[p2p-research] discussing money on ning

Sat Mar 14 06:01:38 CET 2009

Dear Sepp,

For a long time, I have been surprised on the slow uptake on internet-based
monetary systems, so unlike the steady adoption of cc's in regional and
urban settings ...

This inititaive for the Open Source Hardware Bank is the most significant
development I have seen in a long time, and really has the potential to
jumpstart the whole physical peer economy.

I think we should follow it closely, and perhaps, just in case they don't
know the previous experience, point them to successful experiments like WIR
and the JAK bank, from which they could learn.

A full article on their bank, with their logo and physical certificate as
illustrations, would be much appreciated, if you have the time.

The links for our friends in cc:

- http://www.oshwbank.org/

-
http://antipastohw.blogspot.com/2009/03/introducing-open-source-hardware.html

- http://www.liquidware.com/shop/show/IBILL/Open+Source+I-Bills

Our own first treatment:

http://blog.p2pfoundation.net/the-economics-of-open-source-hardware-need-a-oshw-bank/2009/03/14

*The economics of open source hardware need a OSHW
bank*<http://blog.p2pfoundation.net/the-economics-of-open-source-hardware-need-a-oshw-bank/2009/03/14>
*[image: photo of Michel Bauwens]*

Michel Bauwens
14th March 2009

 Open Source HardWare requires a lot of time and it takes money too. It
can’t work with only one, and not the other. If you throw a lot of time at
making a project schematic, it doesn’t become a real thing unless you also
throw money at it. Likewise, you can’t just throw money at building a
project or paying someone to build it, without also taking the time to
design it, architect it, and eventually code it and debug it.

The blog of Liquidware<http://antipastohw.blogspot.com/2009/02/zen-and-art-of-open-source-hardware.html>,
an open source electronics shop that’s part of the Arduino ecology, examines
the economics of open source hardware, in a manner that shows the rapid
maturation of the field.

First, the article shows the similarities and differences between the
traditional and the open source economy, summarized in a great
graphic<http://1.bp.blogspot.com/_pGsJFsc5Buc/SZoiwg32iiI/AAAAAAAAALs/STviWAFOMYs/s1600-h/OSHW1.jpg>,
and then delves into what differentiates making software from making open
hardware.

[image: open hardware economics]

Essentially, if open source software is based on time, open source hardware
needs both time, and money, the latter being necessary for actually making
the physical products:

This “cluster”-based theory of Open Source Software and Hardware treats the
Open Source Economy as a collection, or centralization of time and money. To
have Open Source Software, you need clusters of time. To have Open Source
Hardware, you need clusters of time and money.

*Where can this money come from?*

The author writes that:

*“When money comes from individuals, it needs coordination mechanisms to
make sure individuals are repaid, or get their money’s worth. When it comes
from institutions, it often needs to support a cause or mission. And
finally, when it comes from companies, it usually needs to make a profit.
This last one is particularly nagging in the Open Source Hardware economy,
because it suggests someone is making money off of Open Source. This tends
to contradict the notion of the “free as in beer” ideas of Open Source. But
is it necessary? Open Source Software can work without the presence of a
profit-making corporate entity. Can the same be true for hardware?”*

What matters is that, if a company needs to be involved, it has the right
ethics compatible with a community of volunteers working for free, there are
indeed, good and bad profits, or good and bad reasons to make profit, as
summarized in a
graphic<http://1.bp.blogspot.com/_pGsJFsc5Buc/SZoiwxFd4RI/AAAAAAAAAL8/t6Yp6NIrjXc/s400/OSHW3.jpg>
.

The author explains:

*“By this framework, profit-making is a good thing when it’s maximized and
re-invested back to the community. On the other hand, profit-making is a
“bad” thing (or “less good”) when it funds traditional business model
reasons, like mitigating risk, distribution, portfolio, or scaling. Why?
Because each of these business models involve taking advantage of the
efforts of others to make profit. The profit doesn’t make its way back to
the individuals who contributed, so it’s “less good” than a system that
directly rewards and incents individuals and their time. This assumes that
the end-state desired outcome is a system in which individuals are directly
contributing to a shared community, and collecting as many of the benefits
of their time as possible.”*

The next point is that, if such an ecology of ethical OSHW businesses is to
form, it needs a certain amount of financial backing, just as ordinary
start-ups would. Such an institutional assistance can come through a, still
to be created, Open Source Hardware
Bank<http://www.p2pfoundation.net/Open_Source_Hardware_Bank>
!

