What, How and Why

August 5, 2010

During the last few months, I have channeled my spare time towards the implementation effort (updates at tyaga.org), which has obviously affected my ability to post regularly on this blog. I would like to catch up by discussing the ‘what’, ‘how’ and ‘why’ of currency traceability as promoted on this site. Hopefully, potential collaborators would see immediately whether or not satconomy fits well with their own vision.

Traceable to ‘WHAT’?

While many non-traditional currency design promotes currency that is traceable to a community or individual, satconomy’s emphasis is traceability to a market entity or organization. This emphasis leads to design issues that are not considered important in currency projects that promote self-sufficient collectives or personal currencies as issued by autonomous individuals. One very important issue is that each entity-issued currency brand is tracked in its own ledger (a collection of  entity-owned accounts and NOT just one account.) The one-to-one correspondence between an owner and an account in a mutual-credit system may be practical for an individual, but not for an entity with many ongoing budget and organizational concerns.

HOW will it be Traceable?

An entity’s budget effectively becomes its currency. As is common practice today, each entity will be expected to administer its own ledger/budget without a requirement to open an account in a centralized database. In the OCAUP accounting model, a flow transaction results in the corresponding cancellation of the payer’s expense budget and the recipient’s revenue budget. Credits are not reusable and do not circulate among entities. Each entity independently manages the life cycle of its currency brand, including account organization, budget creation (i.e., currency issuance), assignment, use and reporting.

WHY should it be Traceable?

Currency traceability, in the context of a dynamic currency index, enhances the ability of an entity to determine the currency brand reputation of other entities. The focus is on being able to reject payments from disreputable currency brands and thus exert pressure on the entity that issued the rejected currency brand. This focus is different from systems that track reputation to guide participants to decide which currency system to join (membership in a community currency) or which network node to extend credits to (lending to a creditworthy participant). In satconomy, participants can support and pressure each other even if they do not belong to the same community or are not networked in some way.

Leave a Comment » | Currency Traceability, Entity | Permalink
Posted by Edgar

Busting Currency Myths

April 21, 2010

In exploring the workings of various currency systems, I’ve had to overcome ingrained ideas that thwarted my informal study of core design issues. These myths are quite powerful. It is worth spelling them out in detail, hopefully to serve as reminders since these myths come up often in currency-related discussions.

“If everyone has the ability to issue money, then that particular currency would soon be worthless due to inflation.”

This assertion is true only if market participants unconditionally accepted that particular currency, regardless of how much was issued. In fact, it is possible to design a currency system where published information about potential over-issuance helps regulate the behavior of currency issuers. The design should make currency traceable to particular issuers, so that market participants would have the informed option of rejecting over-issued currency. The design requirement for traceability led to the core concept of independent currency brands in satconomy.

“All currency systems involves notes or credits that circulate in a market.”

This assertion is true only for commodities and reusable, or transferrable, physical representations of credits such as coins and currency notes. However, in ledger-based currency systems which do not require physical representation of credits, it is quite easy to design a system where credits are not transferrable between currency issuers. There would be different motivations for issuing currency, especially in light of the fact that — if everyone could truly act as an indepedent currency issuer — no one would need to receive currency from others in order to accrue credits. The budget-centric OCAUP accounting system was conceived to provide a currency lifecycle framework for bona fide currency issuers.

“It is possible to design a large-scale currency system that is technically and administratively much simpler than current systems.”

It is tempting to look at the simplicity of a mutual-credit system and assume that its design could be scaled easily with minor tweaks and network or sociotechnological features.  I had the same hopes about five years ago when I started looking at currency systems, but I have since learned to embrace the challenges of dealing with complexity. It is true that the basis of any system might be simple and easy to understand. However, the policies and technical standards that are required to implement a simple system into large-scale, decentralized setting imply continous effort towards solving small and complex problems that come up regularly. In my opinion, a decentralized currency system that does not have an effective approach to auditing and indexing a diversity of issuers will not scale and influence anyone other than its limited membership base.

To summarize the counterpoints to the above myths:

- Even if currency issuance is decentralized, it is possible to encourage self-regulation and discourage inflationary tendencies by making currency traceable to specific issuers and not having guarantees of future currency acceptability between issuers

- It is possible to design a currency system where the currency lifecycle (e.g., budget creation, assignment and cancellation) is emphasized instead of currency circulation (e.g., credit transfer and velocity)

- Emergent complexity is inevitable in large-scale currency systems or frameworks, and must be carefully considered in the design of supporting  information systems, policies and standards.

