Ideas to encourage the use of Ripple Pay 2
David W
referring to was erroring on me in the google web interface.
Ryan,
I think the idea you are talking about here...
"An idea that occurs to me is to start with an existing cooperative of
some kind -- a food store would be ideal, although others could work
too -- where members can work in exchange for the coop's products
and/or services. Keep track of credits in Ripple: each member
connects to the coop and offers it some amount of credit, and then
gets paid and buys products using that account. Then, anyone
connected to a member can shop at the coop through the member's Ripple
account. Eventually this might grow to become a network of coops... "
is basically the essence of what the OpenCapital idea I posted about
in my May 16th 07 post.
The coop could be structured as an LLC where all the members own a
share of the coop's hard assets-inventory, land, building. The coop
pays a rental fee, say 6 cents on the dollar per year for using the
capital. Now consider Bob, Carol, and Steve. If Carol is a coop LLC
member and trusts Steve who is Land1 LLC member. And Steve trusts Bob
who is a Vendor LLC member. If the coop needs some supplies from
Bob's company, she can pay with a chunk of the coop to Bob via Steve
in a Ripple network, and all parties are only dealing in shares (LLC
partnership interests) of companies they are familiar with.
So essentially it is the flipside view of an MCS (mutual credit
system). Equity/Asset based instead of Debt/Credit based. Instead of
swapping IOU's we are swapping ownership interests in something real.
This isn't to say simply "loaning" your trusted friends money is bad,
I just think that is what people do when they have money/capital to
loan. I don't think that is a viable way to promote the system in
general. It has led people to propose such things like demurrage
which I think is a alternative currency killer.
I think there is an illusion created by these MCS setups that simply
by creating credit we are somehow creating capital, but
"money" (IOU's) is not capital. Only real things are capital. At
each end of the transaction one person is using a resource that the
person on the other end of the chain has produced. Any system which
penalizes the the producer/owner of the actual asset has a terminal
problem IMHO and there will be no incentive for him/her to
participate.
This is why I believe Ripple is the only MCS system (or something
nearly identical to Ripple) which will see widespread implementation.
It has isolated the main benefit of an MCS. To connect the payer and
the payee no matter what their chosen currency is and no matter who
they do business with (assuming a path can be found.).
So IOU's are great but there not guaranteed to be redeemable. I
envision this scenario:
Bob has loads of money (say 10K dollars in various inflation proof
Land LLC's) where he earns say 4% a year. But Bob's a venture
capitalist and his friend who he trusts wants to open up a deli. He
agrees to loan his friend Jim say 5K at 8% a year to make a little
extra. Jim has no collateral (else he probably could have gotten the
money himself) it's totally based on Bob's trust (an IOU) and the only
recourse Bob will have if he can't collect from Jim is Jim will have
bad credit with Bob and anyone Bob decides to let in on the fact that
Jim doesn't repay his loans.
So I see people using the IOU's to basically make higher risk
investments, or to loan money to family and friends in need, or to
charities etc. But even if there was no "loaning" taking place, but
rather complex LLC asset exchanging, the Ripple network would still be
useful for the reasons mentioned above.
Clear as mud?
--
David Watson
David W
incessant posting today) is that the Ripple concept can be used to
manage risk via the trust network. The farmer in Peru wants stability
in his assets, the New York stock broker wants high returns. But in
the current system it seems the farmer suffers via inflation and
currency speculation. The stock broker suffers because everyone hates
him and thinks he's a blood sucking vampire who works for
Halliburton. But in a distributed LLC scenario each player is only at
risk based on what LLC's he's part of. It seems to me that there is
an achievable equilibrium between globalist and the green mentalities
under this scenario. The stock broker can live happily in his dog eat
dog global casino, and the farmer can wittle wood on his marijuana
farm in the netherlands.
I encourage everyone to read the links to opencapital.net I uploaded
to this group and to check out my other post from today.
David W
as a payment routing mechanism further by way of an example.
Consider:
LLC1 has members Alice and Bob who are 50/50 partners at $1K a piece
LLC2 has members Bob and Carol who are 50/50 parnters at $1K a piece
If Alice wants to buy $100 worth of girl scout cookies from Carol, her
share of LLC1 will go down by 100, Bob's share in LLC1 goes up by 100,
and Bob's share in LLC2 goes down by 100, and Carol's share of LLC2
goes up by 100.
