Designing an Intentional Currency

Epistle from an imaginary adviser to an imaginary startup currency. Time to get off the proverbial fence. With a health warning [1].

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Suggestion #1 Clear intentions, communicated

Currencies are never neutral. As Richard Douthwaite seminally set out in The Ecology of Money [2], by specifying how currency or credit is created, and by whom, where it is first spent, what if anything backs it and more, values and preferences are embedded in money systems whether we like it or not. Sometimes, as with our mainstream money, those values and preferences are hidden in plain sight and it takes quite a bit of rooting around before we realise the role they play in screwing up lives and the planet.

So clarify your intentions. Be as open, clear and explicit as you can about them. Frame intentions in terms of the values you want to perpetuate, the outcomes you would see as signs of success, the preferences you have for participants and transactions and any other aspects that you want to differentiate what you plan from what has gone before.

As you do so, it will gradually dawn on you that you are intentionally restricting the scope of your project. Maybe you read somewhere that a key aspect of money is its universal acceptance, and here you are putting certain activity offlimits. Put this thought aside. There’s a price to be paid for promiscuity and you dont want the economic equivalent of an STD. In the monetary ecosystem of the future there will be many modes of money. Your responsibility is to define yours.

Other things not to worry about at this stage include: the fact that intentions will change; and how you will ever manage to assess how you are doing against your aims and objectives.

Completing this stage from first principles is good. You will find that your developing values statement acts as a cohesive force in bringing together (and keeping together) collaborators. If you need a bit of help by all means read this article [3] which attempts an intention-taxonomy incorporating, economic, social, commercial and value-led intentions. But remember that much of the interesting work in this monetary-ecosystem space hasn’t been done yet, so dont feel obliged to copy previous models.

This step is not trivial. Because of the money-is-neutral myth we don’t automatically think of money-design as a catalyst of behaviour change, so it can be difficult knowing how narrowly or widely to draw your intentions. Too wide and your statement will end up as motherhood and apple pie; too narrow and it might miss a community-building opportunity. Some type of priority indication would probably be good from central/ vital to nice to have. You will probably have your own fixations (which is good).

Suggestion #2 Choose your media

So here’s a bit of balanced advice – choose digital. In our #1 aim of transparent and open intentions, the availability of good data on scheme operation is vital, and any system reliant on bits of paper is operating with its hands tied. Note that this does not mean there is no role for paper. The exchange of a voucher carries two important benefits – firstly it’s a physical act where both parties are present and may even consequently have time for a chat and a bit of tangential value-adding; secondly it’s an opportunity for branding as assorted strangers ask you what the feck that is you have there. But paper should be a tactical add-on, nothing more.

This choice does have one further implication – you are not designing a post-apocalypse currency. (Although that is an interesting challenge.)

Suggestion #3 Check out your fiat attitude

By fiat here I am referring (inaccurately perhaps) to euros, dollars, pounds. (Elsewhere I tend to use the term mainstream money.)

Your attitude to mainstream money will be somewhere on a spectrum between friendly through tolerated to hostile. This will depend on the extent to which you have been brainwashed by the man and conditioned to your own subservient position in the overall scheme of things. So next piece of balanced advice – edge towards the tolerated/ hostile end – be ‘fiat-averse’.

Fiat-friendly is my term for what are elsewhere referred to as complementary currencies. These stunted projects contend themselves with fitting in the gaps around the edges of real money whilst tugging their metaphorical forelock to their betters. They ‘match unused capacity with unmet need’ – a tempting formulation for those not wanting to cause a fuss of any sort, or upset anyone important. Begrudgingly, I admit they can do good, much in the same way as the bridge club or WI can, and may even have a microscopic economic impact via import substitution. And until Bitcoin came along they were perhaps the sole publicised evidence of alternative approaches to money. (Not much press interest in the Wir[4] or Fureai Kippu[5] but they do like Brixton’s funny money.)

Fiat-averse currencies make life difficult for themselves by not aiming to be formally exchangeable (in either direction) with fiat, and potentially impossible by not wanting fiat capital-investments-with strings. Whether this level of programmed separation from the mainstream will always create a set of insurmountable obstacles remains to be seen. But this is what I would like to encourage you to explore – the purest expression of dissatisfaction with monetary dysfunction.

In between, and arguably a bit more pragmatic would be a fiat-aware position. Here the realist might recognise the omnipresent influence of the mainstream money system, but articulates, assesses and manages every interaction with it, with a view to limiting its influence and in due course ‘kicking the habit’. The danger always being that of being recaptured by the deprecated regime.

Suggestion #4 Find a Platform

For whatever reason there are few platform alternatives, and no independent comparative study of their capabilities. In so far as there is a well-trodden path, the default choice is Cyclos [6]. The platform has been developed by the Social Trade Organisation (STRO) [7] over a nunber of years and has over 1500 installations worldwide and an active user community. Notable referece sites include the Bristol Pound [8] and Sardex [9]. Versions were open source up to and including Cyclos3, but the latest version, Cyclos4, is proprietary. Pricing options are very flexible, and a social license is available for bona fide documented charities allowing up to 20,000 users and a euro equivalent annual turnover of 200,000.