Leave a Comment » | Currency Traceability, Myths | Tagged: | Permalink
Posted by Edgar

Web Content and Currencies

January 8, 2010

Imagine that the process of creating a currency brand is analogous to establishing a blog or web page. In addition, issuing currency units or a budget is similar to putting content on the web page, and that using the currency or budget is similar to having that content read by someone else.

What if there is a requirement to have someone else approve your content before you could put it on your web page? This requirement presents a burden to the author’s provision of content, and is analogous to having an unnecessary approval process for issuing one’s own currency brand. The proper approach that we see on the web is to let anyone write what he or she wants, and others do not have to read or visit that web page. Similarly, let anyone issue their own currency – if you don’t believe in what that currency brand represents, don’t accept it. 

Additionally, the pre-approval requirement presents an unnecessary burden to the content reviewer as well. Let us say that I agreed to be the reviewer. Instead of worrying about the quality of my own content, I also have to worry about reviewing and approving someone else’s content. This concern is analogous to: Instead of worrying about my own budget, I also have to decide what someone else’s budget should be as it relates to me. Let each currency issuer worry about setting its own limits and others could decide on the acceptability of a currency brand later if it gets offered as payment.

What if there is a requirement that registration with a certain web page is necessary before you could read its contents? While this requirement is understandable in a social network context where privacy is an important issue, it does not make sense in requiring co-membership if the purpose of publishing a web page is to share information.

Such a mentality of restricted usability also does not make sense when it comes to currency and budgets, which should be used based on perceived needs and not on having preconceived agreements to share and use a particular currency with others. This flexibility and openness is an important aspect of entities that cater their products and services based on goals to serve the general public or market. For consumers, currency that is limited to a particular community leads to limited market access. For providers, limiting service to pre-specified beneficiaries implies a conscious decision to limit potential sources of revenue.

The mentality that is advocated in satconomy is to minimize the barrier for an entity to independently issue its own currency brand. Issuing currency should be as simple as issuing unused expense and revenue budgets.  A fledgling entity should not have to determine beforehand who is going to accept or reject its currency brand, but should work steadfastly to establish a good brand reputation and increase its likelihood of being accepted by other entities. If an entity’s currency brand is found acceptable as payment, its unused expense budget and the unused revenue budget of the other entity is reduced by the same amount.

Some of the implementation concerns involve the technology for providing reliable and auditable information related to currency brands. There should be accounting conventions when currency is issued as budgets – this concern is addressed by the ocaup accounting model. Payments should be facilitated between accounting systems of different entities – this concern is addressed through the evolving protocol that is now tentatively called Inter-entity Payment Protocol (IPP). Finally, just as a search engine helps a reader decide which web resource to visit, a currency brand index should also be available to help entities decide whether to accept or reject another entity’s currency brand. The hope is that, just as there has been an explosion in the number of web resources due to the ease in which web pages, blogs and profiles are set up, there would also be a surge in the number of independent currency brands that are established using easy to use accounting software, uniform payment protocols and effective currency brand indexes.

Leave a Comment » | Analogies | Permalink
Posted by Edgar

Durable Goods

September 25, 2009

A valid concern that could be raised by potential study participants is, “What if I sell an old mobile phone using independent currency brands, but then the recipient turns around and sells that product for conventional money?”

In other words, a currency system could be attacked by participants whose purpose is to accumulate durable products to be sold later for profit. If that happens, sellers might become more sensitive to the perceived loss in conventional profits when participating in implementations of alternative currency systems. This concern might become prevalent enough that transaction offers are rejected by sellers without even considering the buyer’s currency brand reputation. Since transactions involving conventional money are not tracked under the information system proposed here, it would be difficult to detect such attacks and side-channels.

A deeper consideration of this issue reveals the fundamental shift in perspective required in trusteeship-oriented currency design. It is important to recognize that this attack does not apply to strictly nondurable products such as services and product consumed at the point of purchase (e.g., meal at a restaurant.)

For durable goods such as a mobile phone, a study participant does not have to sell but could rent or lease it out instead. The recipient would be restricted from selling the rented phone for profit since ownership was not transferred in the transaction. As long as potential side-channel attacks exists, leasing would be preferred for durable good transactions which results in the cancellation of self-accrued debt (such as accounted in the ocaup model.)