So the LLC's are actually Ripple nodes that only offer credit up to
the amount invested by the member and are only 'allowed' credit up to
the total value of the LLC. Alice is shielded from any risk
associated with LLC2 and Carol is shielded from any risk associated
with being a member of LLC1. And if Bob perceived some risk
difference between the two LLC's which he is part of he could assign
some kind of conversion fee.
Now this is totally different than when Bob actually extends credit to
Alice. If he were to do that then Alice could simply use Bob's shares
in LLC2 to pay Carol, and then Bob would be responsible for making
sure Alice eventually pays him back. It seems Bob would only do this
if he were wanting to charge Alice interest in excess of what he would
make from LLC1, or as a favor, etc. But this is the way it should
work because the overall system balance is always zero.
In the former scenario:
Alice + cookies
Alice - $100 share of LLC1
Carol - cookies
Carol + $100 share of LLC2
Bob + $100 share of LLC1
Bob - $100 share of LLC2
And in the latter:
Alice + cookies
Alice - 100 Alice IOU's
Bob + 100 Alice IOU's
Bob - $100 share of LLC2
Carol - cookies
Carol + $100 share of LLC2
So in my view, the way to really further more widespread adoption is
to integrate asset-backed currency (via the opencapital concept) into
Ripple, so that people who don't want to be in the business of giving
and getting loans, can actively participate.
All currency in circulation (pretty much planet wide) is fiat-debt
based currency. Meaning every dollar in circulation is issued via
collateralized loans. By buying into bank debt (mortgages, etc.)
through investments in properly structured LLC's, you can push the
fiat dollars or euros (depending on where you live) out of the system
and use the asset "as" the money. Not only freeing up the
transactional costs associated with the current monetary system but
also recirculating the capital rental fees (interest) locally. So
instead of a community paying interest on the amount of 'money' in
circulation, the community earns interest on the amount of money in
circulation.
Ryan Fugger
people with nothing to invest get shares of an LLC?" It didn't take
but a second to realize that they work for the LLC, of course. When
revenues come in, someone's share balance goes down (and go up at
another node, if they are just an intermediary in the transaction).
Those "revenue" shares can be used to pay the LLC's expenses, such as
labour. I've thought many times in the past about using Ripple to
manage shares in an enterprise, but you've made it clear how it would
work.
I've stopped using the term "IOU", and started using "obligation"
instead, because it's a bit more general and has better connotations.
But I really like the word "share", because it is, in a sense, where
community and capitalism overlap. Everyone's life is a sort of
enterprise, and accepting their IOUs/obligations is like taking a
share in their enterprise, sharing in their life. The word works to
describe all forms of Ripple account balances, and it suggests we
think more about what we can put into a relationship rather than what
we can get out of it.
Ryan
David W
Ryan,
I want to thank you up front for starting this group. I'm always
wanting to talk about these concepts but never really have an avenue.
This group will be good for me to point people at, to see some of
these explanations, and can be indexed by Google and other search
engines. So a lot of it may seem like I'm preaching to the choir but
I'm just editorializing and trying to highlight the interesting
features of these ideas so hopefully more people will notice and
eventually 'get' the underlying big picture. And that is something I
think no one notices at first because money is such an absolute
concept in most people's minds.
Thanks again,
*******************
I read a lot about Solari and Catherine Austin Fitts ideas about
Neighborhood equity corporations, Land Trusts, etc., but setting up
these types of companies is a pretty painful process and securities
laws make the "buy stock in your local grocer" idea very impractical.
The system would be too complex to try to turn everyone into a
classical shareholder, or managing partner. But using Chris Cook's
Open Capital Partnership idea, we can turn everyone into an absentee
landlord (but in a good way).
Other points:
Another good question (besides yours about participation of people
with nothing to invest) is how do we get people with regular jobs with
government or big box retailers (companies unlikely to participate
initially), and very little excess investment money to support the
system? In addition to simply shopping at places that takes the new
money, they could use it as a savings account. A little diversified
portfolio of capital investments. To expand the system they can buy
shares early and hold them until they need to spend them on whatever
it is they normally buy. So basically a person could earn interest on
the average daily balance of shares they own. This is important
because these people are the main component in the global economy, and
whatever new currency system that eventually emerges, it needs to tap
directly into the income/expense streams of average (insert name of
countrymen here).
This brings up another main point. Average consumers don't
participate, not because they wouldn't like to, but because Wal-Mart,
Citgo, Pizza Hut, Ebay, etc. do not participate in local currencies.
