Author: Guillaume Lebleu

BarCampBankSF2

We just released the PR for BarCampBankSF2. Please re-blog, re-twit, re-send, …

Dear Innovators,

It’s been a year since we had the first BarCampBankSF at the UC Berkeley campus — and given the current state of the economy, the collapse of the stock markets, the credit crunch hitting the global markets and the issuing severe slowdown of activity — the timing couldn’t be better for a second BarCampBankSF.

BarCampBank aims at bringing together the Bay Area’s smartest technologists and industry insiders from all over the world for a great day of networking to discuss the impact of emerging technologies in the Banking and Financial Services space. BarCampBankers will present projects, confront ideas and participate in lively conversations around the innovations in the Banking and Finance world. If you are an innovator, a technology disruptor or a professional in the banking and finance industry we’d love to have you join the debate and share in the experience.

We believe that innovation happens in any economy. We’d love to hear your ideas and share how your organization or institution is doing to ease the financial mess we are in right now.

Regards,

The BarCampBankSF Team.

More info and the wiki for the event can be found at http://barcamp.org/BarCampBankSF2
Registration takes place on eventbrite: http://bcbsf2.eventbrite.com/

Open Money Foundation update and logo

The Open Money Foundation is gathering interest.

I’ve discussed the idea to a variety of people in the last few weeks, ranging from virtual world developers to Web developers, community currency activists and gold currency advocates, and there is a strong agreement towards a very focused and simple goal of currency services interoperability.

This simple goal has to be viewed as a first and necessary step to realize the larger vision of Open Money or free currencies. In particular for community currencies, another cornerstone are economically-driven adoption models such as Community Way.

Open Money Foundation mission

In a nutshell, Open Money Foundation should define the OpenID of currency services:

Open Money = a set of open interface specifications designed for adoption that governs the interoperability between independent currency services and client applications.

Note that this is not restricted to community currencies currencies. We think World of Warcraft virtual gold coins, phone airtime minutes, digital gold currencies, Linden dollars or any virtual currency can benefit from this interoperability. Conversely, we think that community currencies will benefit from the participation of virtual/game/alternate currency providers.

A currency service that complies with Open Money Foundation specifications will enable the following benefits for end-users:

  • automatic discovery of currency services on the Internet.
  • one click currency registration request: users will be able to very easily request to join a currency service from their favorite currency application (“wallet”?).
  • single view of all currency balances: users will be able to view all their balances at various currency service from their favorite Open Money-compliant currency app.
  • transacting on any currency service from any Open Money compliant app.
  • starting a new currency on an existing currency service will be as easy as starting a group on Facebook (this is specific to credit currencies such as community currencies)
  • and more.

The goal of these specifications isn’t to re-invent the wheel. There are many open specifications to leverage to address some of the problems above (OpenID, OpenSocial, OAuth, OFX) and some currency systems already leverage these.

An important aspect of the suggested focus is to not focus on implementation but only on interfaces. In the case of a currency service, implementation is for instance how creditworthiness and credit limits are determined, or whether interest or fees are charged. An interface is simply: how do I request to the currency service a demand for credit. There are many advantages to focus on interfaces not implementation:

  • We don’t get into the philosophical discussions of what is a currency, what are its characteristics, etc.
  • We can each focus on our area of expertise: some on client applications that make it easy for users to use the currency, some on server scalability, some on currency design, etc.
  • We leave an opportunity for implementers to differentiate themselves and address various community requirements, either as a generic platform with a currency definition language or as an ad-hoc currency service for a specific community, either as a not-for-profit, or for profit.

Besides offering a forum for the development of these specifications, the Open Money Foundation will channel funding for the development of an open source reference implementation that everyone can at least use to test their own implementation, or build upon.

I’m looking forward for feedback on this topic. If you like these goals and are interested to participate in a way or another, please comment.

Open Money Foundation logo

Here’s a possible logo I’ve been working on several WEs ago.