On the one hand, this type of transaction favors a recipient who likes the flexibility of being able to easily upgrade to newer product models. On the other hand, leasing would force the owner to be more involved with the whole product lifecycle, including eventual recycling and disposal, instead of simply transferring that responsibility to the recipient. The predicted effect is that only dedicated owners would want to deal with the lifecyle responsibility of durable goods, leading to better product traceability and accountability.

In the long run, independent currency brand transactions will likely flourish in a service-oriented economy, where ownership transfers or trade boundaries are less emphasized.

Leave a Comment » | durable goods, Implementation | Tagged: | Permalink
Posted by Edgar

Reputation Basis

August 18, 2009

While reputation may be derived from many relations and concepts, these bases are frequently observed in the design of reputation currencies: ownership, membership and trusteeship.  

Owner reputation is a primary basis of lender-oriented currency design. The benefactor evaluates how likely the recipient is to return or compensate a trade. For example, the recipient might own cash and thus immediately return a favor by giving the seller reusable currency tokens. The currency design is, therefore, aimed at facilitating direct reciprocity.

Member reputation is a primary basis of community-oriented currency design. The benefactor evaluates if a recipient benefits a common cause or resource and how likely that member’s contribution to the community will continue. Even though indirect rather than direct reciprocity is facilitated, there is a strong expectation of a closed-loop circulation of currency within the community. 

Trustee reputation is a primary basis of brand-oriented currency design. The benefactor evaluates if a potential recipient belongs to an entity with a worthwhile specialization and acceptable market performance. The emphasis is on indirect reciprocity without any expectation of closed-loop currency circulation within a predetermined boundary.

To illustrate the concept of trusteeship, imagine a hospital whose mission is to provide healthcare. If the hospital has a reputation for effectively allocating its limited resources to serve patients, then a benefactor would have a good reason to support and accept that hospital’s currency brand. The benefactor should not be concerned whether or not it would eventually benefit directly from using the hospital’s services. Rather, the benefactor should focus on establishing its own reputation as a trustee by effectively fulfilling its specialization.

The preceding comparison does not imply that reputation currencies may emphasize only one conceptual basis. Different reputation bases leads to different approaches to improving market access. On the one hand, it is easy to see that a brand or trusteeship-oriented currency design provides access to the widest market possible since currency use is not limited to direct reciprocity or within community boundaries. On the other hand, it may be argued that a trustee’s reputation offers the least guarantee on redeemability since trusteeship is not as easily qualified or quantified in comparison to ownership or membership.

Leave a Comment » | Comparisons, Trusteeship | Permalink
Posted by Edgar

Diversity in Currency Brands

July 3, 2009

As the development effort in tyaga.org moves closer to the packaging stage, I would like to discuss a topic that is directly related to currency brand indexes: What type of currency diversity should an index represent and track?

There are many ways to design a currency index, but the approach advocated in satconomy is to represent and track the diversity of specialized market entities and their activities through the concept of independent currency brands. Each entity issues currency as unused revenue and expense budgets. In a transaction between two entities, the unused expense budget of the payor’s entity decreases by the same amount as the unused revenue budget of the recipient’s entity. Both entities publish and report depersonalized transaction information to promote traceability and auditability.  This approach has the following advantages with regards to the design of a currency index:

Tracking by currency brands leads to diversity in both quantitative and meaningful terms. Each brand represents a specific entity that contributes and takes from the market. In contrast, other approaches emphasize the potential diversity in different currency designs, which would naturally have less diversity than the number of market entities and be of interest only to currency designers and not the general public.

The OCAUP currency life cycle in satconomy aligns closely with a market entity’s typical use of “money”: to budget for organizational goals, to make or receive payments and to evaluate market performance. In contrast, other approaches emphasize other aspects of currency design such as a common means for storing or expressing wealth. Although these design aspects are important, they are not emphasized in satconomy.

A currency index in satconomy represents the existing  diversity of market entities that issue independent currency brands. The accounting systems and interoperability requirements are intended to be as simple as possible. In contrast, other approaches attempt to put a new layer of accounting configurability and/or currency type diversity on top of existing entity diversity.