I don't think it's because they are evil but rather they are simply at
all times trying to make money. I also know from experience that
credit cards and checks are very expensive to a small or big
business. And even though you save fees with cash, it requires bank
trips, and cash businesses are very prone to drawer skimming and
employee theft. In spite of all this I think the overhead is too
great to participate in some kind of LETS for a big company. And they
are unlikely to participate on merit, they are in the business of
selling stuff, or providing services, not making the world a better
place.
Yes very depressing...
So given that we could offer people and companies a viable alternative
currency that is asset-backed (via the open capital partnership) and
potentially global (via Ripple) and decentralised (no currency is king
and most will just be property-as-money), how do we get the big boys
to participate without requiring drastic overhauls to their current
point-of-sale systems? And the whole world is never going to agree on
a specific medium.
That's the $64,000 question.
And the answer?
Ding! Ding! Times up.
*Gift Cards*
: )
Huh?
Yes gift cards, those little annoying things that every big company on
planet earth has but seem to only benefit the company. I never
understood them myself. I pay you up front and I get nothing out of
it? And you won't refund the amount? And I can't use the money
anywhere but here? Great! I'll take $200 worth!! They're so pretty.
Jokes aside, here's how it would work. Say Wal-Mart wants to improve
it's public image so decides to really participate in the community
rather than simply having a bulletin board up next to the return
counter. They open an account through some local Ripple Node host and
decide to accept payment via a basket of low-risk (low return as well,
say 3% annually, but very stable) land-backed LLC shares. The
person(s) in their accounting/finance department who handle this will
have a broker agent either internally (at the customer service desk
perhaps) or externally (online perhaps, so Wal-Mart can interface with
the Ripple network more easily, then maybe the gift card is mailed or
can be loaded from your online gift card balance at the customer
service counter) that handles the selling of the gift cards.
(Side Note: Here in Topeka, the Price Chopper grocery stores actually
have two way gift cards. You can buy a $100 gift card, spend $50 then
turn the card back in and get your $50.)
So the connection can be made rather easily. You simply have to
integrate a company enough to where you can buy their gift cards via
Ripple, then use their gift card to buy everything else. And at
places like Wal-Mart, "everything else" is quite a bit, cell phone
minutes, food, clothes, electronics, medicine, sporting goods,
hardware, pet stuff, toys, jewelry, etc. There is a real world
example of this already occurring. Tradebank.com
(www.tradebanktopeka.com specifically) has clients in Topeka where I
live that only accept tradebank points via a broker, the same as
described above. Tradebank is a poor example of an alternative barter
network. They charge participants 12% when accepting payment via
tradebank. Yes "twelve" percent. And they have about 60 local Topeka
businesses participating. But this gives me hope. This means that 60
businesses in a town of 120,000 are willing to give up 12% of a
transaction, and this system doesn't really help them or their
community.
So the next step is to spend the money back out of Wal-Mart. Now it
is assumed they would have thought about how they could spend it out
before they started selling the gift cards for the new money.
Naturally they would only want to take in what they can spend out,
unless they were wanting to hoard land or something. And big stores
like Wal-Mart have plenty of ways to interface. Coke Distributor,
Pepsi, Miller, Budweiser, the Dairy guy, the local floor cleaners,
restaurants they've leased internal space to, the eye doctor, local
utilities (gas, water, electric, sewer, trash), property tax, sales
tax, employee payroll, and of course my consulting fees : ).
I see taxes and competition as the two main ways to make it worth a
companies while to participate.
The competition aspect means if Wal-Mart doesn't do it K-Mart will.
And if one is using it and the other not, they will have an edge.
Once the amount of new money replacing old money becomes significant
it will only want to go where it is accepted and will start affecting
non-users revenues. Because the amount of money in the system does
not increase except through inflation (which is bad), or increases in
population/production/wealth (which is good-generally). The new money
is not adding to the already existing Fed Notes, it is replacing them
by buying back assets presently owned by banks (by paying off loans in
exchange for a share of the real asset). Once a loan is payed off,
the bank is now making less money, and must seek out new assets to
collateralize and collect interest on, in order to stay in business.
And this seems unnatural in principal to me: I own something, and in
order to make that asset 'spendable' I must pay say 7% APR on the
balance of spendability? Doesn't it make more sense to charge me for
the service of participating in the money system (Fed system), then
only charge me for the cost of valuing the asset I wish to be
spendable? This may be an oversimplification of what banks are
currently doing but I'll be the first to admit the the Federal Reserve
fractional banking system confuses the hell out of me and seems very
MLM/Ponzi-esque to me.
