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Hi there,

I would like to present the ideas in this article below for discussion with folks on this forum.

The article itself is something I put together over night but I have been sitting with the ideas for a couple years now.

I could be a lot more elaborate in my presentation of these ideas, but I thought I'd run it by other curiously minded folks, to have some critical feedback points, prior to putting significant energy into it...

With that said, please enjoy and comment as appropriate.

Original URL: http://evolvingtrends.wordpress.com/2008/10/21/p2p-social-currency-...

P2P Social Currency (Money 2.0)

October 21, 2008 at 7:18 pm


One of the foundational elements of society is the definition of money.

Changing how money is defined will change society.


If we had a networked, programmable currency then I could tell my money to exchange itself only for goods/services that are made by vendors who care about the planet AND who have donated to my chosen candidate for President.

I can be as particular as I want and my money should do the figuring out of whom to pay itself to, based on rules I supply, and based on information it can access about the parties I’m trading with.

Another example for networked, programmable currency is to enforce rules on the spending of money that I give to my kids (luckily no kids yet) so they don’t buy food that contains unhealthy ingredients.

The new networked, programmable money should abandon the idea of paying interest on borrowed money. There is so much debt in the system that it would take decades to get rid of it and return the economy to normal functioning. The interest on debt is like bad cholesterol. While it fattens the economy, it ultimately clogs the global economic arteries and can lead to economic failure, as it has done (see: global economic meltdown 2008.)

In my opinion, the concept of “credit” and “credit rating” is good but the concept of interest is not. What I mean is that people and businesses should have a credit rating but it should be tied to something other than their ability to pay interest on money borrowed.

If you lend money to someone, where that someone is chosen per the particular criteria you’ve programmed into your money, you should be able to get your money back and get “good will” points that would replace today’s “hamster wheel” concept of credit rating, which was designed to encourage people to buy money with money, which is not only retarded but gives value to money from nowhere. Instead of being rated on your timeliness in paying back money borrowed + interest, you should be rated by how much you’ve lent others and how much time you’ve given people to pay you back, and this rating, e.g. your “good will” points, becomes your credit rating. This way people can dictate that their money is to be exchanged for goods/services only from providers with N “good will” points or more.

Maybe a good place to try this P2P Social Currency (or “Money 2.0″) would be in an online virtual world?

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I think my epistemic relativism is creeping in ....

By axiom I mean a rule, as I don't believe in self-evident truth ...

So we could use the word "rules" or even "ideas" or "design principles" or "design patterns"

To me, it's all patterns
I meant to say that Godel proved that there can be a logical system that will always be axiomatically incomplete and inconsistent, which to me and certain other people says that logic itself is not infallible.

Wish I could edit past the 15 minutes limit. But that's a typo: meant to say "Godel proved it wrong" but the wording above is actually more accurate/articulate.
Hi Sepp,

I just wanted to say that I'm really loving the current bend/twist in the debate ...

My concern with Demurrage is that it immediately makes me cringe :) I think I'm allergic to notions of punishment as a way to discipline behavior ...

It's like inheritance tax. You're parents/relative already paid taxes on their money. But if they leave you something behind then you/them are punished by the government. What to do? Dump the inheritance in the ocean? Why would anyone penalize the transfer of wealth from parent to child?

I understand why, but it's too aggressive in my opinion

We need a kinder, gentler more subtle way of governance (and self governance)

Is there a middle ground between demurrage and credit points for lenders?
I have to point out that in the proposed model, hoarding of money is not an issue because the best way to achieve comparative advantage is not by saving your money but by lending some of it (to increase credit points) while using the rest to produce/distribute great goods and services.

The reason people hoard money today is because money can generate money on its own, i.e. grow on its own. If you take away the ability for money to grow on its own, i.e. abolish interest, those who want to have the most money will have to have the most credit points (which they can only do by lending to others without interest) and produce/distribute the best goods and services.

In other words, the reason for having demurrage, i.e. to prevent hoarding of money, goes away because there will be no value in saving money, and all the value will be in lending it and using it to produce goods/services
You're right about inheritance tax - it's violent and in a way unjust.

I see demurrage (I'm not saying we must use it) as different, because of the worthwhile feature of tending to eliminating a much greater evil (interest) and because it provides means that can be used to help economic interaction by distributing (giving economic power) to the more disadvantaged participants in the economic game.

"...Is there a middle ground between demurrage and credit points for lenders?..."

Not that I could put my finger on it. Demurrage, by the way, is a rather small charge that progressively diminishes. If combined with a re-distribution as proposed historically by Gesell, there is a break-even point at which outflow from demurrage and inflow from distribution balance.

Below the break-even point you'd have a net inflow for the economically weak, and above the break-even point you get a net outflow for the economically strong.

If programmed into the model and handled by the computerized currency system, you barely notice it's there, the percentages involved are so small.
I think the outflow/ inflow system is a good idea.