In all of the currency systems, platforms or frameworks that I have surveyed, I have not observed any that emphasize the utmost importance of currency indexes. In contrast, the research, development and establishment of relevant, sustainable currency indexes is a unifying theme in satconomy. A dynamic, reliable and informative currency index is an essential component and goal in satconomy. A brand index is not simply an option – it is a mandatory feature that promotes public monitoring and self-regulation of market entities that issue currency.

Leave a Comment » | Brand Evaluation, Comparisons, Implementation | Permalink
Posted by Edgar

“Charity” by Accepting Another Entity’s Currency

June 15, 2009

In previous posts, I have discussed targeted noncooperation with specific market entities through the rejection of its currency brand. However, it is worth noting that satconomy also encourages informed acts of cooperation with reputable entities that issue independent currency brands. For example, individuals and corporations could support nonprofits not just by donating or granting funds to other organizations, but also by accepting an organization’s independently issued currency units in a market transaction.

Think about it. A church needs construction material for a shelter that it is trying to build – would a hardware/lumberyard company accept that church’s self-issued currency as payment for its products? How about a grocery store accepting a school district’s currency brand to support the school’s lunch program? The main requirement is for the lumberyard or grocery store to also issue their own currency as unused budgets, so that they could use the payer’s credits to cancel equivalent units of unmet revenue budgets. In this way, an entity accepts currency from another entity to cancel its self-determined obligation to the market, and not to have more ‘spendable money’ .

Looking deeper into this dynamics, it is easy to see the importance of knowing which entities to support or avoid. A lumberyard could instead accept stolen money for construction material used in building a mansion for a con artist (such as Bernie Madoff) — would it have been better if the lumberyard accepted a church’s currency to support a more worthwhile economic activity? With generic currencies that are not traceable to specific market entities, it is difficult to answer such questions. To make such determinations easier, tyaga.org is attempting to develop practical implementation of the concepts of independent currency brands, OCAUP accounting and auditable reporting.

Leave a Comment » | Brand Evaluation, Currency Traceability | Permalink
Posted by Edgar

The Dark Mansion

May 22, 2009

An inspirational excerpt from “Fermat’s Enigma” by Simon Singh:

…getting this far has required enormous determination to overcome the periods of self-doubt. Wiles describes his experience of doing mathematics in terms of a journey through a dark unexplored mansion. “One enters the first room of the mansion and it’s dark. Completely dark. One stumbles around bumping through the furniture, but gradually you learn where each piece of furniture is. Finally, after six months or so, you find the light switch, you turn it on, and suddenly it’s all illuminated. You can see exactly where you were. Then you move into the next room and spend another six months in the dark. So each of these breakthroughs, while sometimes momentary, sometimes over a period of a day or two, they are the culmination of, and couldn’t exist without, the many months of stumbling around in the dark that precede them.” … “I really believed that I was on the right track, but that did not mean that I would reach my goal.”

Andrew Wiles spent 7 years of dedicated effort to prove Fermat’s Theorem, plus another year fixing a subtle error in the proof. Significant progress, even an outright solution to a problem, is bound to result from the right combination of skills, dedication and detachment from thoughts of rewards or hardship.

Leave a Comment » | Inspirational, Practical Idealism | Tagged: , | Permalink
Posted by Edgar

Of Workers and Worders

April 27, 2009

“I see you are a worker. You are not a fanatic. You will change whenever you find yourself in the wrong. There is no harm as long as you are not fanatical. Whether you are in the right or I am in the right, results will prove. Then I may go your way or you may come my way; or both of us may go a third way. So go ahead with your work. I will help you, though your method is against mine.” [An Atheist with Gandhi by Gora]

The above was taken from an exchange between Gandhi and the quoted book’s author, which had sought advise from the Mahatma. If the reader doubts that people could effectively work together despite having fundamental differences, I would recommend reading the short book by Gora. No one denies the idealism of these men, and yet what really stands out in their discussions is the importance of having concrete results to back theories. 

Through Gora’s endearing recollection of his time with Gandhi, I could imagine myself receiving advise directly from eminent practical idealists. More than once, I have used the following curt advise to pull myself above recurring doubts: ”Go and work. Work solves your difficulties.” On the other hand, when I feel getting carried away by words and flights of ideas, I find this quote brings me back on solid ground: “You are too theoretical. I am not so intellectual. Go to professors and discuss.”

Immediate relevance and clarity of insight more than makes up for the lack of eloquence in the preceding advise.

