Keywords

These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

The Global Context, and Our Focus Within It

The problem with global financial systems today and the current practice of economics is that they are divorced from the real economy. This means they are unable to meet people’s social, economic and environmental needs.

Studying the flow of conventional money will not tell us much about real resources and real needs. Therefore this research has focused on the parts of the economy which conventional markets do not reach:

  1. 1.

    The gift economy––resources which are freely given

    For example: a mother’s care, voluntary work, open source software, free recycling, hospitality, looking after a sick relative, etc. These activities are the bedrock of Civil Society, and provide a foundation for all other economic activity.

  2. 2.

    The mutual exchange economy––resources which are provided in return for something

    For example: neighbourhood watch scheme, car sharing, parent/teacher association. Some exchanges are facilitated by time banks, barter clubs, and a growing number of exchange and swap websites.

  3. 3.

    The potential economy––resources which are wasted or unused

    Within every community there is a wealth of wasted and unused resources. Wasted resources such as wasteland, food waste, disused buildings, wasted energy, underused or unused possessions, landfill, etc. Examples of unused resources include, would-be entrepreneurs and leaders, those with new ideas, unique creativity and skills, the knowledge and experience of age, the energy and strength of youth, the capacity to care and support, the unemployed and underemployed, etc.

Within each community there is also a long list of unmet needs to which these resources could be applied: housing, education, healthcare, conservation, caring for the elderly, decent neighbourhoods, childcare, to mention but a few. In some communities even the basic needs of food, water and shelter are not met. The management of resources is the foundation of economics, and effectively matching resources to needs is the basis of a healthy economy.

Conventional Money

Conventional money (CM) fulfils three functions: a store of value, a unit of account, and a medium of exchange.Footnote 1 Because it is a store of value, money is prone to hoarding. Estimates in 2012 show companies are hoarding $3.2tn,Footnote 2 and 1 % of the world population holds 50 % of its money. Moreover, money relies on scarcity to maintain its value, and this explains why there is not enough in circulation to provide an effective medium for exchange within everyone’s reach.

More problematically, CM is created by banks issuing credit, so all money has to be paid back with interest. For this reason, money needs to make a quick return, and cannot facilitate activities such as care or education for all. Between 1998 and 2008 the money supply in the UK doubled but only 20 % of it went into the ‘real’ economy, 80 % went on assets such as property and financial speculation both of which command a higher and quicker return.Footnote 3

Consequently, there is never enough money to provide for basic needs. The problem is a lack of money, not a lack of resources. Within every community there are many wasted and unemployed resources: talent, strength, ideas, skills, ambition, time, possessions, energy, wasteland, empty buildings, landfill and so on. There are many people and communities excluded from productive economic activity simply because CM is not able to facilitate the exchange of their goods and services.

Digital Money

Conventional Money is no longer backed by gold. It is fiat money––‘a promise to pay the bearer’. It has no intrinsic value; it is just an IOU from a Central Bank, which is backed by a nation’s taxpayers. Money is simply information, and most of it is digital. Only 3 % of money is hard cash in circulation, the rest is just digital data. Consequently, technology enables us to create new digital currencies. Many of these currencies are bought with CM (Facebook Credits (FB),Footnote 4 iMoneyFootnote 5). Others are issued and redeemed by large organisations (Airmiles, and other reward points).

Bitcoin has demonstrated the potential of a peer-to-peer currency, but like CM its value is based on scarcity. Bitcoin is based on the model of gold.Footnote 6 Immense fluctuations in value caused by speculative buying and selling of bitcoin have occurred, similar to the gold market. Hence a new type of democratic digital currency is required. It needs to be complementary to CM. It will be democratic because it is created by the users, and draws its value from the enormous untapped resources within our communities.

Barter and Exchange

In times of economic crisis people turn to bartering. During the 1930s a barter currency was set up in Switzerland to enable businesses to keep trading. Today the WIR is used by over 60,000 businesses and is credited with having stabilised the Swiss economy.Footnote 7 When Argentina defaulted in 2001, hundreds of barter clubs sprung up, where people could go to exchange goods and services.Footnote 8 At the height of the crisis over two million people were dependent upon them for their survival.

All over the world local exchange schemes, time banks and local currencies have been set up to encourage local trade and the reuse and sharing of resources.Footnote 9 , Footnote 10 , Footnote 11 These have been very successful at supporting the elderly, keeping local businesses open, creating a sense of community, and rewarding volunteering.

Barter currencies are not just for the desperate, nor the worthy. Business-to-business barter is now well established; in 2009 it was worth $12 billion in the USA, and growing rapidly.Footnote 12 However, by their nature barter currencies are exclusive and inflexible, and therefore limited. Unlike CM they do not have a standardised measure of value. They are only tradable within closed groups. What is required is a common, global barter currency.

Using a Mutual Exchange Currency, ebarts, to Activate the Social Economy

The irony of our current financial system, so obsessed with efficiency, is that it creates enormous waste and irreversible destruction. Furthermore, because conventional money depends upon scarcity to maintain its value, there is never enough of it to do the things that matter most; for example: look after the vulnerable, educate the young, protect beautiful places, conserve cultural heritage––we can’t even feed the hungry. To build resilient and sustainable economies we need other kinds of money.

