What is wealth?
In the conventional sense, when we say someone is “wealthy”, it implies this person has lots of money in his/her bank account. But wealth, in its essence, expresses something much deeper about reality: the well-being. It begins with essential basic material needs that every human being has a right to access: food, clean water, health, clothing, shelter, education… Humans also need wealth at the immaterial level: love, care, free time, art, beauty, acknowledgment, self-development…
Another way to put it: wealth is whatever brings us closer to what is true, good, and beautiful.
What are the different forms of wealth?
There are 3 forms of wealth: tradable, measurable, acknowledgeable. Each one is a subset of the other one. All of these together we call integral wealth:
- Tradable wealth: food, time, energy, services, material resources…
- Measurable wealth: performance, sustainability, physiological health, quality…
- Acknowledgeable wealth: fun, love, care, trust, beauty…
What are currencies?
From its original root, the Latin word “currere” means to run or to flow. In this original sense, currencies are tools for seeing and changing flows. Therefore we are not using the word currency in the everyday sense where it means the same thing as money. Instead we take our definition from its original and universal purpose, thus: currencies are systems made to express all forms of wealth flowing within a community.
Currencies exist everywhere around us, in nature, in our bodies, in our cells… Any social system, and life in general, needs currencies as an intermediary tool to trade, measure, and save. They are used to exchange matter or energy (water, light, ATP in our cells…), to measure the state of a system (hormones, nerve impulse…),to acknowledge an experience of reality (a scream of joy, a dance to seduce, a smile, a thank you…).
Currencies express the whole spectrum of wealth: what is tradable (partially covered by conventional money), what is measurable, and what is acknowledgeable. The alphabet allowed static representations of reality. If used at their full potential, currencies can offer us a dynamic representation of wealth (flows); in other words a totally new way to represent collective reality.
What is the difference between “money” and “currency”?
Money, as we know it today, is a very specific form of currency. Money’s intended purpose is making exchange easy and universal within the community that uses it. It’s a unit of measure, a unit of exchange, and a store of value. Thus one kilo of potatoes can be exchanged with an hour of gardening or a gallon of oil.
However, there are many other forms of wealth that are central in our lives, but they can’t be expressed with money (see “wealth”). Trying to express the whole spectrum of wealth with conventional money, as is done today everywhere, degrades universal wealth into a tradable form. This places humanity into a mercantile paradigm in which everything can be sold, bought and owned, and this is a huge epistemological mistake. Non-tradable forms of wealth need to be expressed in a more universal, more encompassing language of flows, not with conventional money. This is what currencies, in our broader sense, are made for. They are symbolic tools we use to express and manage currents within the whole spectrum of wealth. Currencies can function systemically in a number of independent capacities: as a unit of measure, store of value, token of status, and a medium of exchange, etc…
What is wrong with conventional money?
Conventional money is scarce because it concentrates in the hands of a few and leaves everyone else short of this indispensable means of exchange.
Entire communities — people, villages, cities, regions, companies, NGOs, public services, countries — are undermonetized. They do have wealth –competencies, resources, time, love, genius, assets, entrepreneurship skills, culture– but exchanges don’t happen. Not because of lack of wealth, but because of lack of transactional units: money. Conventional money is concentrated somewhere else, offers and needs are not fulfilled, poverty follows. This is very much like an ecosystem without enough water.
This phenomenon of wealth condensation on the one hand, and desertification on the other is called the Pareto principle. This vicious circle increases the gap between rich and poor. At least 80% of humanity lives with less than $10 a day, and almost 50% of humanity lives with less than $1 a day (source: World Bank)
Close your eyes and imagine the wisest persons you may know on Earth. Now ask them them to play a Monopoly game. If they play by the rules, no matter how wise or good these persons are individually, one will end up rich and the rest will end up poor. The Pareto effect is built into the rules of the game, and has nothing to do with the wisdom of the players. Our conventional monetary system has this same property of wealth condensation.
Taxes are meant to redistribute wealth in an equitable manner, but to date no tax strategy has ever overcome the Pareto effect. It’s just as if the Monopoly game goes on as normal except that every once and a while some of the monopolists properties are given to the poor players. All this does is slow down the general path of the game, or, if the redistribution is large enough, put someone else at the top. But the principles of condensation/desertification remain.
Fundamentally the problem is in the system itself.
How do open currencies solve what’s wrong with money?
Open currencies allow for sufficient, non-scarcity based systems for tradable wealth:
- If the currency accumulates in one place (which commonly happens because of an intense economic activity), value doesn’t need to leave the rest of the social ecosystem. There will simply be issuance of more currency where lacking, or consumption of it where there is too much. This principle can be understood thru an analogy of air or water: when an emptiness happens, new quantities are sucked up. When an excess happens, the surplus is evacuated.