Leave a Comment » | Practical Idealism, Trusteeship | Permalink
Posted by Edgar

Currency Traceability, Madoff and AIG Executive Bonuses

March 17, 2009

While currency traceability to a specific issuer brand is not a cure-all for all of the world’s ills, recent news stories continue to show its importance in relation to currency design. If, for example, madoffholdings.com and somebroker.com are each expected to publish corresponding currency outflow and inflow record copies, then it would have been much more difficult for Madoff to run an undetected Ponzi scheme for so long. The potential for fraudulent schemes will never be eliminated, but transparency and technology could help lead the way in deterring and catching such occurrences.

Traceability would also be extremely valuable in enabling targeted noncooperation with disreputable market entities. In light of AIG’s woeful neglect of its responsibilities , those who disagree with AIG’s intent to award bonuses to its executives could easily refuse to accept AIG’s currency brand  in interentity trades – if currency is indeed to be traceable to independent currency brands.  Without currency traceability, those who end up accepting any payment from AIG’s executives would be unaware that their products and services are being redeemed with inappropriately earned, anonymous currency.

Leave a Comment » | Currency Traceability, Self-Regulation, Trusteeship | Permalink
Posted by Edgar

Shift in Priorities

January 16, 2009

The past year marked a gradual shift in priorities for me. The following thoughts are common-sense stuff, something the I felt that I needed to articulate to myself in order not to get lost in all the cliches.

Self-Regulation before Self-Sufficiency: I have written about self-regulation since starting this blog, and I do not want to repeat the points that I have already made. However, it might be worth mentioning that the perspective shift was not the result of mere mental exercises, but also of trying to actively seek a more self-sufficient lifestyle such as through organic gardening. It became readily apparent to me that only a minority could become fully self-sufficient through organic gardening or farming. Market specialization is a fact of any modern economy, and as market boundaries disappear, self-regulation is a more practical goal than self-sufficiency and has a more viable chance of spreading.

Inside-Out before Bottom-Up Change: In a flat world, there are no higher ups or bottom dwellers, and it is counterproductive to think of the marginalized as powerless. There definitely are people with more influence than others, but I believe it would be misguided to seek power itself to effect sustainable change. Change that starts from within has more chance of lasting, as other types of change involves numerous factors that are not under an individual’s direct control. For example, this approach is reflected in my effort to develop a system where I could simply declare my willingness to accept ledger-based currency, without preconditions of belonging to certain communities or payment networks.

Duty before “Harmlessness”: This prioritization is bound to be misunderstood; I’ll explain by relating the two through my own search for a peaceful vocation. In the process of trying to move away from working for corporations, I tried to avoid looking into technology-related careers and instead leaned towards more “natural” professions in agrarian, education and healthcare sectors. However, one’s temperament and lifetime of experience cannot be easily ignored — to do so would imply being constantly at war with one’s natural tendencies. And so despite the numerous down-to-earth paths that one could follow, a natural profession for me means following my interest in information/documentation systems, even though such profession could be easily dismissed as being elitist or being disconnected from everyday needs.

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Posted by Edgar

Recent Observations

November 24, 2008

I have been working mostly on the implementation side, so I have been unable to spend time posting here. The good news is that I am getting closer to a usable demonstration system, hopefully to be released in December after I revise the protocols to reflect the extensive architectural changes that I have made. For system development and implementation updates, please visit http://tyaga.org/. What follows below are mostly personal thoughts.

Within this year, I have visited the user demos of cyclos, ripplepay and three alpha-sites of open money systems. I have also read the MRS server-client specification, IRTA, some of the unmoney convergence session notes, as well as the more accounting-oriented approach exemplified in ledgerism.net (now defunct). All of these sites are quite inspiring, and I’ll continue to follow the updates on those projects. I have general observations that I’d like to share.

Why do most ledger-based currency systems focus on monetizing community and personal relationships? I still don’t quite get that angle, and besides IRTA, only ledgerism.net had focused on serving business-type needs and/or settlements. When I think of money or currency, I think of organized work and of regularly earning it, not so much the use of it which would just come naturally in a market, community or personal setting.

Why do most systems focus on tracking account net balance, when ‘cash’ flow budgets seems more appropriate for triggering and regulating market activity? Organized work in business, government and nonprofits are driven mostly by serving specific needs, and is typically regulated against revenue targets and controlling costs. It just seems that a particpant or organization that focuses on breaking even (zero net balance) will not have much incentive to innovate and proactively produce value, to take responsible risks.