Open Money Foundation logo

Thoughts on a Twitter Time Bank with multi-currency support

Today, Eiso Kant, the co-founder of Twollars announced that he had been working lately on a multi-currency version of Twollars, and that “soon everyone can start their own currency on Twitter”. This could be an interesting development for Twollars, which have so far acted as a multiplier and allocator of the generosity of the sponsors US dollars donations: Twollars are backed by commitment of sponsors to donate real US dollars to the charity of the donator’s choice (the first $1,000 was sponsored by Eisomac Ltd, the creator of Twollars themselves, and it seems they are now looking for a new sponsor for the next $10,000).

We will have to wait until more details emerge, as there are many different ways a multi-currency platform could be implemented.

In the meantime, I’d like to share some thoughts on the concept of a Twitter Time Bank, something I’ve been thinking about in the last few days.

Overview

The goal of the Twitter Time Bank is to allow people to bring the reality to the idea that “time is money”, and allow anyone to issue their own time-based money they can use to pay others for products/services or to donate to others.

Here is an example of how it would work:

“(from @glebleu) give @receiver 1 hr for …” would give the receiver the right to schedule 1 hour of my time with him/her/them, through an operation called “redeeming”. Alternatively, they could transfer the time/money I gave him/her/them to someone else via the following Tweet: “(from @receiver1) give @receiver2 1 @glebleu hr for …” (receiver1 gives one hour of glebleu to receiver2).

Give syntax

Anyone is free to give their own time money to anyone else they want for whatever reason they want. They can give as much as they want (but there is an obvious limit, as each person’s time is limited). Anyone is also free to transfer other people’s time money they received to someone else. Here is the syntax:

Short syntax (@giver = @issuer) “give @receiver 5 hr ….”  or  “give @receiver 10 mn …”

Long syntax (@giver <> @ issuer) “give @receiver 5 @issuer hr” or “give @receiver 10 @issuer mn”

units supported: hr or mn

Accept syntax

Although you are free to give your time money to anyone for something, they are also free to acknowledge it or reject it. Acknowledgment would be done via the following Twitter syntax:

Short syntax: (@issuer = @giver) “accept 1 @giverissuer hr for …”

Long syntax: (@issuer <> @giver) “accept 1 @giver hr from @issuer for …”

Creating fungibility with community currencies

“Fungibility is the property of a good or a commodity whose individual units are capable of mutual substitution.”

Personal time money is hard to get accepted, obviously. With the above scheme, each time you are given some time money, you need to review the issuer for the value of his/her time to you and his/her creditworthiness.

To make personal time money useful, we need to make it fungible, but obviously all people’s time is not fungible. It is only within specific groups/communities that it may be.

To create mutual substitution, we need to allow people to spontaneously mutually agree to make their time money substitutable with one another. This agreement is a currency. In Twitter terms, @user1, @user2, etc. create a community whose currency is for instance called #bernal (say for the Bernal Heights neighborhood in San Francisco to support neighborhood “barn raising” events). In the community currency configuration, the community admin can decide:

  • how people can be accepted in the community (ex. unanimous vote, cooptation from a minimum number of existing community members, verification of affiliation, etc.)
  • the limit on each community members’ un-redeemed issued time.
  • whether the currency can be sold for US$ to highest bidder (note that there is no way to prevent it from happening, so it’s better for the process of buying/selling currency for US$ to happen in a way that can be tracked and users protected from theft).

Once this is set up,  community members can issue community currency backed by their own personal time money. For instance, if I’m a member of #bernal, when I tweet “give @receiver 1 #bernal hr for…”, I automatically have an additional @glebleu hr that is accounted for in my un-redeemed issued time. If I exceed the personal issuing limit set for my community, the issuance is rejected (the received can’t accept it).

Web service

A Web service would provide a Web version of give and accept actions, as well as the following actions:

  • reports:
    • un-redeemed issued time,
    • un-redeemed (but scheduled) issued time,
    • total redeemed issued time
  • search profiles of people that you can redeem your personal money or community currency with
  • request redemption (schedule time & location, or redeem for US$)
  • confirm redemption
  • bid in US$ for redeemable personal time money or community currency
  • personal profile/preferences
    • auto-accept given money (default is no for personal time money, can be configured on a per community currency basis)
    • authorize personal time money issued to be sold for US$ to highest bidder (default is no, but there is no real way to prevent it to happen)
    • community currencies joined
    • schedule w/ booked time.
    • geo location, services/products provided for 1 hr, delivery (F2F, online), etc.

