Nordic Enterprise Trust - The Community is the Currency - Innovation in Complementary Currencies

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The Community is the Currency Philosophy Conference Chris Cook, Kragerø 07 June 2009 Money 3.0 Today I am going to be talking about the future of Money......Money 3.0

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Money 3.0 Philosophy Conference 07 June 2009 Chris Cook, Kragerø Money 1.0 -Money of the Past Currencies consisted of valuable objects Exchanges for value –money’s worth - required physical market presence Money 1.0 -Decentralisedand Disconnected Currencies are interest-bearing IOU objects or claims over value... Money 2.0 -Money of the Present ...and Central Banks ...issued by Private Banks ...or seller and buyer Borrower LenderLender £ Loan £ Credit 08/07/2011 08/07/2011

Transcript of Nordic Enterprise Trust - The Community is the Currency - Innovation in Complementary Currencies

Page 1: Nordic Enterprise Trust - The Community is the Currency - Innovation in Complementary Currencies

The Community is the Currency

Philosophy Conference

Chris Cook, Kragerø

07 June 2009

Money 3.0

Today I am going to be talking about the future of Money......Money 3.0

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Money 1.0 - Money of the Past

Currencies consisted of valuable objects

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Exchanges for value – money’s worth -required physical market presence

Money 1.0 - Decentralised and Disconnected

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Money 2.0 - Money of the Present

Currencies are interest-bearing IOU objectsor claims over value...

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...issued by Private Banks

...and Central Banks

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...who step between borrower and lender

Borrower LenderLender

£ Loan

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...or seller and buyer

Seller BuyerBuyer

£ Credit

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...to provide a framework of trust through an implicit guarantee

Banking

System

Banking

SystemBorrower

Lender

(Depositor)

Lender

(Depositor)

£ £

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...supported by a base of Regulatory Capital

Bank Credit

Bank

Equity

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Money 2.0 - market presence is typically through intermediaries

Money 2.0 - Centralised and Connected

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Money 3.0 - Money of the Future

Money 3.0 - involves direct, instantaneous Peer to Peer (P2P) connections....

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Money 3.0 - market presence is “network presence”

Money 3.0 - Decentralised and Connected

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Cool....but what is Money 3.0?

Nordic Enterprise Trust works where the Internet and Markets converge

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With a little help from Innovation Norway...

....NET has developed a new framework for P2P Finance

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P2P Credit and P2P Investment together comprise Money 3.0

Let’s look first at P2P Credit

Sellers BuyersBuyers

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Sellers give buyers interest-free credit –or “time to pay”

Sellers BuyersBuyers

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Credit

Value

Credit is guaranteed by a Guarantee Society of seller and buyer members...

Sellers BuyersBuyers

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Pool

GuaranteeGuarantee

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...with some kind of “common bond”: geographical, functional, or both

Sellers BuyersBuyers

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Pool

GuaranteeGuarantee

Both sellers and buyers pay into a Pool for the use of the Society’s Guarantee

Sellers BuyersBuyers

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Pool

GuaranteeGuarantee

Fee Fee

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Buyers settle credit in money, or money’s worth of Value acceptable to sellers

Sellers BuyersBuyers

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Pool

GuaranteeGuarantee

Fee Fee

Value

If buyers default, the Pool pays sellers, and collects from buyers

Sellers BuyersBuyers

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Pool

CollectsPays

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A service provider sets guarantee limits, handles defaults & manages the system

Sellers BuyersBuyers

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Pool

Service

Provider

Service

Provider

Services Fee

Fee

Guarantee

Guarantee

Fee

Now that Banks’ ability to create and support credit has evaporated....

Bank

Equity

Credit

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...a Guarantee Society provides a complementary trust framework...

...where Banks may manage credit creation as service providers

Sellers BuyersBuyers

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Pool

Service

Provider

Service

Provider

Services Fee

Fee

Guarantee

Guarantee

Fee

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If a barter system incorporates time to pay –Credit - the result is a monetary system

Since 1934 the Swiss WIR business network has cleared credit for SME businesses....

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...for billions of Swiss Franc’s worth of goods and services

No Swiss Francs change hands as a currency or Unit with exchange value

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The Swiss Franc is an abstract Unit of measure - a Value Standard, or benchmark

The WIR is a monetary system which is complementary to the Swiss Franc

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The WIR takes security over members’property to protect against defaults...

...so the WIR framework of trust is backed by property

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NET’s Guarantee Society is a new framework of trust for P2P credit....