Why do developers focus on system configurability instead of simplifying the accounting bases of the system? When reading related discussions on the principle of requisite variety, I find it surprising that the focus is mostly on giving the user a myriad of options in configuring an account, such as the use of obscure units, floating exchange rates and leakage settings, which makes the system more intimidating and the accounting more complicated than necessary for a typical user. I realize most users would forgo such options, but it might make the simple users wonder if they are somehow being put at a disadvantage relative to a more configured account. 

To me, requisite variety should come from having a diversity of specialized organizations that issue its own currency and which could either be rejected or accepted by market participants, similar to companies issuing its own shareholder stocks or bonds and people either buying or avoiding those shares.

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Posted by Edgar

The US Financial Bailout and Self-Regulation

September 30, 2008

With all the news and opinions on the recent US financial bailout effort and bill failure, I would like to offer some insights on how the satconomy framework could have helped prevent this potential for widespread market collapse. The keyword is self-regulation, but distinguished from the common, unsustainable free market version as follows: 

Accountable Self-Regulation: It is true that public companies regularly publish their financial and market results, but those reports are very difficult to decipher for regular market participants. In particular, it is very difficult to perform online audits and inter-entity reconciliation of reported revenues and expenditures, which would go a long way towards preventing overstated profits or understated spending. When entities such as Worldcomm, Fannie Mae, AIG or Merrill Lynch have had to restate billions in cash flow summaries, it shows how current accounting models are not adequate for tracking self-regulation in very large market entities.

In contrast, satconomy promotes the use of the OCAUP accounting model that standardizes the declaration of self-determined limits, currency lifecycle and the publishing of inter-entity transactions that are openly reconcilable. With more eyeballs able to view and audit simplified financial reports in public, it is hoped that self-regulation issues do not have to go undetected for years which could help prevent problems from getting uncontrollably intertwined.

Independent Self-Regulation: As the massive bail out plan points out, everything is intricately tied together in the current free market version. As a financial entity gets larger, the impact of its collapse on the whole market becomes significantly more adverse. This type of dependency makes it difficult to analyze for root causes and target solutions.

Ideally, a healthy market could and would simply accept and survive the natural demise of irresponsible entities that failed to self-regulate. This is the idea behind the cultivation of independent currency brands in satconomy.  The more diversity there is in independent currency brands, the less potential there is for undesirable dependencies between market entities. There would still be inter-entity needs for specialization and product flow in satconomy, but the reliance on a shared currency brand as a transaction instrument is eliminated. There will be more isolated segment fluctuations in contrast to wild swings affecting the whole market.

Influencing Self-Regulation through Non-Cooperation: One of the main reasons that the $700 billion bail-out plan failed to gather enough votes is the perception that it would lead to long-lasting government intervention in the operation of free markets.  With current socio-economic platforms of conservative versus liberal ideals, the practical result is that the market is either (a) left alone to the whims of moneyed investors and lenders, or (b) monitored by powerful regulators that present bureaucratic and selective responsiveness issues. In other words, the options could be framed as a choice between the influence of big money or big government.

Satconomy offers a vastly different option, that of harnessing the cumulative influence of market participants in accepting or rejecting a currency brand in a market transaction. Any entity could issue its own currency brand to support its goals and members, which other entities are free to accept or reject. Market entities and activities that are represented by popular currency brands will thrive, while unpopular entities will feel pressure from sellers that are unwilling to accept disreputable currency brands. This dynamic is not much different than today’s public companies reacting to stock prices. In satconomy, however, public opinion has a more direct impact on purchasing power: it does not matter how much currency you have stashed if you could not spend any of it.

Leave a Comment » | Self-Regulation, Trusteeship | Permalink
Posted by Edgar

Reporter / ICB Index Demo

September 28, 2008

A mock-up of an independent currency brand (ICB) index is available here. The demo ICB index has example market performance charts and news. I hope the demo gives more insight into one of the more popular post category in here, that of currency “brand evaluation.”

Leave a Comment » | Brand Evaluation, Implementation, Self-Regulation | Permalink
Posted by Edgar

Proposed Standards

August 24, 2008

I have uploaded three short documents that outline proposed standards for the satconomy framework. Those documents are in the Standards page. There is also a draft powerpoint are also two slide presentations in the Implementation page. Please post your comments, questions, suggestions. I am also currently developing an interactive demonstration of my implementation projects at tyaga.org - will provide updates here when that becomes active.