In a follow-up article<http://antipastohw.blogspot.com/2009/03/introducing-open-source-hardware.html>,
this idea is examined in greater detail:

As proposed by the Liquidware Antipasto blog:

*“The Open Source Hardware Bank will work to eliminate the scaling and
quantity pricing problem for OSHW projects by funding the build of 2x the
quantity of any Open Source Hardware product. That means, if a project has
found a way to find 10 potential buyers, the bank will put down the money
needed to fund 10 more, for a total of 20 products. If a project has found
25 community members to buy in, the bank will fund another 25, to bring the
total quantity down to 50. This should reduce the unit costs by around
10-30% of any hardware project, and in the case of the Illuminato, it’ll
reduce costs by almost 40%!

In return, anyone who pitches in money to the bank will get a modest and
sustainable return on their investment, somewhere between 5-10%. Normally,
this wouldn’t be a huge amount, but given what I’ve learned about the “real”
economy recently, 30-50% return on investment may never have really existed
in the first place, let alone represented “sustainable growth.” This money
gets paid back and cashed out when the rest of the inventory is bought as a
check that Justin, Andrew, or I write and sign personally.

So Andrew, Justin, and I will see to it that the Open Source Hardware Bank
does not default, and each of us will guarantee every investment. Maybe you
could call it AJMIC (instead of FDIC insured)! No one is trying to become a
millionaire (without lots of hard work), a high paid investment banker
(ugh), or Alan Greenspan (was he ever right about anything?). We’re just
trying to build a sustainable little financial institution to help Open
Source Hardware DIY’ers. Consequently, we’re also human and realize the
limits of spare time, so no one’s rushing out to build 50 projects, just 1
or 2 or 3 at a time will be perfectly fine, thank you!” *

On 3/13/09, Sepp Hasslberger <sepp at lastrega.com> wrote:
>
> I looked at their page and like it. There is a lot of potential there.
>
> Will follow that one up as well, at least with a comment on the questions
> the guy asks in the article.
>
>
> Sepp
>
>
>
>
>
>  On 13/mar/09, at 11:17, Michel Bauwens wrote:
>
> yes, thanks, and please do have a look at that open source bank, I'm rather
> enthusiastic about their seriousness ... they have a logo, physical
> certificates, and already a queu of jobs ...
>
> Michel
>
> On Fri, Mar 13, 2009 at 4:58 PM, Sepp Hasslberger <sepp at lastrega.com>wrote:
>
>> Hi Michel,
>>
>> yes, I will keep it around and re-post after a while on the regular blog.
>> Maybe we get some more data in comments...
>>
>>
>> Sepp
>>
>>
>>
>>  On 13/mar/09, at 09:31, Michel Bauwens wrote:
>>
>> Hi Sepp,
>>
>> this would also be a good article to post to our regular blog!!
>>
>> i.e. http://p2pfoundation.ning.com/forum/topics/discussing-money-on-ning
>>
>> Perhaps in a week, after you had some reactions, after the 17th, you can
>> repost it, eventually amended?
>>
>> Michel
>>
>> --
>> Working at http://en.wikipedia.org/wiki/Dhurakij_Pundit_University -
>> http://www.dpu.ac.th/dpuic/info/Research.html -
>> http://www.asianforesightinstitute.org/index.php/eng/The-AFI
>>
>> Volunteering at the P2P Foundation:
>> http://p2pfoundation.net  - http://blog.p2pfoundation.net -
>> http://p2pfoundation.ning.com
>>
>> Monitor updates at http://del.icio.us/mbauwens
>>
>> The work of the P2P Foundation is supported by SHIFTN,
>> http://www.shiftn.com/
>>
>>
>>
>>
>
>
>
> --
> Working at http://en.wikipedia.org/wiki/Dhurakij_Pundit_University -
> http://www.dpu.ac.th/dpuic/info/Research.html -
> http://www.asianforesightinstitute.org/index.php/eng/The-AFI
>
> Volunteering at the P2P Foundation:
> http://p2pfoundation.net  - http://blog.p2pfoundation.net -
> http://p2pfoundation.ning.com
>
> Monitor updates at http://del.icio.us/mbauwens
>
> The work of the P2P Foundation is supported by SHIFTN,
> http://www.shiftn.com/
>
>
>
>

-- 
Working at http://en.wikipedia.org/wiki/Dhurakij_Pundit_University -
http://www.dpu.ac.th/dpuic/info/Research.html -
http://www.asianforesightinstitute.org/index.php/eng/The-AFI

Volunteering at the P2P Foundation:
http://p2pfoundation.net  - http://blog.p2pfoundation.net -
http://p2pfoundation.ning.com

Monitor updates at http://del.icio.us/mbauwens

The work of the P2P Foundation is supported by SHIFTN,
http://www.shiftn.com/
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