Over the past year, I’ve been exploring the many examples out there of communities forming peer-to-peer networks in order to rebuild local economies, resilience and trust. These range from gift economies to barter groups, from loyalty programs to mutual credit systems. The latter, mutual credit systems, is the focus of this post.

The oldest mutual credit system still in operation today (of which I am aware) is the WIR, based in Switzerland, which was created in 1934 due to currency shortages after the stock market crash of 1929. The WIR is managed by the WIR-bank, a cooperative owned by the businesses using it. They currently have about 75,000 Swiss businesses as members, representing about 25% of all businesses in the country.

It’s essentially just a bookkeeping system that enables transactions to happen, and is generated directly among the businesses. So, business A sells a good or service and receives a WIR Credit, while Business B, the buyer, gets a corresponding debit. Business A can go use their Credit elsewhere, while Businesss B has to eventually sell a good or service to offset the debit and remain in good standing with the community of business members. No interest is charged, and the ledger always balanced to zero. It’s been observed over the years that during times of recession, participation in the WIR system increases, meaning the financial needs of businesses continue to be met uninterrupted despite what’s going on in the global economy.

I thought this was a pretty cool thing, both in terms of creating a mechanism for businesses to engage in trade without the use of traditional money, and as a complementary currency that acts as a “spontaneous counter-cyclical shock-absorber for the Swiss economy,” in the words of Bernard Lietaer.

I wondered if there was anything similar going on in the US, and was excited to discover the Vermont Businesses for Social Responsibility Marketplace, an “innovative peer-to-peer mutual credit system embedded within the largest green business association in the US.” Businesses pool the credit they issue to each other into a common marketplace where local goods and services are bought and sold, credit lines are issued to willing entrepreneurs, and the cost of doing business is lowered by consolidating expenses and buying power. They currently have 160 businesses actively trading, with a goal of getting 1000 Vermont businesses as members by 2015.

I reached out to its founder, Amy Kirschner, to find out more about how it works. Continue reading →

I just saw an article from the NY Times – Bloomberg, on Radio, Raises Specter of Riots by Jobless– with the NYC mayor hinting that the combination of enormous public debt and high unemployment could lead to rioting, as we’re currently seeing in other parts of the world.As I’m looking at this article, I’m also preparing my ‘future of money’ talk for SIBOSin Toronto next week, where I’ll have just a few minutes to paint a picture for the bankers about where the future may be heading.I’ve been trying to think about how to frame it, because it’s bigger than just talking about banks being disintermediated due to mobile payment platforms and peer to peer technology. There’s a larger discussion to be had about the nature and design of currency itself, its inherent biases towards certain types of behavior, and its impact on living systems. There’s also a story about the human desire to redefine what wealth means and to be empowered to create local economies that are biased towards cooperation and abundance. Continue reading →

I came across an article yesterday on GigaOm – Dreams of mobile payments lead telco to try banking – notifying us that Rogers, a Canadian mobile carrier, has filed to become a bank.

It makes sense, as we see various iterations of mobile wallets coming into existence, and carriers looking for a new revenue stream. Of course, it’s yet to be seen if ‘ease and convenience’ will be enough of an impetus for consumers to make the switch from the physical medium of paper and plastic to a virtual form that may still seem foreign or less secure.

This does bring me back to a question posed earlier this year about the potential of Facebook becoming a bank. I’m reminded of an interview we conducted for the Future of Facebook Project with JP Rangaswami, the chief scientist at salesforce.com and Venture Partner at Anthemis Group, who said:

“Facebook is the new new telco.  It is the natural logical extension of what telcos were.  I don’t think of it as anything more than taking the concept of what a telephone company used to be and drive it forward.”

He went on to describe what he meant by that, saying that essentially Facebook had brought the 5 basic components of a telco into a 21st century context. These components were:

1. a population of people you put in a directory
2. ways of reducing search costs by grouping people alphabetically/functionally/regionally/etc
3. a number of ways of communicating between people (1-to-1, groups, audio, mail, text)
4. ways to change details associated with those people, via updates to the raw data of what people are doing
5. scheduling

So now you have a ‘social network’ that operates on the basic model of a telco, with the added functionality of mapping and extracting value from the social graph, and building open APIs across a developer platform to expose the graph to other services.

