[p2p-research] How Open Money Ought to Work

[marc fawzi]

Or, in other words, why do we need it? and how would it change or improve
the system?



On Wed, Mar 25, 2009 at 1:11 PM, marc fawzi <marc.fawzi at gmail.com> wrote:

> How does this money differ in its basic nature from the existing money?
>
> What are its propositions? (or deductively provable benefits)
>
> How does it work with respect to supply-demand economics? Does it enforce
> scarcity by moving the price higher with demand? or does it move money into
> increased supply?
>
> There are more questions but I'm not sure I'm asking the right ones until I
> fully understand the context.
>
> It does sound like you've put a lot of thought into it. I'm just coming at
> it from my own context (the P2P Energy Economy) which addresses the above in
> a radical way (which may not be practical as what you're suggesting but it
> is radical and new so I guess I'm trying to bridge evolutionary to radical
> thinking by trying to understand thel aspects (if any) of what you're
> proposing that are a radical departure from the kind of economy and currency
> we have now.
>
> Marc
>
>
> 2009/3/25 Ryan Lanham <rlanham1963 at gmail.com>
>
>>  I've been thinking a long time about LETSIs and Open Money lately.  I
>> have a few thoughts on the execution of a larger scale scheme than those
>> typically handled in current LETSI frameworks.  I'll throw them out here and
>> welcome any feedback.
>>
>>
>>
>> 1.      Those who honor one or more types of local currency are members
>> of a LETSI network.  Think of the old credit card honored symbols on
>> retailer doors.
>>
>> 2.      A LETSI network, or more generally, the [exchange network] (in my
>> example below, the hypothetical Bay Area Bucks Network) is a membership
>> organization.
>>
>> 3.      Any person or organization making offers (or bids) in the
>> [exchange currency] requires [membership] in the exchange network (like
>> having an Ebay account).
>>
>> 4.      Scrip can be used by anyone whether or not they are a member so
>> long as it is used at a member organization.  Scrip is essentially local
>> legal tender as accepted by a member (e.g. for 50% of any bill or for all
>> purchases under $20 US etc.)
>>
>> 5.      To get currency without being a retail member, members create an
>> [ask bid]—like selling something on Ebay--for a good or service (or loan) to
>> attain exchange currency.
>>
>> 6.      When an ask bid is accepted or a [counter offer] is made and
>> agreed—like from an Ebay buyer member—a [contract] is recorded at the
>> network administrators at a given [exchange price] set in the network
>> currency.  The issuing person is the [asker], the one who accepts the ask
>> bid or sets a counter-office that is agreed is the [offerer].
>>
>> 7.      There is also meta-market of local currencies with inter-currency
>> pricing linked to other standards of value such as $US and to each other.
>> This central exchange point is called the [grand market].
>>
>> 8.      The [network administrator] is an entity responsible issuing
>> currencies following a contract.  It could be a community foundation,
>> chamber of commerce, group of market makers, etc.  It manages electronic
>> account credit and debits and also trades scrip for electronic account
>> debits.
>>
>> 9.      All contracts require that the offerer complete
>> transaction comments within an agreed period based on the goods or services
>> specified in the ask bid.
>>
>> 10.  The network administrator can freeze accounts of those who do not
>> issue comments and/or investigate negative comments and resolve them as
>> appropriate in the membership provisions.
>>
>> 11.  The grand market set of exchange prices is set once per 24 hour
>> period to simplify administration of the participating networks.  For
>> example, the Grand Market would publish that LETSI currency A is worth 0.2
>> US dollars or 1 garden fresh tomato, 20 aluminum cans, 1.4 units of LETSI Z
>> (etc.)
>>
>> 12.  Any participant in LETSI A could fulfill a contract be delivery in
>> kind quantities of specified items to the network administrator (usually
>> US$), but could be pounds of canned goods for a local food pantry, etc.
>>
>> 13.  As an example, Say someone wanted to issue 1000 Bay Area Bucks (a
>> hypothetical network currency) to themselves in exchange for a large good or
>> service (an ask bid).
>>
>> 14.   There would be known ways to use those BAB units publicized and
>> supported by the network administrator (the catalogue) and the local network
>> would encourage advertising schemes.
>>
>> 15.  I would put my ask bid (1000 BAB) up for offer to participants in
>> the pool (the retailers, etc. would honor the bucks)...for, say 500 lbs of
>> concrete ready mix.  I might just as well ask to borrow 1000 BAB in exchange
>> for paying 20 US dollars every week for one year based on a standard
>> contract noted in the ask, or offer a coupon for 100 hamburgers of a given
>> type at my hamburger stand.  The list of asks would look very similar to a
>> micro credit site (e.g. Kiva or MyC4) or Ebay sales items, etc.
>>
>> 16.  The BABs would only be unlocked if (and only if) another member
>> accepted by confirmation online that the BABs I wanted for the good or
>> service were contractually agreed.
>>
>> 17.  The member offerer might offer fewer BABs (e.g. 640) for the
>> services or goods to the asker--in other words, there can be auctions.
>>
>> 18.  The asker then either choose to accept or decline an offer.
>>
>> 19.  Upon agreement, a contract is set (matched).
>>
>> 20.  The network administrator automatically issues network currency to
>> the account of the asking member.
>>
>> 21.  The asking member who now has a credit to an account can go to a
>> central facility to trade e-currency for scrip (essentially an ATM).
>>
>> 22.  The grand market allows movement of liquid commodities and
>> currencies between local exchanges at daily set rates.  E.g. BABs to US$,
>> ounces of silver, BABs to other LETSI currencies, etc.  The simplest model
>> would be US$ but a range of grand market trades would likely quickly arise.
>> A central foundation would manage the grand market.
>>
>> 23.  It would be straightforward to add charity or microcredit systems to
>> this framework where a special rate of scrip could be moved to a charitable
>> account, for example, in exchange for a credit card debit.
>>
>> 24.  The key supporting systems would include the catalogue of asks, the
>> bank accounting system of e-accounts, the scrip tracking system, the grand
>> market system, and ancillary tools like charity systems, microfinance
>> systems, etc.  However, most things could be handled as a variation on
>> the central catalogue system.
>>
>>
>> Ryan Lanham
>>
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>
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