- Regulation of the monetary mass has always been a puzzle for countries and economists. It was necessary to build centralized organizations to analyze the market and make decisions for everyone, provoking the mistakes and abuse we know. In the age of Internet, regulation mechanisms of the monetary mass can become distributed at every level of the system. If we can build holoptical structures there is no more need for centralized authority. Every player becomes a regulator of the global monetary mass.
- Sufficiency implies the monetary mass of the community is always proportional, and an expression of the capacity to exchange and produce. There should never be too much or not enough. This rule also applies to people: if you have wealth to create or exchange, then you will immediately and freely, have the necessary monetary mass to perform the transaction. No more, no less. What counts is that the “wealth balance” is always positive for everyone. The currency is the tool that will enable this.
Open currencies embody this fundamental and universal claim that any citizen, any community, any organization has the right to create tools for wealth to flow. No individuals, no community should be dependent on monopolistic and private currencies, unless they have decided as such.
We want to create a new currency for our community or organization… Which one should I choose?
There is already a mistake in the question. Asking “what is the currency I need?” is like asking “do I need a screwdriver or a hammer to build my house?”. You need both, and many other tools. This is the same with currencies. Every community will need an appropriate set of different currencies that will work together in a systemic way. You will certainly need at least a currency to trade (buy/sell), maybe some currencies to measure (performance, number of transactions, energy, carbon emission, etc), and some currencies to acknowledge (someone’s expertise, someone’s level of trust given by the community(ie. eBay), someone’s coolness, and so on.)
If you decide to create a mutual credit currency for trading, you may want to link it with someone’s reputation in the community to establish credit limits. The more trust this person has gained, the more he/she can go positive or negative.
As you see, we are moving from the stone age — one currency for everything — to the era of multi-currencies that, finally, express social life in a much more evolved way!
What does “MetaCurrency” mean?
MetaCurrency is the name for the infrastructure and protocols necessary for an open source economy, and free currencies to flow in an interoperable and standardized way. This requires new technological capacities which need to function in a non-monopolizable manner.
- Open Identity: Create, manage and own your identity in a trustworthy manner, independent of any central authority.
- Open Rules: Know the rules of any currency you participate in and see when they change.
- Open Transport: A protocol to enable a participant to transact with any other participant and a currency to interact with any other currency.
- Open Data: The ability to share, decentralize and distribute data (like your account balance) and ensure its integrity and privacy… also, to allow you to be a reliable authority of your own data. (You can represent your own accounts, and I can validate your data.)
Are community currencies legal?
There is no law in any country that covers the whole range of what we call currencies, but there are many laws that cover aspects of them. For example, in the U.S. there are federal tax reporting regulations about barter exchanges. Some uses of free currencies may be seen as breaking these regulations if participants don’t do the necessary reporting. But notice that other countries have no such laws, so there will be very interesting legal cases around transactions in open currencies between people across national borders. Another example: certain countries and many U.S. states have laws that cover businesses issuing coupons. Some free currencies may be seen as coupons under these laws and thus be subject to them. So the legality of a particular currency will depend on its particular rules of operation, and how the governing jurisdiction interprets them.
The fundamental challenge is that free currencies are a paradigm shift. They require a new understanding of how currencies are actually a large family of related wealth building information systems. They require agreement that creating these systems is a fundamental right of all communities. This paradigm shift creates new social evolution, laws will follow much later. This is the case for the abolition of slavery, racial and gender equality, freedom of speech, freedom of religion, freedom of assembly, etc.
So, on the one hand Nations claim their sovereign right to issue money in the name of citizens, but on the other hand this right has been abandoned to the private banking sector. On the one hand Constitutions declare the rights of citizens to equal treatment and safety, but on the other, conventional money works in opposition to these declarations. Open currencies will hopefully, in time, release us from these fundamental contradictions.
Aren’t governments going to be upset with new currencies?
Governments may or may not be upset by new currencies. There is one very typical scenario where governments embody the old paradigm and do everything to keep it in place. By doing so they stir up creative forces that open innovative paths towards new paradigms. Once upon a time slavery was legal and defended by States on the basis that large parts of the nation’s economy was based on that slavery. Today’s economy is built on money and there will certainly be many people to say that there is no possible future without keeping money in its current form.
But there are other scenarios too. In the face of great difficulties, governments do sometimes embrace change that visionaries bring forward that show a path forward. We believe that open currencies encompass more universal values and will provide a better and safer economy for citizens. De facto they carry the founding values of the Universal Declaration of Human Rights! In the end, which government will want to stop this evolutionary wave? Eventually open currencies will become the norm.
