009/5/15 Teddie Goldenberg <alba...@gmail.com>

[Teddie Goldenberg]

To use your scenario,

1. Jack, belonging to Syndicate A, works 20 hours in a week farming. He is credited for 20 hours of time by Syndicate A. The 20 tons of grain produced that week is valued at 1 hour debit / ton, and has a certain about of calories (Joules), plus has sequestered a certain amount of carbon in its production. (let's pretend it was all harvested, ground, and transported by Jack, by hand, just to simplify things).

2. Jill works in a bakery that is part of Syndicate A. Jill is the sole proprietor of the bakery, meaning that she owns all the capital goods. She receives 1 ton of grain from Jack, taking possession of it, which makes her overall balance go down 1 hour of work-time, but she also gets a positive benefit (in her balance sheet) from the sequestered carbon of the grain. Jack, having relieved himself of 1 ton of grain, regains an hour on his own balance sheet.

* note - the ownership of the grain is what is transferred, and the associated debit-values are transferred along with it. The ownership is tracked by Syndicate A.

3. Jill works at night, and in 10 hours makes 1000 loaves of bread from 1 ton of wheat (I know, unrealistic numbers, but it makes the math simple). Each loaf has a debit-cost of .01+.001 in hours of time, (.01 for Jill's labor, and .001 for materials cost, assuming water just falls from the sky)  0.011 hours is the debit-cost of each loaf of bread on her shelves.

4. A customer in Syndicate A comes in and purchases 100 loaves of bread. Jill's credit balance regains 1.1 hours. If all 1000 loaves are purchased, then for that 10 hours of work, her net gain is 10 hours of work-time-credit.

* note - the Jill / customer interaction is simple: The customer says they want 100 loaves of bread, and Jill uses her smart-phone to transfer ownership of the bread to the customer, who validates the transfer with their own smart-phone. Or they can use a computer with Internet access there in the store. It's that simple.

Now let's make it more complicated.

In step 2, let's say Jill co-owns the bakery with Julie, James, and Justin, meaning that they all have a 25% share of the capital goods. When Jack transfers the ton whole-wheat flour to them, each of their balances goes down by 0.25 hours. Say Julie works the cafe in the daytime, and Jill bakes at night, and James and Justin both work part time at the cafe and bakery, respectively.

Jill works 10 hours on Monday night/Tuesday morning and makes 1000 loaves of bread. This is co-owned by all of them as part of their corporation. Jill gets credited for 10 hours of work, and all 4 accounts are debited for 25% of the cost of baking that bread, or 2.5 hours. Julie opens the cafe on Tuesday morning, and other than selling coffee, muffins, and other things, sells 100 loaves of bread (probably to a resturaunt). For selling that bread, the bakery/cafe co-op members each regain 0.011*100*0.25 = 0.275 hours. Julie also gains 8 hours for her shift, and then James gains 8 hours for his shift later that night, but doesn't sell any bread.

The net change from Mon to Tues:
Jill : +10 Hours, -0.25 Hours, -2.5 Hours, +0.275 Hours = +7.525 Hours
Julie: +8 Hours, -0.25 Hours, -2.5 Hours, +0.275 Hours = +5.525 Hours
James: +8 Hours, -0.25 Hours, -2.5 Hours, +0.275 Hours = +5.525 Hours
Justin: -0.25 Hours, -2.5 Hours, +0.275 Hours = -0.475 Hours

Things to note from this example:
* Jill gained the most because she worked the most.
* Julie and James gained the same even though Julie was the one present when the bread was sold.
* Justin lost almost a half-hour of work-time credit because he didn't work those days, and not all the bread has been sold (900 loaves remain in their possession).
*A loaf of bread is cheaper (as a matter of labor-time) than in the existing economy (even if the price was 10 times greater, at 0.11 Hours/loaf - the equivalent for someone making $10/hour, that's only $1.10 for locally-produced, organic bread (I've seen it at $6/loaf at farmer's markets!))

