The Community is the Currency

A Guarantee Society Approach

Chris Cook

Bristol 20th June 2013

“21st Century problems cannot be solved with 20th Century solutions”

Market Paradigms

Market 1.0 – decentralised, disconnected, physical

Market 2.0 – centralised, connected, intermediated

- Debt (Banks) and Equity (Joint Stock Company)

- October 2008 – the Market 2.0 paradigm broke

How do we achieve a resilient Market 3.0 ?

Introduction - Resilience

Resilience - the enduring power of a body or bodies for transformation, renewal and recovery through the flux of interactions and flow of events

Resource Resilience – Natural Grid

Financial Resilience – Open Capital

Financial Resilience – Open Capital

Prepay – credit returnable in payment for value

Nondominium

- People-based (P2P) Credit – Guarantee Society

- Asset-based Credit – Capital Partnership

Guarantee Society - Seller accepts Buyer's IOU

Seller Buyer

IOU

Value

IOU is guaranteed by Sellers & Buyers mutually

Seller Buyer

IOU

Value

Pool

GuaranteeGuarantee

Seller & Buyer pay guarantee charge into Pool held by Custodian

Seller Buyer

IOU

Value

Pool GuaranteeGuarantee

Fee Fee

1/ Buyer settles credit in £ or '£'s worth' eg energy-based or land-based currency

Seller Buyer

Value

Pool GuaranteeGuarantee

Fee Fee

2/System identifies a chain of IOUs A<B<C<D<E<A and 'nets' them out

Seller A Buyer B

PoolGuaranteeGuarantee

Fee Fee

Buyer C

Buyer D

Buyer E

IOU

IOU

IOU IOU

IOU

3/ Buyer defaults: system pays sellers and collects from buyer if possible

Seller A BuyerDefault

Pool

Collects

Pays

Seller B

Default

Pays

Service provider sets guarantee limits, handles defaults & manages system

Seller Buyer

IOU

Value

Pool GuaranteeGuarantee

Fee Fee

Manager

FeeService

Clearing Union

Guarantee Society is the social contract within which Sellers accept Buyers' credit and settle balances

Sellers and Buyers pay a guarantee charge and share costs of operation and defaults

Manager allocates guarantee limits, manages platform, ensures transparency, handles defaults

Clearing Union

Producer Consumer

Pool GuaranteeGuarantee

Fee Fee

Manager

FeeService

It'll Never Work

For 140 years, Protection & Indemnity (P&I) Clubs have mutually guaranteed risks Lloyds won't cover

For 125 years P& I Clubs have been managed by Thomas Miller

Market 3.0 – Banking......but not Banks

- networked, decentralised and dis-intermediated market presence = network presence

- banking as value-adding service......not banks as value-extracting middlemen

- they'll never do it? They already are – because risk is with end users & so capital required is minimal

21st Century problems cannot be solved with 20th century solutions.........

…....21st century solutions pre-date modern finance