Leave a Comment » | Implementation, Uncategorized | Permalink
Posted by Edgar

Information Driven Market Ecology

July 22, 2008

A market entity may be viewed as a species that performs a ‘niche’ role in an ecological system. So, for example, a farmer cooperative perfoms the role of food producer, while a clinic or hospital seeks to address the market’s health-related needs. Since each market entity has a particular niche or specialization, it is only reasonable to expect that none could become completely self-sufficient since, in this scenario, everyone is only able to concentrate on addressing a limited set of human, social or market need. In short, the general goal of a market entity is not self-sufficiency within itself and exclusive of others. Rather, an entity seeks to cultivate a self-sufficient market by contributing to the diversity of product choices in it and by influencing how resources are used for the production of ‘desirable’ products.

Of course, no one can summarily dictate what products are to be offered by market entities, or which products are desirable for whom. It is simply hoped that goods and services would naturally be produced by entities who see a need for them, and market participants would self-determine those products that they need and the choices that they prefer. It would seem that this expectation could lead to resource exploitation and unmet needs, and there might even be support for that viewpoint with the current state of market economies where, for example, one person could live in a 40 bedroom estate while hundreds are homeless on the streets.

However, the satconomy market framework is designed to offer active feedback to a market entity through the acceptance or rejection of its currency brand by other entities. This is different than current market situations where sellers blindly accept ‘generic’ currency regardless of how that money was earned. In satconomy, currency is traceable to a specific market entity and its activities. If market sellers are not willing to accept an entity’s currency brand due to its reputation, members of that entity are likely to run out of product choices, and without employees or members, that entity is destined to failure or extinction. Therefore, each and every entity in a satconomy framework is expected to actively regulate itself against public opinion in order to promote and maintain its market reputation. Please note that there is a similarity between this expected form of self-regulation and the current stock-price-oriented management of a publicly owned company.

In order for this feedback regulation in satconomy to work as expected, market participants must have reliable access to timely and accurate information that they could use to evaluate whether or not to accept someone’s currency brand. Even now, companies regularly update investors with financial results and ‘stewardship’ performance. Market entity information is also currently available as a constant ticker of stock symbols and price fluctuations. All that needs to happen in order to implement satconomy on a wider scale is to adapt existing information technology to serve the need for performing currency brand evaluation. I am not implying that it will be easy, only emphasizing that all of the ingredients are already available – we just need cooks in the kitchen. Or, perhaps more appropriate in the current analogy, new entity species simply need to evolve and take on a niche in this market ecology – its easier to establish a new currency brand before more competition arrives.

Leave a Comment » | Analogies, Brand Evaluation, Implementation, Self-Regulation | Permalink
Posted by Edgar

Summary Document and Implementation Examples

July 22, 2008

I have not posted here in awhile, but there is a good reason for that spell of blog inactivity. When I use a blog to discuss certain aspects of the satconomy framework, each post ends up having a very narrow focus and seem to become more and more disconnected from each other as the discussions get more detailed. I thought that a cohesive summary document would be useful for those who would like to see the bigger picture painted as a whole, and so I spent some time last month writing this document for that purpose. The summary document provides more relational structure to the concepts and principles that have been presented here under different categories.

I am also spending more time in developing implementation examples at the tyaga.org site, which now includes basic currency brand evaluation metrics here and online donation portal here. Please visit these links; I believe the online examples, in contrast with mere discussions, are able to illustrate the practice of satconomy more clearly.

Leave a Comment » | Brand Evaluation, Implementation | Permalink
Posted by Edgar

Illustrative Storyline

May 7, 2008

Instead of being forced to close due to the district’s budgetary woes, the teachers and staff at East Side School (K-12) decided to maintain normal operations by issuing its own currency brand. The shortfall in the school’s salary budget allocation will be made up by issuing credits to teachers, who could then redeem those credits for the products of other market entities. Redeemability is not guaranteed, but the teachers hope to convince market sellers that the school’s currency brand represent valuable and sustainable economic activity. When a seller agrees to accept credits from a member of the East Side School, those credits are then used to cancel the seller’s self-declared ‘debt’ to the market.

For its part, the school district would then accrue equivalent debits everytime it issues credits as wages to its employees. The strategy that the East Side School developed is to start accepting tuition in the form of credits that are issued by other independent currency brands. Just like any specialized entity in this market framework, the school would then use those credits to cancel its self-declared ‘debt’ to the market.