As a share holder of this bakery, Justin might go online and look at all the transactions that occured in association with this bakery on Monday/Tuesday. He'd see that Jill was credited for 10 hours of baking from 10pm Monday night to 8am Tuesday morning, and that 1000 loaves of bread were produced in that 10-hour block. That 10-hour credit was verified by Julie, also using a smartphone app. He could see who bought those 100 loaves, if the customer had any public information associated with their Syndicate A account number (otherwise, he'd just see a pseudononymous account number).

Justin would then send an email to Jill that she shouldn't bake all the bread on one night, because there's no way they can sell it all before it gets stale. Jill might write back that she was planning on taking the rest of the week off because her mother is in the hospital, and then Julie would interject an opinion... but that's all part of being in a business with people.

-Teddie

[Matthew Slater]

Good thanks

Gimme some time.

I think you should stop saying there's no liquidity.

The interesting parts of this idea seems to me to be the use of multiple currencies in one transaction, and the idea that, from its inception, there would be a standard way to value these things.

Matthew

2009/5/16 Teddie Goldenberg <alba...@gmail.com>

[Matthew Slater]

Ok Teddie,

Because last time I visited the site there wasn't an explanation I actually understood, this is my attempt to frame it for you in a way which expresses the most important concepts. You can do with this text as you want, and then I suggest you post it's descendant on the google group.

I'm still not sure exactly what the relationship is between the syndicates, but you can fill that in at the end.

Also note I can't find ANYWHERE what OCFS stands for.

OCFS is a proposal for an advanced type of local money system. It emphasises these two things:

1. The multidimensional nature of transactions

2. Global standards of value

It is advanced because unlike lets or SCRIP currencies, it has been designed to rely on the processing power now at our fingertips. Each transaction typically involves several components and relies on recent technology in order not to be overwhelming. OCFS is not a currency, it is a way of transacting and a framework which can embrace many types of currency.

When we exchange currency for work done or for goods, we are forced to value everything on one scale. This is a blunt instrument for measuring value, which is after all, a personal matter. We now have the technology to price our goods and services in more just ways. and to better reflect and value the different costs involved in making them. What if, instead of the government fixing a business-friendly carbon-emission price, the carbon-emissions were passed on directly to the consumer, who was granted an allowance from the government. Then instead of the consumer making an 'informed' choice from carbon footprint labels, the consumer would be weighing up the money cost and the carbon cost of his prospective purchase. And budgeting both. A headache maybe, but a more transparent way to work. The next currency would be fresh water, a dangerously diminishing resource. Of course fresh water could be traded for money, but that price would be set more by supply and demand, less by political considerations.

These examples show how multidimensional transactions give the buyer more information and more responsibility, and how transacting in a range of currencies all at once allows for other things to be valued apart from bank-owned money.

This is not going to happen overnight. That's why the standard is important. OCFS will start in separate communities looking to experiment with money and to create their own currencies. But these currencies will be much more useful if other trading communities value them. So OCFS will be there to help the communities create useful currencies. For example one community wants to trade in loaves of wholemeal bread. The OCFS might point out to them that there is already a community in Germany trading in half kilos of pumpernickel, and a currency in morrocco of their 200g round loaves. While their might be some debate about the comparative value by weight of whole meal and pumpernickel bread, which some also consider an  acquired taste, they might agree that if a whole meal loaf were nominally 400g, it could be exchanged for exactly two Moroccan loaves. A breadbasket of currencies!

It's important to note that at this stage, the OCFS is indifferent to currency mechanisms. How the currencies are created, redeemed, whether they have interest or demurrage is not our concern. Whether the information resides in a digital 'wallet' on or a web server matter nought. In principle, currencies need only be digital in order to participate.

Teddy I look forward to seeing what you make of this.

