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Mar 23, 2009, 6:14:41 AM3/23/09
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From http://newcurrencyfrontiers.blogspot.com/2009/03/intro-to-currency-platforms.html
"Intro to Currency Platforms
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.
Posted by Alan Rosenblith at 11:47 AM
9 comments:
Mark Herpel said...
Excellent article.
Mark
March 16, 2009 2:26 PM
King of the Paupers said...
Jct: When I visited Europe in 1999, I paid for 39/40 nights of
accommodations with an IOU for a night back in Canada worth 5 Hours.
It's only a matter of time until all systems based on the Time
Standard of Money will use the internet to intertrade globally. I
did.
We need the United Nations Millennium Declaration UNILETS Resolution
C6 to governments for a time-based currency to restructure the global
financial architecture. Barter Timebanks are economic lifeboats.
See my banking systems engineering analysis at http://youtube.com/kingofthepaupers
with an index of articles at http://johnturmel.com/kotp.htm
March 16, 2009 7:52 PM
Just a Demo said...
Hi, I have enjoyed reading your recent posts. I agree that lowering
the cost of failure would be a good platform goal. However, if there
are too many unsuccesful attempts that affect the same community,
there would be a serious risk of immunizing potential participants due
to overexposure to too many failed om initiatives. In other words,
instead of getting people used to the idea of cc, they might instead
become more critical of new attempts as something that would lead to
the same failed result.
March 16, 2009 10:59 PM
Alan Rosenblith said...
@just a demo:
Thanks for the comment (and everyone)!
I would include the risk of a potential community becoming jaded as
part of the cost of failure. That has been one of the reasons currency
practitioners have put a lot of pressure on themselves to "get it
right the first time." I think, however, that "lowering the cost of
failure" also means lowering promises and expectations about what
currency can do. In order to rally support in a community, currency
practitioners have often made outrageous (and completely impossible to
fulfill) promises about what will happen once the community gets on
board with the new currency. When these promises are broken, the
community loses faith in currency as a tool. Wouldn't it be better to
lower everyone's expectations a little? Think email groups. Some work,
others peter out. No one has lost faith in email groups because they
were in a couple that went no where. This is because no one has made
outlandish promises about email groups turning a community around
overnight. When community currency as a tool becomes organically
infused with culture, then it will make a big difference in society.
However, until then, our primary goal should be about enabling it to
happen organically rather than psyching everyone up for it.
March 17, 2009 8:40 AM
Edgar said...
I totally agree with the need to lower expectations, or at least make
realistic ones. I came to the same conclusion just recently, as I am
currently strategizing how to conduct a market trial for a Prowl-based
system.
However, I disagree with the notion that anyone could or would want to
be a currency issuer. It's not that I want to deny that right or
responsibility to others - anyone could do that now without any
software at all and regardless of what I think. But it is also obvious
that certain conditions must be met to have a reasonable expectation
of mild success.
So even though you might have an open platform that anyone could
easily package, there is a responsibility on the platform provider to
announce the required skills and best practices that are likely to
lead to a successful implementation.
In particular, all implementations should have some sort of study
objectives, in order to systematically collect data that could be used
to generate an implementation knowledge base. For example, certain
conditions that coincided with a successful or failed implementation
could be processed to give useful information to guide subsequent
attempts.
For me, lowering the cost of failure is important because better
knowledge about trends could be gained from a larger set of
implementation data. Otherwise, the success to failure ratio would
remain the same or perhaps even worsen if there were more trials that
have no study objectives.
edgar (aka just a demo)
March 17, 2009 10:01 AM
Alan Rosenblith said...
Edgar,
I have seen PROWL. Great work! (http://tyaga.org/prowl/ for others). I
totally agree with the need for a clear set of best practices, or at
the very least a clearer matrix of understanding for what kinds of
currency designs are appropriate for what kinds of communities. I also
fully agree that collecting information about how different designs
are correlated with different outcomes will be very valuable. It may
even bump the field of economics into the realm of science :D (I think
Michael Linton made this joke once).
With all that said, I think fear of failure is one of the biggest
obstacles to creativity. And, if there is one thing we need right now
to solve our current problems, it is creativity. One thing I love
about science when it is done right is that it can have a very light
and playful feel; kind of like kids experimenting with the world
around them. I fully support bringing that ethos to the world of
currency, as well as the subsequent rigor.
March 17, 2009 3:12 PM
Edgar said...
"It is not a mistake to commit a mistake, for no one commits a mistake
knowing it to be one. But it is a mistake not to correct the mistake
after knowing it to be one. If you are afraid of committing a mistake,
you are afraid of doing anything at all. You will correct your
mistakes whenever you find them."
from http://www.positiveatheism.org/india/gora13.htm#CHAP_VII.
