If we define a currency as a measurement in complex transactional markets, then we can define a currency system as any formal system based on a set of currencies. Observe that the financial system and consumer banking are based on a worldwide system of fiat currencies that is ultimately derived from one or two national fiat currencies that are the defacto measuring sticks for all inter-currency transactions. The system of national currencies are federated through a system of foreigh exchange trading with many complex derivitive financial instruments as a further support system for interrnational finance and trade.
The ubiquity of this system leads people to confuse money, and all its derivitive currencies in markets and banking, with currencies in general and the actual wealth that is being measured. The wealth is the goods, services and labor that are transacted. We have tricked ourselves into thinking that actual wealth is involved in purely financial transactions. If you win or lose in financial markets, it is no different that winning or losing in the casino. No wealth is created, it is only moved from one account to another. Ironically, the claimed purpose of the markets is to distibute risk, and that is a valid insurance function of markets, but in reality markets are predatory environments where players are competing to hide and concentrate risk on those without the power and information to resist. We will leave the deconstruction of the current system and its violence to another essay, here we are concerned with the functions and features of alternatives to the systems of scarce money.
First, although our systems may use prevailing local currencies as both a measure and a medium of exchange, these are distinct currencies. In reality, this is little different than customer accounts with a vendor or a bank. Accounts payable and receivable are denominated in dollars, and stocks are valued in dollars, but the numbers in these accounts are not money, but other currencies derived from dollars. Depending on how each currency in the system is defined by the rules, it may not be tradable at all and only attach to the identity or events to which it was issued. Tokens representing achievements or a level or performance would be like this, and example is a gold medal or grades in school that qualifies one student each year to be validictorian of their class. Many alternative currencies will be designed to recognize work and contribution. Pay, or greater pay, is usually thought of as the incentive for achievement and the desire to perform well or better that the rest, to stand out. This seems on the face of it to be more counterproductive that helpful even in the intended result of a reward and incentive based system.
Passion and desire are not encouraged by the promise of a reward, and achievement for its own sake, for the aesthetic end of peak performance and not the desires of fame and fortune. Do we want to valorize greed or amateur passion to be like the lillies of the fields? What if each person got the care and community connection needed to live in health and essential comforts and we openned up the ways in which we produce what is needed. The old financial system has all be stripped the earth bare and will burn us all out if we let it, we don't need any more greed driven market systems, but we can still use markets as collective intelligence subsystems both to manage and regulate production, but also to account for all the essential natural cycles and balances that are simply ignored as externalities by current economic measures and system.
Consider the function of funding activities that build the commons. Now, we assume we will need contributions in conventional currencies as well as time and other resources that will be permanent donations to the efforts. Ultimately, gifts to the commons, but what if some of my investors are willing to give a certain amount, and provide financial backing at a higher level. In other words, some moneys would be contributed as a lone rather than a gift. (fix this para. refer to currency mechanics)
We can create Care Circles for community based educational resources where students of all ages learn about technology and social media, and learn to design and build all sorts of things. I come with the knowledge and experience to help build the school and small amounts of money to invest. If someone in the community can replace my salary with gifts and loads, I can go full time. Like so many, I should be retiring soon, but I can't afford to. In a community of gifts and abundance.
Select qualified students to the advanced systems program to take on metropolitan area networks. We create one or more open technology based network technology companies, and they are successful. Now we can feed back some of the profits made possible by the knowledge assets created and transferred in the educational experience to retire the obligations created in building the commons assets in the first place.
The difference in our currency design is mainly in our approach to scarcity and abundance. In natural systems, we have balance of flows and signals of relative abundance that are the currencies of the natural world. New flows can overwhelm and replace existing ones, but ultimately either there is a long term balance, or scacity becomes extinction. Scarcity as a control mechanism is a simialr threat to existence. In other words, we want currencies and currency based signals to contribute to choices based on attraction, not fear. We want to produce wealth as a collaboration of friends, not as warring tribes or empires.
We will design a system of currencies and provide a reference implementation of supporting systems. Using these currencies will be how we measure our work and wealth in collaborative enterprise. I will measure my wealth and security by the communities I participate in and not by the scarce currencies I hord, and I will know I can be secure in my retirement even if the conservatives ultimately destroy Social Security. I will know because our systems of currency make visible the shared community wealth we always had. If my wife and I need someone to come over and clean or shop when we can't anymore, and if we need nursing care, we can be confident that is available out of our collective abundance. All the wealth I create in teaching and building technical local industries will stay in the community rather than getting sucked out by vampire capitalism. I don't need money to pay for care, I need the abundance in the community to support a larger community of caregivers.