So where does the potential of becoming a bank come in?

As Rangaswami pointed out, we’re making the move to smart mobile devices, and we have the capacity to link the SIM card with one aspect of authentication. We have Facebook Connect. We have near field communication that enables us to transfer virtual value out into the real world. We have virtual currencies that can be implemented across any number of community contexts – local, regional, by industry, etc. And we’re not just talking about Facebook Credits or digitized money, but any number of complementary currencies used by particular groups to enable more frictionless transactions.

Facebook then also has the potential to draw in the unbanked or the underbanked around the world, where the entire infrastructure of having physical money and a place to store it can be leapfrogged in place of a virtual system and marketplace.

I still haven’t really wrapped my head around the big picture… curious to see how it will unfold and how mobile carriers are going to convince consumers they can be trusted as financial institutions.

What does this mean for banks? Do they get disintermediated?

Hub Culture is a global collaboration network with over 25,000+ members distributed across 110 countries. Their stated mission to expand collective consciousness is driven by the blend of online workspaces for knowledge sharing with offline Pavilions for meeting and connecting – all powered by their digital currency, Ven. Below is an interview with Hub Culture’s Founding Director, Stan Stalnaker. Continue reading →

There is a growing movement towards peer-to-peer value exchange and production, prompted by a variety of things, like economic conditions, shifting cultural values, exploration into collective intelligence, and further enabled by social technologies. I’ve been tracking the online marketplaces that have been cropping up for sharing, swapping, gifting and renting, as well as sites that give people different kinds of opportunity to share skills and knowledge, innovate, and work collaboratively both on and offline. Below are a few sites I’ve come across, please add any I’ve missed.

Continue reading →

I came across a few cool projects today that made me wonder when we’ll have a currency for sustainability. I’ve written a bunch about how our conceptualization of “money” and “currency” is being expanded as we find new ways to measure and make transparent aspects of wealth that were previously hidden. For example, services like PeerIndex and Klout seek to measure influence, authority, trust, and how well your message resonates with an audience, hence establishing online reputation currencies.I’ve also read before about the weakness of GDP in determining the actual health or wealth of a nation, as it misses out on major indicators of human and environmental well-being – which are arguably more important than the measurement of consumption. Other systems have been proposed, like the Genuine progress indicator (GPI), which attempts to measure whether a country’s growth have actually resulted in the improvement in the well-being of the country’s people.Another fun one is Gross National Happiness (GNH), which attempts to measure quality of life or social progress in a more holistic way, focusing on sustainable development, preservation and promotion of cultural values, conservation of the natural environment, and establishment of good governance. This idea was further fleshed out a few years ago as follows (from Wikipedia): Continue reading →

How will Facebook and the global economy interact in the future?

There has been much speculation recently about the role Facebook Credits could play in becoming a global virtual currency, and even the possibility of Facebook becoming a bank. In many ways, it already is becoming a bank – just not in the traditional sense. Facebook is harnessing the power of the social graph, and has certainly adopted an expanded definition of what ‘currency’ means. It’s time for the rest of us to hop on board.

As I’ve been conducting research for The Future of Facebook Project, the experts and thought  leaders interviewed shared some compelling views about the evolution of virtual currencies, and Facebook’s potential role in their development. A big takeaway is that while we typically associate currency directly with money, the rise of the social web and quantification is shifting that reality to become more inclusive of kinds of capital that were formerly intangible.

Money is a tool we use for arms-length transactions, where there isn’t an assumption of any kind of relationship or trust between parties. But as data is being mapped at an accelerating rate – from self-quantifiation, to the contextual and relational data about our location and interactions, to our preferences and opinions, to our exchanges and transactions – we are being granted access to a much richer base of information in our decision-making toolkit. Continue reading →

Now that the Future of Money project has come to a close, I wanted to do a brief wrap-up post/case study about the process and our crowdfunding efforts.

Though we’d never tried it before, we managed to receive almost $6,000 in donations in about 6 weeks, and went on to get some pretty impressive media coverage. So, here’s a few questions to consider when structuring a crowdfunding campaign, and a few reflections about what I’ll do differently the next time around. Continue reading →