"
"Intro to Currency Platforms
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.
Posted by Alan Rosenblith at 11:47 AM
9 comments:
Mark Herpel said...
Excellent article.
Mark
March 16, 2009 2:26 PM
King of the Paupers said...
Jct: When I visited Europe in 1999, I paid for 39/40 nights of
accommodations with an IOU for a night back in Canada worth 5 Hours.
It's only a matter of time until all systems based on the Time
Standard of Money will use the internet to intertrade globally. I
did.
We need the United Nations Millennium Declaration UNILETS Resolution
C6 to governments for a time-based currency to restructure the global
financial architecture. Barter Timebanks are economic lifeboats.
See my banking systems engineering analysis at http://youtube.com/kingofthepaupers
with an index of articles at http://johnturmel.com/kotp.htm
March 16, 2009 7:52 PM
Just a Demo said...
Hi, I have enjoyed reading your recent posts. I agree that lowering
the cost of failure would be a good platform goal. However, if there
are too many unsuccesful attempts that affect the same community,
there would be a serious risk of immunizing potential participants due
to overexposure to too many failed om initiatives. In other words,
instead of getting people used to the idea of cc, they might instead
become more critical of new attempts as something that would lead to
the same failed result.
March 16, 2009 10:59 PM
Alan Rosenblith said...
@just a demo:
Thanks for the comment (and everyone)!
I would include the risk of a potential community becoming jaded as
part of the cost of failure. That has been one of the reasons currency
practitioners have put a lot of pressure on themselves to "get it
right the first time." I think, however, that "lowering the cost of
failure" also means lowering promises and expectations about what
currency can do. In order to rally support in a community, currency
practitioners have often made outrageous (and completely impossible to
fulfill) promises about what will happen once the community gets on
board with the new currency. When these promises are broken, the
community loses faith in currency as a tool. Wouldn't it be better to
lower everyone's expectations a little? Think email groups. Some work,
others peter out. No one has lost faith in email groups because they
were in a couple that went no where. This is because no one has made
outlandish promises about email groups turning a community around
overnight. When community currency as a tool becomes organically
infused with culture, then it will make a big difference in society.
However, until then, our primary goal should be about enabling it to
happen organically rather than psyching everyone up for it.
March 17, 2009 8:40 AM
Edgar said...
I totally agree with the need to lower expectations, or at least make
realistic ones. I came to the same conclusion just recently, as I am
currently strategizing how to conduct a market trial for a Prowl-based
system.
However, I disagree with the notion that anyone could or would want to
be a currency issuer. It's not that I want to deny that right or
responsibility to others - anyone could do that now without any
software at all and regardless of what I think. But it is also obvious
that certain conditions must be met to have a reasonable expectation
of mild success.
So even though you might have an open platform that anyone could
easily package, there is a responsibility on the platform provider to
announce the required skills and best practices that are likely to
lead to a successful implementation.
In particular, all implementations should have some sort of study
objectives, in order to systematically collect data that could be used
to generate an implementation knowledge base. For example, certain
conditions that coincided with a successful or failed implementation
could be processed to give useful information to guide subsequent
attempts.
For me, lowering the cost of failure is important because better
knowledge about trends could be gained from a larger set of
implementation data. Otherwise, the success to failure ratio would
remain the same or perhaps even worsen if there were more trials that
have no study objectives.
edgar (aka just a demo)
March 17, 2009 10:01 AM
Alan Rosenblith said...
Edgar,
I have seen PROWL. Great work! (http://tyaga.org/prowl/ for others). I
totally agree with the need for a clear set of best practices, or at
the very least a clearer matrix of understanding for what kinds of
currency designs are appropriate for what kinds of communities. I also
fully agree that collecting information about how different designs
are correlated with different outcomes will be very valuable. It may
even bump the field of economics into the realm of science :D (I think
Michael Linton made this joke once).
With all that said, I think fear of failure is one of the biggest
obstacles to creativity. And, if there is one thing we need right now
to solve our current problems, it is creativity. One thing I love
about science when it is done right is that it can have a very light
and playful feel; kind of like kids experimenting with the world
around them. I fully support bringing that ethos to the world of
currency, as well as the subsequent rigor.
March 17, 2009 3:12 PM
Edgar said...
"It is not a mistake to commit a mistake, for no one commits a mistake
knowing it to be one. But it is a mistake not to correct the mistake
after knowing it to be one. If you are afraid of committing a mistake,
you are afraid of doing anything at all. You will correct your
mistakes whenever you find them."
from http://www.positiveatheism.org/india/gora13.htm#CHAP_VII.
"
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