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The Community  is  the Currency Money 3.0 Philosophy Conference Chris Cook, Krager ø 07 June 2009
Today I am going to be talking about the future of Money......Money 3.0
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 -  Decentralised  and  Disconnected
Money 2.0 - Money of the Present
Currencies are interest-bearing IOU  objects  or claims over value...
...issued by Private Banks
...and Central Banks
...who step between borrower and lender  Lender £  Loan 10/06/09 Borrower
...or seller and buyer  Buyer £  Credit 10/06/09 Seller
...to provide a framework of trust through an implicit guarantee Banking System Lender ( Depositor ) £ £ 10/06/09 Borrower
...supported by a base of Regulatory Capital Bank Credit Bank Equity 10/06/09
Money 2.0 - market presence is typically through intermediaries
Money 2.0 -  Centralised  and  Connected
Money 3.0 - Money of the Future
Money 3.0 - involves direct, instantaneous  Peer to Peer  (P2P) connections....
Money 3.0 - market presence is “network presence”
Money 3.0 -  Decentralised  and  Connected
Cool....but what  is   Money 3.0?
Nordic Enterprise Trust  works where the Internet and Markets converge
With a little help from Innovation Norway...
....NET has developed a new framework for P2P Finance
P2P Credit and P2P Investment together comprise Money 3.0
Let’s look first at P2P Credit  Buyers 10/06/09 Sellers
Sellers give buyers interest-free credit –or “time to pay” Buyers 10/06/09 Credit Value Sellers
Credit is guaranteed by a  Guarantee Society  of seller and buyer members...  Buyers 10/06/09 Pool Guarantee Guarantee Sellers
...with some kind of “common bond”: geographical, functional, or both  Buyers 10/06/09 Pool Guarantee Guarantee Sellers
Both sellers and buyers pay into a Pool for the use of the Society’s Guarantee  Buyers 10/06/09 Pool Guarantee Guarantee Fee Fee Sellers
Buyers settle credit in money, or  money’s worth  of Value acceptable to sellers Buyers 10/06/09 Pool Guarantee Guarantee Fee Fee Value Sellers
If buyers default, the Pool pays sellers, and collects from buyers Buyers 10/06/09 Pool Collects Pays Sellers
A service provider sets guarantee limits, handles defaults & manages the system Buyers 10/06/09 Pool Service Provider Services  Fee  Fee  Guarantee  Guarantee Fee  Sellers
Now that Banks’ ability to create and support credit has evaporated.... Bank Equity Credit 10/06/09
...a Guarantee Society provides an complementary trust framework...
...where Banks may manage credit creation as service providers  Buyers 10/06/09 Pool Service Provider Services  Fee  Fee  Guarantee  Guarantee Fee  Sellers
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....
...for billions of Swiss Franc’s worth of goods and services
No Swiss Francs change hands as a  currency  or Unit with exchange value
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
The WIR takes security over members’ property to protect against defaults...
...so the WIR framework of trust is backed by property
NET’s  Guarantee Society  is a new framework of trust for P2P credit.... Buyers 10/06/09 Pool Service Provider Services  Fee  Fee  Guarantee  Guarantee Fee  Sellers
...enabling value to circulate and the creation of new productive assets
Although Credit is necessary for the circulation of currency....
...contrary to conventional wisdom it need not actually  be  currency....