Back when I was at LSE doing social policy and government things were often framed in terms of "liberals vs communitarians" (as per this book http://www.amazon.co.uk/Liberals-Communitarians-Introduction-Stephe... )

But to me things are never either/or but both, and there was no clear way to effectively balance the interests of individuals (liberals) vs the wider community (communitarians) both of which seemed equally important.

We also studied different tax structures and how flat rate consumption taxes are a more effective way raising revenue than income taxes, and since the effect everything equally don't distort prices.

And about how basic income/ citizen income is more just and cost effective that means-tested welfare benefits.

Anyway, this lead me to believe it might be good idea to abolish all taxes except for a 50% consumption tax but that the revenue raised shouldn't go into centralised gov't coffers, but simply re-distributed equally as a basic income to all citizens.

The effect of this would be that those who consume more than average have to pay everyone else for that benefit (their 50% consumption tax would be more than the basic income they receive) whereas those who consume less than average would be rewarded for their frugality (the would get more basic income than tax they paid).

I still think it is a rather elegant solution :)

But I'm too cynical to get involved with political party/ gov't shenanigans and so what I'm hoping to try and set-up is a freely chosen voluntary system with similar qualities.

Specifically, my idea is to start a collective where everyone agrees to pool a minimum of 1% of their income into a common pot that is invested into land and renewable energy infrastructure. The land is then rented out affordably and the energy sold, with 50% of surplus being put back into the pot for re-investment and 50% being re-distributed to members.

Something like that anyway :)
Hi Josef,

I really want to hear more about it.

Could you frame this VERY INTERESTING proposal you just noted in its own thread/discussion space so we can get into it and give it the attention it deserves? (without confusing it with the ongoing discussion here which is in midstream now and getting bigger and more terse by the hour)


I'm very interested in both.

that's exactly the same discourse then the one I heard at a conference on basic income in Switzerland - taking the money for basic income from increased consumption tax -
there is a ( german speaking ) movement related to it :
They also seem to have created a documentary around the topic,
which you can download through

Probably you also know the "Basic Income Earth Network" (BIEN)
I'm interested in Josef's land idea .... anyone doing that? and is it possible to start a new discussion about it?
We can try demurrage as an on/off option in the simulation but since there is no reason to hoard money and more importantly no harm done to the economy from individuals hoarding money (as people can create money by producing energy) why would demurrage be needed?

My job as a zero-gravity thinker is to question schemes from the past as if I know nothing about them, which in the case of demurrage happens to be true.

I'm not sure what "re-distribution means in this context"

There are two knowns that I'm working with:

1. Hoarding money under the proposed model does not hurt the economy, it hurts the hoarder (in the sense that if their money is not growing on its own and that means that it's shrinking relative to the money others have, assuming those others lend their money, get credit points and sell stuff to make more money)

2. Money can be grown primarily through the production and distribution/reselling of goods and services. You can make money from pumping excess locally generated energy into the Peer Grid but you won't have Exxon-sized profits as the energy is intended to be generated by individuals and small businesses (i.e. populous energy production model) and is dynamically capped at a certain amount per hour with energy price also being dynamically regulated so it's eventually cheap (as everyone pumps excess locally generated energy into the Grid) but not too cheap as to make local energy production economically unattractive. And since everyone can produce energy with the same cap on production and sell it at the same price everyone's income from energy production will be within the same limited range, with the minimum being zero and the maximum is only limited by the total demand for energy (i.e. the cap I mentioned earlier is moved up so that production of energy from the participating peers can cover the total demand). The net profit you make from supplying the maximum allowed energy into the Grid is not the way to achieve comparative economic advantage because there is a cap on how much money you can make from selling energy. If you want to achieve a comparative economic advantage over other peers, you're only way is to lend some the money you make to others, so you can accumulate Peer Credits (credit points), and then sell something, and the idea or assumption here is that the seller with highest Peer Credits gets the most customers (and this assumption can be helped by the computerized trading system so that when searching for sellers of a certain product you will see those with highest Peer Credits first)

Given the conclusions in #1 and #2, why is there need for demurrage?
Under the proposed model, money can also grow by being invested in assets, which grow in value as the economy grows.
Hi Marc

perhaps this kind of project


( on which Thomas Kalka is working )

goes towards the direction of more transparent systems where individuals can decide to purchase goods that would have full transparency concerning the various stages of their development, and/or can allow any individual to add information about products ,
as to allow everyone to choose products that correspond to individually selected criteria.

( making transparent all social , ecological, and financial conditions related to the process of producing and delivering the various components or sub components of every product, or even of services - especially for products or services which are not produced locally and go through a long logistics chain.)

It could also be related to the kind of financial system you describe in your draft ?


--> for example in relation to the " good credits " people receive for re-investing the money / including the field in which they invest / or donate it , and the way that these good credits / reputation can influence consumer choice.




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