Business Model

The business model would quite simply to take a % of the time money sold for US$ (the system would allow users to prevent their issued time money to be put up for sale in US$ if they’d like to).

Minsky’s agenda for reform

I just started to read Stabilizing an unstable economy by Hyman Minsky. In this book published in 1986, Minsky argues that the financial capitalist system is endogenously more prone to instability than stability and that we should reform to avoid “IT” (the Great Depression) to reproduce. In the 2008 preface, there is a summary of his agenda for reform that I found particularly relevant to the current financial situation.

  • employment rather than welfare, with the government acting as employer-of-last-resort, because employment provides more opportunity and dignity than welfare and because welfare – paying people not to work – is inflationary
  • universal child allowance
  • payroll tax elimination
  • policies encouraging greater equality of wages
  • allow retirees to work without losing Social Security benefits
  • tax policies encourage equity finance rather than debt finance
  • policies encouraging small- to medium-sized banks, with less regulation the smaller a bank is.
  • increase oversight of banks trough the use of the Fed’s discount window instead of FOMC
  • zero reserve requirements with interest-earning positive reserve balances

What a personal data currency may look like

I was challenged tonight in an email to explore where VRM and Open Money concepts may intersect.

Here are my notes:

  • To make personal data a currency, you would have to issue redeemable promises to deliver personal data to anyone “holding” the promise, say your location.
  • You may want to assign circulation rules to your currency so that it has no value outside of your social network (and you don’t end up being stalked by strangers).
  • Until redeemed by you the issuer, the currency could be exchanged for goods/services.
  • After redeeming the promise i.e. obtaining the data from the currency issuer, the promise would no longer have any value.
  • To have significant value, the currency would have to be issued by you (and ideally, certified by other parties).
  • You may want to provide foreign exchange services.

Of course, I haven’t answered the key question yet: why anyone would want to make their personal data a currency.

Evolving community currencies from barn raising

The biggest challenge of community currency adoption is probably education. People don’t understand why they would need a different currency, or they don’t trust the community currency as much as the government-issued currency.

Over at the opensourcecurrency group, Benjamin made a very exciting suggestion based on an adaption of the Amish barn raising.

With Barn Raising, we all get together
in January and break up into groups of 4-6 households. We then
schedule our work days – about one every other month – throughout the
year. When your day comes up, everyone converges on your house and you
put them to work for the day. It’s a great way to get big projects
hammered out in a short amount of time, and it’s way fun! The problem
is that anyone who doesn’t get in during that first meeting has a hard
time joining a group. I see ATEN as a way to facilitate even more of
the BarnRaising spirit without having to do all the organization up-
front. You have a bunch of folks over to your house and then pay them
in hours. Go to someone else’s house and get some of that time back
working for them, etc.

So, the idea is essentially for the community currency, here time-based, to be used as a tool to make the barn-raising more flexible.

What I really like about this idea is that it makes the community in community currency very real in a social sense: you get to meet and accomplish something with other community members.

An analysis of the CommunitySmart fundraising and loyalty program

While on a WE in the Russian River area, 2 hours north of San Francisco, my payment-obsessed eye noticed a “Community Smart Bonus Rewards” sticker on the entrance door of the Food for Humans organic supermarket.

CommunitySmart Bonus Rewards

Back home, I researched this program and found out that Community Smart Bonus Rewards is essentially a merchant-funded local fundraising program for local non-profits and community services like schools. Participating merchants set a rebate, participating customers choose a school or charity in their community that they would like to support, and for each qualifying transaction the cash value of the rebate minus a small administration fee is paid to the chosen school or charity. This reminded me a lot of Community Way, except that in Community Way, rebates are re-circulated as local currency, so they have a multiplier effect.

Merchants decide how to structure their rebates. The most common seems to be an amount or percentage based on a minimum purchase amount with an optional capped amount on each rebate, but many other options are possible:

  • a flat dollar amount,
  • a fixed percentage of the purchase amount,
  • a tiered percentage of the purchase amount,
  • an amount that is available on certain shopping days or promotional periods.
  • a special percentage or amount (to override a normal percentage or amount) on certain shopping days or promotional periods.

