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Currency Mints (Re: The UN Millenium declaration)

From: Manu Sporny <msporny@digitalbazaar.com>
Date: Sun, 04 Dec 2011 23:31:55 -0500
Message-ID: <4EDC493B.8080004@digitalbazaar.com>
To: Web Payments <public-webpayments@w3.org>
On 12/02/2011 07:44 AM, Melvin Carvalho wrote:
> To make serious commitments to restructure the global financial
> architecture based on principles of equity, transparency,
> accountability and democracy, and to balance, with the participation
> of civil society organizations, the monetary means to favour human
> endeavour and ecology, such as an alternative time-based currency.

Even if the UN didn't adopt this language, there is no reason why we
cannot. It's effectively the modus operandi that was laid out in the Web
Payments talk at W3Conf. It seems very much aligned with what we're
trying to do here.

With respect to the "alternative time-based currency", I've been
thinking about that and do have a few thoughts on how we could
accomplish such a thing on top of the PaySwarm system.

We do already have "alternative currencies" as a use case that we intend
to support:

http://payswarm.com/specs/ED/use-cases/2011-10-25#alternative-currencies

The idea here is that the PaySwarm system should allow anybody to create
an alternative currency with very little effort. Even if it is a
currency that you plan to exchange with only a few people. Currencies
would be identified by URLs and would be added to the "currency" field
in all transactions. For example, here is a currency used in a
transaction that expresses "hours of labor":

{
    "@context": "http://purl.org/payswarm",
    "@subject": "http://blue.example.com/transactions/12345",
    "source": "http://blue.example.com/i/manu/accounts/work",
    "destination": "http://green.foo.com/i/steven/accounts/workstorage",
    "currency": "http://workhours.com/workhours",
    "amount": "10"
}

The intent of the alternative currency above is that the receiver of a
transaction in work hours would then be able to redeem them at a later
date. For example, if you want to have a share of vegetables in a farm,
you would work on the farm to plant the vegetables. You would be
credited with work hours. When harvest-time came, you would then
exchange the work hours for a weekly bundle of vegetables during the
course of a few months. You could then choose to sell these vegetables
at the market (for a fiat currency), or take them home and consume them.

The problem with alternative currencies is that there has to be a mint
of some kind. Somebody has to create the currency in the first place.
This can be accomplished with a fairly simple concept that we're calling
a 'mint'. The mint would create a new amount of a particular currency
and use PaySwarm to transfer a certain amount in that currency into a
receiving account.

So, the flow would look something like this:

1. Request from some external source that a new amount of a particular
    currency should be created and placed into a PaySwarm account
    somewhere on the Web. For example, this would be the farmer
    authorizing their mint to create a few "workhours" and place them
    in a destination account.
2. The mint creates and tracks the workhour that was created by the
    farmer.
3. The mint initiates a PaySwarm transfer to place the workhour into
    a PaySwarm account using the same protocol that is used for USD,
    Euro, etc. transactions
4. The field worker, at harvest time, goes to claim their share of the
    crop, which is a fraction of all workhours performed to generate the
    crop. They use PaySwarm to transfer the workhour back to the farmer
    in exchange for a fixed bundle of vegetables.

While the example is fairly simplistic, this would provide a pre-money
mechanism for the farmer to generate a crop. That is, the farmer could
use PaySwarm to provide a promissory system without having any technical
or legal knowledge about doing so. This is important as the farmer would
not have to take out an operating loan, nor would they have to take out
crop insurance.

The interesting thing to note here, however, is that there isn't much of
an incentive for the PaySwarm authorities to support small alternative
currencies as getting a 2% fee on a "workhour" is useless unless the PA
intends to trade it for a portion of a crop at that particular farm. One
could sell the "workhour" for cash via a currency exchange, but even
then - the worth of the final amount is questionable.

Food for thought... I do think we'll end up spec'ing out Currency Mints
at some point for PaySwarm and thus achieve what the UN proposed over a
decade ago.

-- manu

-- 
Manu Sporny (skype: msporny, twitter: manusporny)
Founder/CEO - Digital Bazaar, Inc.
blog: The Need for Data-Driven Standards
http://manu.sporny.org/2011/data-driven-standards/
Received on Monday, 5 December 2011 04:32:21 UTC

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