The tax aspect is another choke point local communities could use.
Offer a tax break/or incentive if companies pay their taxes using the
new money, or just force them as a condition of moving their business
to your city or town. Local governments have even more ways than Wal-
Mart to spend the new money back out locally, and in most cases they
are supposed to be doing that (re-investing locally). Government
employees, pensions, vehicle fleets along with fuel and maintenance,
(insert infinite ways the government wastes and spends money here).
Anyway, that's the best implementation scenario idea I've come up with
so far. Piggybacking the new money 'caterpillar' inside the gift card
'cocoon' in hopes that the open money butterfly will emerge. I feel
it's important for the system to grow fast, and this approach would
require very little infrastructure changes for companies or consumers,
except consumers might have a big stack of gift cards in the wallets
at first until gift card vendors start to merge and become compatible
with one another (again Ripple-ish).
Here's a link to the wikipedia entry for stored-value cards (what gift
cards are called by the industry savvy people),
http://en.wikipedia.org/wiki/Stored-value_card
Also note that Visa, Mastercard and other major credit card companies
are experimenting with Stored-Value Credit Credit cards. And www.paidbycash.com
lets you buy mastercard prepaid cards from CircleK, K-Mart, Kroger,
Rite-Aid, Safeway. Then you can buy stuff anyplace that accepts
Mastercard.
Now on a technical note, you currently wouldn't 'exclusively' want to
buy prepaid versions of the three major credit cards because the
transaction fees (which is in the price of the product) are currently
too high and in my opinion structured improperly (based on a
percentage of transaction amount rather than what it actually costs to
process the transaction). But even this is a minor point because a
Ripple network will be highly competitive as far as service providers
go. It will simply be too easy to route around service providers/
hosts who are trying to charge outrageous transaction fees for
substandard service or for services that don't really cost much.
But you can see that the infrastructure is already in place. So take
Open Capital, Ripple, and Stored-Value cards, and let it all swirl
around in your head and ferment, or, as they say, "Put that in your
pipe and smoke it." : )
I believe that once a suitable Ripple type node application is built
that can be easily installed on a shared web-hosting account (and
perhaps be part of the package the way zencart, phpbb, and other
applications are), the idea will go viral worldwide within a couple
years. It's a bold statement and I could be wrong, it certainly won't
be the first time. I won't delve into what I think that "means" for
society because then I'd really sound like a fruitbasket, but I do
think it will be a good thing.
Here's an article I found while drafting this post:
Stored-Value cards as digital currency medium:http://www.e-
articles.info/e/a/title/Characteristics-of-Stored-Value-Cards/
I will leave you with the eternal wisdom of Zen Master Spongebob.
BACKGROUND: Spongebob, after being conned by Plankton into scaring
away beach goers so Plankton could build a new Chum Bucket restaurant,
replies:
SpongeBob SquarePants: You used me... for land development! That
wasn't nice.
Plankton: Haven't you figured it out, SpongeBob? Nice guys finish
last. Only aggressive people conquer the world. Ha ha ha ha!
SpongeBob SquarePants: Well... what about aggressively nice people?
--
David Watson
On May 18, 12:46 am, "Ryan Fugger" <rfug...@gmail.com> wrote:
> Hi David. I think this is brilliant. My first thought was, "How do
> people with nothing to invest get shares of an LLC?" It didn't take
> but a second to realize that they work for the LLC, of course. When
> revenues come in, someone's share balance goes down (and go up at
> another node, if they are just an intermediary in the transaction).
> Those "revenue" shares can be used to pay the LLC's expenses, such as
> labour. I've thought many times in the past about using Ripple to
> manage shares in an enterprise, but you've made it clear how it would
> work.
>
> I've stopped using the term "IOU", and started using "obligation"
> instead, because it's a bit more general and has better connotations.
> But I really like the word "share", because it is, in a sense, where
> community and capitalism overlap. Everyone's life is a sort of
> enterprise, and accepting their IOUs/obligations is like taking a
> share in their enterprise, sharing in their life. The word works to
> describe all forms of Ripple account balances, and it suggests we
> think more about what we can put into a relationship rather than what
> we can get out of it.
>
> Ryan
>
David W
http://www.lower-apr.com/stored-value-cards.htm
Related to previous post.
-David
> (www.tradebanktopeka.comspecifically) has clients in Topeka where I
> Ripple network will be highly competitive as far as service ...
>
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