In the system we have, caregivers get squeezed with minimum wages and few benefits. In our system, everyone can get what they need, so they can't be squeezed that way. Collectively, we can only consume the wealth we produce, but if we share that more equitably, I think we'll be fine. We'll even take care of the failed leaders of the old system who find little they can productively do now.
The currency system will be designed with the understanding that the purpose is not to restrict choice, but the enhance it. It makes contribution visible in all it's detail. If your designs are included in millions of systems, we'll know that. Is that more valuable than being a neurosurgeon or an NBA player? I don't know, does it matter? Does comparing their salaries help? The real wealth we share will continue to be largely intangible, but we can do a better job measuring even the intagibles with a better system.
The critical points of contact between a formalism and the world is ontology. What counts as an objects, what are the kinds of objects and qualities they can posses, and how are they related. In the money world, dollars are created and destroyed in the change of balances and transactions are a zero-sum gain where a number added in one place has to be subtracted in another.
The critical act in the current system is not well understood by most people. This act is the debt transaction. Lets make it concrete in the purchase of a home. There is a buyer and a seller, but then there is also the bank. The bank is a whole network of institutional arrangements, but let's keep it simple. At the start, the seller owns the property and may owe a balance on a mortgage, and the buyer has a down payment and the ability to pay a monthy amount. At the end the seller no longer has the property or the mortgage, and he also has the balance after paying the mortgage and fees. The seller now owns the property, and a different bank has a lean on the property. For the bank, internal balances have changed, but it is a net zero. If we now consider that the buyer and seller have different banks, you might ask, where did the buyer's bank get the money to pay the seller's mortgage and deposite the balance in the seller's account? The answer is that they created it with the mortgage instrument. Sure, if their net lending changed significantly over some period of time, they would have to borrow more to meat their reserves, but on their books, the money the buyer owes is an asset. It can be sold, and it almost always is.
The upshot of this is that the financial system is based on debt. Money is created as debt. At the macro scale, the US government issues treasury bonds, and the Federal Reserve sells them. That process creates most of the money that circulates in the dollar based economy that currently runs the world.
What if instead of debt and contracts, we had an economy based on giving and receiving and social obligations? We have that in the places where community is like family, but those are not formal systems. That is not to say that they don't have their place, they surely do, but it makes it hard for them to scale in order to address the large scale problems we face. What if we had a formal system of currencies where the richest person is the one who has given the most, but even more critically that receiving what we need is never shamed? What would that look like? (This is an early description of Care Currencies)
Instead of zeroing out an obligation like a debt repaid, the currencies would show a summary of a lifetime of giving. For someone who received a hand up when they had nothing, their lifetime of giving after getting what they needed might also be credited to the original giver. If helping a stranger is not fundamentally different that supporting and teaching your children until they can care for themselves and others, then it is a different sort of obligation than a financial contract. In the current system, you run out of money and you are broke. Any systems there are to help out come with the message that you have failed and are worthless. Even with our children their are limits where our giving isn't helping them, but that is an entirely different matter.
What is shameful in the gift economy is to take. We give freely to each other with the expectation that each is giving his or her best in return. It is only if someone just takes and does not give back even though they are well able to that there is a problem. In the financial contract ontology, we are not obligated to give one bit more effort than was paid for. Some would call us fools if we do. There is no shared purpose in a contract.
The fact is that the financial contract system is ubiquitous and therefore unavoidable. In the long run, you may only need contracts to defend the growing space of collaborative enterprise and gift economies from predators and parasites. If the system works as designed, people have less and less need for financial currencies, and they could even disappear. In the beginning, many gifts and requests will be transacted in the local financial currency but the system will be designed to accumulate shared assets that are also the basis of local investment and production. Lots of people will be sitting on large holdings of gift assets by virtue of a lifetime of contribution, which will in part be offset by meeting their retirement needs. On the other hand, nobody really retires in a gift economy. As long as we can still do, we will produce because it is what we do, and not because we have to so we don't starve of freeze.
Because of this condition, the first generation of systems that support the new currencies will need to transact in fiat currencies. That part of the system will have to be compatible with all the laws and regulations that might apply to a credit union, and it will connect to a much richer system of currencies. People will accumulate gift accounts based on financial gifts, work contributed. Wealth will be produced and many will receive gifts of money and services derived from that wealth production.