As an independent currency issuer, the East Side School must maintain accurate, timely and transparent accounting records so that any informed market participant could readily evaluate whether or not to support the school’s work by accepting the credits of its members. The school is only one of the growing number of self-declared independent currency brands, propelled by members of the public who wants to be selective on what economic acitvities their products and specialization benefit.

Elsewhere, the elite minority of Westland have started hoarding food and other essential supplies, driven by fear that the public would stop accepting their wealth in the form of generic currency brands.

Leave a Comment » | Uncategorized | Permalink
Posted by Edgar

Market Specialization, aka Self-Determined Obligation/Duty

April 9, 2008

One of the key differences between satconomy and other ledger-based currency systems arises from the concept of ‘obligations’. In other posts, I have used the term ‘debits’ as a quantification of obligation, and I’ll continue that usage here.

In Ripple, debits represent the obligation of a participant to the neighbor node that it used as a payment intermediary. It doesn’t matter in this analysis whether or not there is an actual manual settlement of ‘debts’. The main point here is that the obligation arises as a result of a market transaction, or what some alternative currency proponents refer to as property transfer.

In LETS, obligation also arise from a market transaction. The difference with Ripple is that the debits are owed towards the whole community, and anyone that belongs to that community may cause a member to accrue debits or cancel it through a market transaction. In contrast, Ripple credit-debit issuance and cancellation are specific to neighboring nodes.

In satconomy, obligations arise even before any market transactions take place and without prior contractual arrangements. Even before an entity’s obligations are quantified as debits, the obligation is already there, qualified as mission statements or organizational goals. Debits are declared as soon as an entity issues equivalent credits for member contributions towards its goals.  Again, no market transaction precipitated the recording of new credits and debits, or at least it would be absurd to call the process of product creation as a case of ‘property transfer’, when technically the credit issuer and recipient within the entity end up becoming co-trustees of the entity’s product inventory and debit account. 

In satconomy, debits represent the quantification of an entity’s obligation to the market as a whole. Not because other market participants have necessarily made any demands on the currency issuing entity, but simply because that entity has made it an obligation to specialize in delivering certain goods or services to the market. There’s nothing new in this concept of ‘self-determined duty’, entrepreneurs are always trying to research and develop new product offerings all the time without explicit prompting from the market.

But someone might argue, how could a currency issuing entity cancel its self-accrued debits when it owes no one in particular? By selling its products to other entities that it perceives as engaging in sustainable market activities. All that happens in a satconomic market transaction is the cancellation of equivalent credits and debits (quantified obligations and contributions). No new ledger entries are recorded out of expectations for future reciprocity in a market transaction.

Leave a Comment » | Comparisons, Trusteeship | Permalink
Posted by Edgar

Practical Idealism

March 2, 2008

I don’t know how and when the idea of independent currency brands and issuers would become widely adopted, but a word of caution to the early adopters:

“As long as you derive inner help and comfort from anything, you should keep it. If you were to give it up in a mood of self-sacrifice or out of a stern sense of duty, you would continue to want it back, and that unsatisfied want would make trouble for you. Only give up a thing when you want some other condition so much that the thing no longer has any attraction for you, or when it seems to interfere with that which is more greatly desired.” (Richard B. Gregg recounting M.K. Gandhi’s advice, in the book The Value of Voluntary Simplicity, online copy here.)

If a person’s current line of work allows him or her to achieve peace of mind, as far as being able to provide for family and to contribute to society without personal moral or ethical objections, then the wages from that work does not have to be given up in order to try out a satconomy implementation.

As for myself, I think of this effort as somewhat of a personal hobby/duty. If and when the time comes that I lose interest in the salary that I earn as a technical writer, or if I conclude that my contract work is an obstacle to the effective demonstration of a satconomy framework system, then only at that point would I have to give up earning ‘regular money’. I will be content to be able to simply cultivate a currency brand (tyaga.org) at this point, just like any start-up entepreneur who hopes to eventually gain brand recognition. However, unlike an enterpreneur who looks forward to a big payday at an IPO, my goal is conceptually simpler but perhaps much harder to implement: influence the market to sustainably support what my entity’s currency brand represents.

Leave a Comment » | Practical Idealism, Trusteeship | Permalink
Posted by Edgar

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