Sellers BuyersBuyers

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Pool

Service

Provider

Service

Provider

Services Fee

Fee

Guarantee

Guarantee

Fee

...enabling value to circulate and the creation of new productive assets

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Although Credit is necessary for the circulation of currency....

...contrary to conventional wisdom it need not actually be currency....

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...and other Units of Value may be generally acceptable as currency

This is where P2P Investment through Unitisation comes in

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There are conventionally two types of ownership - Public or Private...

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...and there are two types of investment: Debt and Equity

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Investment through a Limited Company...

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....a 19th Century legal dinosaur...

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...is what makes the Private Sector Private

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Credit is typically issued by banks and secured by legal claims

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...giving two conflicting claims over the same productive asset

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But there’s a new furry mammal out there....

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...the 21st Century UK Limited Liability Partnership (LLP)

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A UK LLP is a corporate body with limited liability....

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...and...errrr...that’s it!...

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As far as the UK Tax Man is concerned it is a Partnership

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It’s an “Open” Corporate where

partnership working is possible....

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... even without a written agreement

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It enables direct Peer to Peer (P2P) Credit and Investment

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Over 46,000 UK LLPs are now in pervasive use for purposes never intended...

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...even in the Public Sector, where Glasgow has four municipal LLPs

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Capital Partnership – direct Peer to Peer investment in productive assets

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Hilton Capital Partnership ( > £1bn)

Capital Partnership LLP10 UK Hotels

Gross Revenues

Hilton GroupCapital User

Consortium LLP Capital Provider

BankProperty

DeveloperHotel

Specialist

% %

%%%

Capital Partnership

AssetsAssets

Investors

Payment

% %

Custodian

Use

Managers

Users

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Productive assets are held by a Custodian

AssetsAssets CustodianCustodian

Ownership

...who safeguards the asset on behalf of the Community

AssetsAssets CustodianCustodian

Ownership

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Investors put in Financial Capital in money, or money’s worth…

AssetsAssets

Investors

CustodianOwnership

FinancialCapital

Managers provide Human Capital of time, expertise and experience....

AssetsAssets

Investors

CustodianOwnership

HumanCapital

FinancialCapital

Managers

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Users pay for the use of Capital

AssetsAssets

Investors

Payment

% %

Custodian

Use

Managers

Users

Result: Capital Partnership

AssetsAssets

Investors

Payment

% %

Custodian

Use

Managers

Users

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Capital Partnership reinvents Equity

Equity Shares - % age shares in revenues or production...

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…..which may be transferred, but never redeemed, since there must always be 100%

Units – Redeemable in production e.g.Kilo Watt Hours, natural gas

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Units have a value in exchange, but no rights to production or income over time…

Equity Shares in property – the Value Proposition

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A new form of Co-ownership between Occupiers and Investors

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Occupiers may invest simply by paying more rent than is due

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...and if they wish, they can pay their rent in Equity Shares, rather than £

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Co-owner Occupiers who maintain property may receive Units as “Sweat Equity”

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Energy Units - the Value Proposition

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Investors - direct investment in energy with no return...

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....similar to an investment in gold...

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...except that while gold may be pretty...

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....it’s not useful in the way that electricity is

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Consumers – the ability to lock in the price of future consumption

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But Investors wanting to sell may not find Investors wanting to buy....?

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No Problem! Consumers will buy if the Unit price falls below the market price...

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...because they gain by buying Units and redeeming them against energy used

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Interest-free financing through monetising renewable energy...

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...by issuing - for value now - Units that will cost nothing to redeem

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Capital Partnerships are not Organisations

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They do not own anything, do anything, employ anyone, or contract with anyone...

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They are simply frameworks for P2P investment with cross border application

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...transcending borders through interactive consensual agreements

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...rather than adversarial contracts imposed by national statutes or courts

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Master Partnerships require no legislation...

MasterPartnership

MasterPartnership

Financial Capital(Money, IP etc)

Financial Capital(Money, IP etc)

UsersUsers

Human Capital(Developers, Operators)

Custodians(National)

Custodians(National)

% %

payment

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..and there are no national or international institutions and hierarchies

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My vision of Money 3.0 is of a networked Clearing Union

Units redeemable in land/ location rental will be acceptable domestically

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Units redeemable in energy will be acceptable globally

Transactions will be priced by reference to an energy standard or Unit of measure

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Credit issued by individuals and enterprises will be backed by mutual guarantees...

...so communities with a common bond provide frameworks of trust

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Money 3.0 is not an Object: it is a Relationship

The Community is the Currency

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Thank You

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