In its early days, like many developments in the open source world, Cyclos depended on the efforts of a group of peripatetic independent developers. These developers typically pick and choose their assignments based on lifestyle criteria, and tend to be solidly committed to the open source ethos. The effect on this community of STRO exploring a more commercial model for Cyclos4 is not yet clear.

Like any complex software the learning curve for Cyclos implementation should not be underestimated. And once that effort has been sunk, human nature dictates that switching becomes more unattractive, and allegiance becomes more unconditional. Make your Cyclos bed and you will likely have to lie in it. Which is a shame because some tantalising open source blockchain options may be just round the corner.

‘How far around the corner?’ is the question. Tracking the development of hundreds of cryptocoins, their integration with open source middleware, contracts, wallets and mobile apps is a challenge to say the least. Harder still will be to time any leap off of the fence into active development and system configuration for a new currency. It’s a hugely promising movement because its associated visionaries are committed to the idea of Digital Autonomous Organisations (DAOs) – exactly the type of institutional re-engineering that will be needed for the reclaim of sovereignty over the money-system.

But ask STRO about blockchain potential and they are quick to note the confirmation time [10] for Bitcoin transactions, and its problems with scaling up to anything like a Cyclos level let alone a VISA level. Current strategies for improving confirmation time tend to compromise the pure-decentralisation motive, but a few risk-takers are beginning to explore the possibilities.

It is worth noting that the choice of platform tends to impact design. Once we are exposed to a new feature-set it is human nature to wonder how to use it. So expect some collision between bottom-up suggestions informed by what you *can* do and the original top-down design priorities setting out what you *should* do. Watch for mission-creep.

Finally if you are interested in applying smart contracts and Ethereum in this space, please make contact with us. We may have a project for you.

Suggestion #5 Pay attention to available resources

People, people-energy, skills, partners and funding are all critical resources. Be pragmatic, and not over-optimistic about their availability and sustainability. Watch for burn-out. Expect changes in model according to circumstances. These projects are much easier to start than to keep going.

Suggestion #6 Keep governance under active review

The choice between hierarchichal control modes of governance and co-operative consensus oriented modes is a difficult one. Typically a start-up requires the former because the guardianship of the vision tends to reside in one or two people. But without transparency, and a clear and inclusive regime for decision-making continuing development is problematic. So start controlling/ authoritarian and design a specific explicit change point to a co-operative model. At that point some ‘forking’ of initiatives is possible and can happen without too much bad feeling.

Consider both how decisions are to be made and how the decision making process might be changed in future. If you can do all this without succumbing to paralysis-by-analysis you will have a project to cherish.

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There are a number of other areas where it would be great to give tight advice but where it is difficult to be specific. Two of these are worth a special mention because they will almost certainly affect the success or failure of projects.

Tricky area #1 Incentives It is understandable to want to incentivise desired outcomes, and reward specific behaviours. We are conditioned heavily to believe that such incentives influence participants levels of effort or commitment. But the signals that incentivisation gives off affect perceptions of the value-set of a currency and can subtly undermine community coherence. Add to this the issues of who decides, and the relative roles of intrinsic and extrinsic motivation and you have an area that needs management.

Tricky area #2 Metrics Best summarised in a recent tweet [11]: 1980 If you can’t measure it you can’t manage it; 2015 If you *can* measure it, it can be gamed.

Notes:

[1]: This article does not neatly summarise success factors for a new currency, based on solid in-depth emprirical research and academic rigour. It isn’t an ‘In Search of Excellence’ for currencies. It seems only fair to advise readers seeking such content so that they can get back to Twitter or whatever other pastime seduces them away from a meaningful life. The article aims for ‘occasional insightful’ rather than ‘structured self-help manual’.

The somewhat light hearted tone (compared to previous more cerebral pieces) can be blamed on Barrett Brown the imprisoned US journalist. Brown’s inspiring writing from his prison cell, published most recently in The Intercept regularly makes me laugh out loud. And he addresses really serious stuff about the cyber-industrial complex. https://theintercept.com/staff/freebarrett_/

[2]: The Ecology of Money: Richard Douthwaite (1999 revised 2006) https://www.feasta.org/documents/moneyecology/

[3]: Motivations for New Currency Design : Graham Barnes (Nov 2015) https://www.feasta.org/2015/11/19/motivations-for-new-currency-design/

[4]: The WIR https://en.wikipedia.org/wiki/WIR_Bank

[5]: Japan’s Fureai Kippu : Time Banking in Elderly Care Mayumi Hayashi IJCCR August 2012 https://ijccr.files.wordpress.com/2012/08/ijccr-2012-hayashi.pdf

[6]: Cyclos http://www.cyclos.org/ The only people likely to be offended by this statement are CES: https://www.community-exchange.org

[7]: Social Trade Organisation http://www.socialtrade.nl/?lang=en

[8] Bristol Pound http://bristolpound.org/

[9]: Sardex best explored via pieces from Tom Greco: https://beyondmoney.net/2015/08/20/sardex-an-emerging-model-for-credit-clearing-exchanges/ and Paolo Dini et al http://eprints.lse.ac.uk/59406

[10]: https://blockchain.info/charts/avg-confirmation-time

[11]: @GrahamJBarnes @feasta_tweets

Featured image: http://www.freeimages.com/photo/designer-1242332