Participation in the program only requires merchants to have a POS terminal, and only requires customers to have either a Community Smart-registered credit card, or a CommunitySmart program card (shipping/handling fee $4.95) for customers who wants to pay by cash or check.

When paying by cash or check, customers slide their CommunitySmart program card in the POS reader. Because the card is not a payment card the payment is declined, but the information about the purchase and the amount is recorded. This method of capturing customer transaction data by routine declining of authorization requests is the core patent of Nietech, the company supporting the Community Smart service.

Nietech is a Santa Rosa, CA-based company.  According to this bizjournals.com report, their annual revenue is $750K. According to this article, they are a 14-people operation with among other customers, the Interra Project, a social commerce non-profit started by Dee Hock, founder of Visa International, and Greg Steltenpohl, founder of the Odwalla juice company with the goal to harness consumer power – 70 percent of the Gross National Product – for social change…

I haven’t had enough time to find much information about the current status and success of CommunitySmart or Interra. In 2005, Nietech reported having raised $75K for a local school in partnership with a local bank issuing their CommunitySmart card, but I haven’t found any news about a successful national roll-out. Similarly, Google News does not have much news about Interra Project in the last few years. I didn’t have much time to research and may have missed news, so if you have any information about these projects, please comment.

Good Banking

I’m reading the live blogging of the Bernanke hearing today, and I’m pretty shocked by the following conversation:

Bad lingo | 3:59 p.m. Emanuel Cleaver, a Democrat from Missouri, condemns the term “bad bank.” He says the term does not exactly inspire support for the program. Maybe it should be called the “Damascus Road” bank, he says, or maybe the Fed should have a linguist look into something else more appealing.

Mr. Bernanke replies that it’s officially called an “aggregator bank,” not a “bad bank.”

Mr. Cleaver says that term is unlikely to catch on, and that perhaps a three-year-old should come up with something that rolls a bit more trippingly off the tongue.

Well, what about “Good Bank”, and what about making it more than just a sweet name?

I’m convinced Americans want good, ethical banking, the kind of banking that focuses on developing healthy communities where they can live and raise their kids. Just like anyone else on this planet. More importantly, they want HOPE, and good banking IS hope.

Bruce Cahan says it very well:

What We Had

The earliest banks were built by business, civic and religious leaders to grow hometowns, in regions they knew best. Community banks and bankers exist as a minority, often still independently-owned.

What We Lost

Today, most deposits (upwards of 80%) in America’s large cities are held by banks headquartered elsewhere, accountable to no one locally, except regulators in Washington or the state capitols who are easily outmaneuvered through lobbyists, industry political donations and complex financial instrument structures that camouflage the transparency needed to see simple causes and effects.

America’s banking system has lost its roots, has lost its way. “Safety and soundness” used to mean bankers living in and knowing their home regions and the people, businesses, governments and nonprofits there. Now Wall Street financial services mega-banks and investment professionals have fractionalized underwriting, ownership and obligation to the point where hedged bets on leveraged obligations (e.g., home mortgages or corporate bonds) create a rapidly cascading morass of multiplexed risk, drying credit up for other purposes in places where the risks are less or could be underwritten more safely and simply. As rogue traders have shown, the whole house of cards can easily unravel, with the use market capitalization and Federal Reserve costs unwinding such positions entails.

What We Need: An Ethical Bank

We need more ethical banks, where decisions are made transparently, its allegiances trace back to community concern and its pricing of credit and investments is directly tied to the contribution each transaction makes to growing regional health.

Hayes Valley Money (report from the field) and Play it Forward Akoha cards

Hayes Valley Money

From wikipedia:

Hayes Valley is a neighborhood in San Francisco, California, between the historical districts of Alamo Square and Civic Center. Victorian, Queen Anne, and Edwardian townhouses rub shoulders with boutiques, restaurants, and public housing complexes.