[Teddie Goldenberg]

Matt,

You've written a great introduction to OFCS. I've had some time to think about what you wrote -- the idea of using OFCS for many currencies is intriguing. I've adopted some of your language for the welcome message. The ability of OFCS to track actual currencies is a debate we need to have, of course. On one hand OFCS should be able to track any sort of property, even if that good is pieces of paper with subjective values attached to them, but on the other other hand, it just becomes a kind of public accounting / banking system, and thus doesn't achieve the kinds of results we'd like. Or am I just bringing too much of my own political ideals into what should be just a software project?

_Teddie

[Matthew Slater]

Thanks

I only wrote what I understood you were saying, with perhaps my ideas as examples. I'm not at all sure how workable the idea is politically, or what other ideas it might embrace. There are lots of similar ideas about, and we need to see discussion and a whole range of things being adopted.

As described, OCFS is much more than a software project. Both the software and the evangelism / politics require a lot of resources. For some reason this is a very slow moving field, and full of dogmatic people, (perhaps including me) and you need a lot of charisma to get them on board. On the other hand there should be (I don't know if the numbers bear it out, a growing interest in the subject and new people coming along all the time.)

From what I've read so far, you're not in a strong position to start a new thing, despite your charisma. You might get more satisfaction and more impact, by lending your energy and skills to an existing project. There are plenty and I think you should be able to find something deserving of your effort.

The real problem in this field is that there is far more talk and proposals than skills and resources to make things happen. There isn't a dearth of ideas! Work is being done particularly in Germany on Cyclos in making local currencies tradable, and software is playing a large part in that. The idea of several currencies in one transaction is favoured by John Waters in Wales. Michael Linton is working on the idea that anyone can create a currency. Stephen deMeulenaire has just about given up on trying to coordinate everybody. The South Africans have a software system, CES, which groups can just sign up to and then intertrade. You should know about all of these before starting something new!

Hope that's encouraging,

Matthew

2009/5/27 Teddie Goldenberg <alba...@gmail.com>

[Teddie Goldenberg]

Cyclos is rather interesting, from what I've read. The next step is to download and try to implement Cyclos in compliance with OFCS. Regardless of whether or not it can be done, the point of OFCS is to establish a Standard, like HTML, but more like aa philosophical / economic standard. Kind of like a bottom-up Bretton-Woods.

On May 27, 2009 3:37 PM, "Matthew Slater" <mats...@gmail.com> wrote:

Thanks

I only wrote what I understood you were saying, with perhaps my ideas as examples. I'm not at all sure how workable the idea is politically, or what other ideas it might embrace. There are lots of similar ideas about, and we need to see discussion and a whole range of things being adopted.

As described, OCFS is much more than a software project. Both the software and the evangelism / politics require a lot of resources. For some reason this is a very slow moving field, and full of dogmatic people, (perhaps including me) and you need a lot of charisma to get them on board. On the other hand there should be (I don't know if the numbers bear it out, a growing interest in the subject and new people coming along all the time.)

From what I've read so far, you're not in a strong position to start a new thing, despite your charisma. You might get more satisfaction and more impact, by lending your energy and skills to an existing project. There are plenty and I think you should be able to find something deserving of your effort.

The real problem in this field is that there is far more talk and proposals than skills and resources to make things happen. There isn't a dearth of ideas! Work is being done particularly in Germany on Cyclos in making local currencies tradable, and software is playing a large part in that. The idea of several currencies in one transaction is favoured by John Waters in Wales. Michael Linton is working on the idea that anyone can create a currency. Stephen deMeulenaire has just about given up on trying to coordinate everybody. The South Africans have a software system, CES, which groups can just sign up to and then intertrade. You should know about all of these before starting something new!

Hope that's encouraging,

Matthew

2009/5/27 Teddie Goldenberg <alba...@gmail.com>

> > Matt, > > You've written a great introduction to OFCS. I've had some time to think about what y...

[Robbt]

I haven't had a chance to read this but I'm pretty sure it's interesting
based upon skimming the author and concept.

http://www.realitysandwich.com/evolving_toward_local_credits