Aren’t the banks going to be even more upset?
Like governments, there are many scenarios as to how banks will respond. They are already experimenting with adopting blockchain technology. But, in practice, banks will soon lose their monopoly on issuing expensive money. Many of them will be very upset and will do everything in their power to maintain that privilege. But more and more leaders inside the banks themselves understand the deep systemic problems built into debt issuance of money, and are looking for ways out. The original purpose of banking (as a profession), is that it is to help people wisely manage and invest with their savings. It is a relatively recent historical addition that banking has become a for-profit business which makes money by issuing money.
Some banks will hopefully be more clever and visionary than others. They will see a wonderful opportunity to create new, useful services in the open currency world. They will return to their original mission statement and become trustworthy again.
Are you against the banks and the governments?
Not at all. We work for a fair world in which human rights, transparency and accountability are applied. Rather than fighting against the current order, we prefer to actively search for innovations that work and will thus inspire change. Our deepest hope is that governments and banks will see an opportunity to evolve and do what they are meant for.
Won’t open currencies cause inflation?
Inflation is a property of a single currency. It occurs as a response of the currency users, when the currency fails to accurately track the value that the currency is supposed to be tracking. Particular free currencies may indeed be inflationary if their rules of issuance don’t work well.
So, some free currencies may indeed be inflationary. But fundamentally, free currencies as a whole will solve the problem of inflation by virtue of creating a competitive space for currencies. If people have free choice to choose the currencies they want, they will choose the ones that actually do help build wealth for them, which will be the ones that don’t have inflationary tendencies built into them unlike conventional money.
What do you mean by “open?”
We mean an even playing field for all participants.
Our current economy is closed. Bankers and brokers manipulate trades, transactions and terms for their own benefit fairly invisibly. The average person has no access to the source code (rules, policies, processes) behind the scenes.
This power combined with a lack of transparency about what they do with it, is largely responsible for the current financial crisis. Securities, sub-prime mortgages, over-valued assets and portfolios are collapsing as the lies unravel.
The problem cannot be blamed on some greedy individuals or lazy regulators, it is structural. Until we change the underlying structure where the imbalance emerges, it will happen again and again.
Open Source Software does this by making a progam’s source code available. Anybody can verify what’s really happening behind the scenes or make modifications to it. This creates an even playing field where the original programmers can’t hide functions which would give them undue control over your computer.
We are doing this by reclaiming the power to make currencies with visible rules, decentralized control and tamper-proof data to anyone who wants to use them.
Why do we need an open source economy?
As long as there are monopolies granted for money-making powers, we cannot have a free market or even a true democracy. The people who control the money supply can and do use that control for their benefit and use the resultant wealth to buy politicians and exert undue control over the government.
No amount of law-making or regulation can counteract the imbalance of the power that a monopoly has in a system which is as fundamentally closed, hidden, secretive and convoluted as our financial system.
If we ever want economic stability and sustainability then we need to build a new system which can be self-regulating.
Hasn’t this already been done?
No. Not to our knowledge.
There are some fundamental technology issues which has made this possible only in recent years. We’re pretty certain that nobody has solved the same set of problems we’re addressing.
There are certainly related solutions, and we’re trying to learn from those and/or incorporate them into what what we’re building.
The normal approach to technology is actually to build closed systems (even for open source projects). For example, Cyclos is an open source currency platform. But every installation of Cyclos is itself a closed system with a small group of people who control access, make rules, charge fees, etc. You can build your own independent installation, but you can’t participate in their system as an open currency. There’s no protocol for interacting across different currencies or installation. They can change rules without your knowledge. And you don’t own your data, they do.
The core capacities for software to not need to be managed as a closed system is pretty new, but is necessary if we want to make an even playing field for all participants in an economy.
What about privacy in an “open” economy?
Open is not the same thing as Transparent.
In some currencies, the rules may require complete transparency. In others, there may be privacy (of participants, contents of transactions or whatever).
Think of it this way. There are card games where some cards are public and dealt face-up and some are private and dealt face-down. All the players can see that cards were dealt even if they can’t see what the cards are.
Open Data allows all players to see a transaction took place, but the transaction can contain private encrypted data (similar a face-down card). The rules of the currency determine how much transparency there is.
A currency could have numbered accounts where the identity of the people transacting is private (like Swiss bank accounts), the amounts are private or what was transacted was private, but if it shares its data using our Open Data protocols, each transaction will be visible, but what parts of that transaction are readable without special keys is customizable.