In November 2008, to fight a worsening recession, Hayes Valley started to print their own money with the Hayes Valley Money rewards program. Here’s how it works:

shop at any participating merchant for a chance to win a Hayes Valley Money card good for $5, $10, or even $20! You can use your reward card in the shop where you got it or at any other participating store. Just look for the “money card participating merchant” signs in store windows or refer to the list below. Hayes Valley Money rewards cards are good for 30 days

This is currently a very low-tech endeavor: to prevent forgery, the money cards are signed by hand by each merchant at the time they are given to customers, together with the expiration date. “We are currently 16 merchants participating in this program and we all know each other, so it would be very hard for someone to forge” explains Russell Pritchard of the Hayes Valley Merchants Associaton.

Russell explained that so far, he has been a bit disappointed by the number of merchants joining the initiative (16 so far), but he has been really encouraged by the reception from customers. So far, out of the 30-40 rewards he has given out, only several came back from other merchants, most likely because people haven’t used them. He may typically give a $10 reward for a $100+ purchase and may a $20 reward for a $200-500 purchase. But he said, and this is interesting, that it happened that he actually gave away some of them to some people he knows shop locally or were considering buying a piece of his store.

From a “backend” standpoint, the rebate collected by merchants are simply counted and returned to the issuing merchant. Rusell acknowledged that the easy-to-setup adoption of a paper/signature-based system has drawbacks in terms of tracking and clearing between merchants, but it’s a start.

Russell hopes that this initiative will be duplicated all over the city with the support of the city of San Francisco. He personally handed a rebate card to mayor Gavin Newsome, who has been personally supporting local shopping during the holiday season, and recently reminded him that he hadn’t used it yet.

My comment

Because the rebate issued is not re-circulated after it has been used once, we cannot strictly talk about a currency (currency comes from current, something that flows). In the current model, merchants are essentially injecting their own money into the neighborhood, creating an incentive for visitors to shop at more than one store in the neighborhood in a short period of time. I suspect this model might lead some of them to think that they might give more than others do.

The next step in my opinion would be to move to a real currency model where received rebates could be used by businesses to trade with one another. In this scenario, the rebates received by a merchant would not be returned to the issuing merchant, but simply used to trade with another merchant. It might not make sense in a community of 16 merchants, but if the community is big enough and involve a wide variety of business types, it will.

Still, there would be something missing in this model: no community value would be created. One way of doing so would be for merchants to donate some of their rebate cards to local community services that would be then use them to fund their activities by using them, or reselling them for hard dollars to local residents willing to make a donation, but without losing purchasing power.

Parallel with Play it foward Akoha cards

A tweet from @akoka picked my attention today. The original idea is for customers to thank each other with rewards cards and propagate good karma, but there is a possible connection between the Hayes Valley Money rebate cards and Akoha cards: stores could easily leverage the Akoha awesome tracking infrastructure to print cards, hand them out to customers, track through which users and which merchants they have been through.

If the merchants themselves play them forward, until the cards they issued are returned to them, as I suggested above, they could effectively measure how many transactions they have incentivized through their rebate cards.

Last, merchants could also easily connect with customers without ever asking them their email or contact information, since Akoha users typically register the card on their Web site to keep a tally of karma points they have accumulated by passing the card along.

The need for an Open Money Foundation

I’ve discussed this topic with Michael Linton and Marc Armstrong this WE.

Problem: community currencies are a $0 Billion market and promoting their development in a way that ensures and maximizes their potential for communities is expensive. Examples include travel costs or Web hosting costs. Today, although many parties are interested in the development of community currencies, there is no organization that represent their common interests that is able to officially receive donations for interested parties. These common interests today are mostly public awareness and technology interoperability, but will eventually include – should we be successful – right to exist under rules dictated by the government of each nation where these currencies are used.

Solution: we formalize Open Money into an Open Money Foundation, a non-profit dedicated to ensuring and maximizing the potential of community currencies. We use Community Way to raise money: corporate sponsors that may include telcos, computer manufacturers, airlines, etc. These companies donate to the foundation their excess capacity in the forms of consumer coupons/vouchers (ex. voice minutes, bandwidth, computers, offices, miles, etc.) and the foundation uses these donations to finance its mission either by directly using them, or by reselling them for the currency needed.