...and other Units of Value may be generally acceptable as  currency
This is where P2P Investment through  Unitisation  comes in
There are conventionally two types of ownership - Public or Private... 10/06/09
...and there are two types of investment: Debt and Equity 10/06/09
Investment through a Limited Company... 10/06/09
....a 19 th  Century legal dinosaur...  10/06/09
...is what makes the Private Sector  Private 10/06/09
Credit is typically issued by banks and secured by legal claims 10/06/09
...giving two conflicting claims over the same productive asset 10/06/09
But there’s a new furry mammal out there....  10/06/09
...the 21 st  Century UK Limited Liability Partnership (LLP) 10/06/09
A UK LLP is a corporate body with limited liability.... 10/06/09
...and...errrr...that’s it!... 10/06/09
As far as the UK Tax Man is concerned it  is  a Partnership 10/06/09
It’s an “Open” Corporate where partnership working is possible....   10/06/09
... even without a written agreement 10/06/09
It enables direct  Peer to Peer  (P2P) Credit and Investment 10/06/09
Over 46,000 UK LLPs are now in pervasive use for purposes never intended... 10/06/09
...even in the Public Sector, where Glasgow has four municipal LLPs 10/06/09
Capital Partnership  – direct Peer to Peer investment in productive assets 10/06/09
Hilton Capital Partnership (  > £1bn) Capital Partnership LLP 10 UK Hotels Gross  Revenues  Hilton Group Capital User Consortium LLP  Capital Provider Bank Property Developer Hotel Specialist %  %  % % %
Capital Partnership Assets Investors Payment % % Use Managers Users Custodian
Productive assets are held by a  Custodian Assets Custodian Ownership
...who safeguards the asset on behalf of the Community Assets Custodian Ownership
Investors put in Financial Capital in money, or  money’s worth … Assets Investors Ownership Financial Capital Custodian
Managers provide Human Capital of time, expertise and experience.... Assets Investors Ownership Human Capital Financial Capital Managers Custodian
Users pay for the use of Capital Assets Investors Payment % % Use Managers Users Custodian
Result: Capital Partnership Assets Investors Payment % % Use Managers Users Custodian
Capital Partnership reinvents Equity
Equity Shares  - % age shares in revenues or production... 10/06/09
… ..which  may  be transferred, but never redeemed, since there must always be 100%
Units   – Redeemable in production eg Kilo Watt Hours, natural gas
Units   have a value in exchange, but no rights to production or income over time…
Equity Shares in property – the Value Proposition 10/06/09
A new form of  Co-ownership  between Occupiers and Investors 10/06/09
Occupiers may invest simply by paying more rent than is due 10/06/09
...and if they wish, they can pay their rent in Equity Shares, rather than £ 10/06/09
Co-owner  Occupiers who maintain property may receive Units as “Sweat Equity” 10/06/09
Energy Units - the Value Proposition 10/06/09
Investors - direct investment in energy with no return... 10/06/09
....similar to an investment in gold... 10/06/09
...except that while gold may be pretty... 10/06/09
....it’s not useful in the way that electricity is 10/06/09
Consumers – the ability to lock in the price of future consumption 10/06/09
But  Investors wanting to sell may not find Investors wanting to buy....? 10/06/09
No Problem!  Consumers will buy if the Unit price falls below the market price... 10/06/09
...because they gain by buying Units and redeeming them against energy used 10/06/09
Interest-free financing through monetising renewable energy... 10/06/09
...by issuing - for value now - Units that will cost nothing to redeem 10/06/09
Capital Partnerships are not  Organisations 10/06/09
They do not  own  anything,  do  anything,  employ  anyone, or  contract   with anyone... 10/06/09
They are simply frameworks for P2P investment with cross border application
...transcending borders through interactive  consensual  agreements 10/06/09
...rather than  adversarial  contracts imposed by national statutes or courts 10/06/09
Master Partnerships require no legislation... Master Partnership Financial Capital (Money, IP etc) Users Custodians (National) % % payment 10/06/09 Human Capital ( Developers, Operators)
..and there are no national or international institutions and hierarchies
My vision of Money 3.0 is of a networked Clearing Union
Units redeemable in land/ location rental will be acceptable domestically
Units redeemable in energy will be acceptable globally
Transactions will be priced by reference to an energy standard or Unit of measure
Credit issued by individuals and enterprises will be backed by mutual guarantees...
...so communities with a common bond provide frameworks of trust
Money 3.0 is not an  Object : it is a  Relationship
The Community  is  the Currency
Thank You 10/06/09

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