In simple economics terms, we have the supply (wasted potential) and the demand (community needs) but we lack the currency (money) to facilitate exchange. Our initial focus group studies with young people, students, local community groups and local businesses have confirmed the need for an alternative currency which enables people to buy and sell without money and have been critical for the detailed development of ebarts.

Our user interviews with young people revealed how they are short of money and worried about the future, in particular about finding a job and somewhere to live. They are more connected with people online than in their local community. These young people have untold ideas, skills and ambitions which they cannot currently realise.

A Social e-Currency

A new currency, ebarts, has been developed with the aim of becoming as universal and useful as conventional money. Unlike other virtual or digital currencies, ebarts is a social currency and cannot be bought for conventional money. Nor is it issued by a company (like Airmiles or reward points). ebarts is a mutual credit system, which means that it is created by the users, like a transferrable ‘IOU’ in exchange for real goods and services received. It can be exchanged online, by SMS, and by handheld devices, enabling those without access to networks to participate.

As a social currency, ebarts is intended to reach people who are currently not well served by the present economic systems. ebarts has been designed to provide an additional means of exchange. It is not intended to replace conventional money, but to complement it by doing things that conventional money cannot do. The aims of the ebarts as a social currency are to:

  • increase productive economic activity, particularly in areas where there is not enough conventional money to meet needs and aspirations,

  • reduce waste and energy consumption by encouraging local trade, and the sharing and reuse of resources,

  • increase local resilience and social capital by bringing social networks to life, in real communities,

  • unleash the potential of people’s natural entrepreneurship and individual talents, and

  • relieve pressure on the current financial system and help to stabilise global markets.

A ‘Person-to-Person Market-Place’

As well as providing a currency, ebarts also provides a market place. The ebarts site is like a simplified cross between Facebook and eBay––with account holders’ profiles and listings of what people are offering and wanting.

Firstly, ebarts is a flexible and friendly way to trade. So if someone’s bike needs fixing, they post a request. If their shoes are hurting, they can sell them. If they have a few hours spare, they can find out which local charity could do with help that day. And if they’re hungry, they can find out which of the shops on the High Street are offering special ebarts deals that day. At the same time, the charity has a direct and flexible way to recruit and reward helpers, and the local businesses have a way to advertise online, in real time, to people in the area.

Secondly, ebarts is not aiming to compete with existing sharing and exchange sites (such as Streetbank or SwapShop) but instead as it will be possible for existing exchange sites to use ebarts on their site through a plug-in. This means that users will be able to trade goods and services on their favourite websites using ebarts, and link these exchanges to their ebarts account. ebarts has the potential to become the PayPal of the social economy.

Networks of Exchange

The Internet has opened up new networks of trust in the form of peer to peer trading, lending and sharing. A new ‘collaborative consumption’ is developing as people swap their possessions, share their cars, sleep on each other’s couches, give things away, broadcast their videos and music, and disseminate their knowledge and ideas. This has been a spontaneous revolution, driven by people’s need to participate and contribute. It is so powerful that major corporations are rethinking their business models in order to join in.

All currencies are based on the general term of trust. ebarts, however, is specifically based on the trust between individuals. In addition, all currencies are backed by assets. In the past, money was backed by gold––now it is backed by the assets of government and banks.

How ebarts Works

A set of ebarts apps are currently being developed to demonstrate ebarts to potential user communities. It will be possible for ebarts users to trade via their mobile phones and the web. A web plug-in is also being developed to allow other trading websites to allow the use of ebarts. A user-centred design approach has meant that early on use cases and user-interface screen shots have already been developed.

Accounts start on zero, and a trading limit is set. This is like an overdraft limit, but it also restricts the amount of credit in an account to keep the ebarts circulating. At the start of the ebarts process, users will open an ebarts account. Each account is opened with the promise that ‘I will give back what I take’. Individuals, businesses and community groups can open accounts. One of ebart’s unique characteristics is that its system is transparent and self-regulating, since each user’s graphic ‘heart beat’ and credit rating will be visible. Furthermore, all transactions must be confirmed by both buyer and seller, or the donor and recipient. There is no obligation to trade with someone; transactions can be turned down if there is doubt.

Another unique characteristic of ebarts is that traders set the price of goods and services exchanged. Transactions in ebarts are made by debiting the buyer’s account and crediting the seller’s account by the same amount. Every debt is balanced by a credit, making the sum total of all ebarts accounts zero.

Account holders do not have to earn ebarts before they spend them, they can go into ‘debt’. When they spend they are creating an IOU: a promise to repay their debt to the system. This is the way currency is created. A healthy ebarts account will have a high throughput and fluctuate regularly either side of zero. The sidebar screen shots show how this is represented. Therefore, ebarts is simply a ‘medium of exchange’. There is no point hoarding or saving ebarts.

Account holders will also have a ‘credit rating’ generated by their trading history, expressed as a percentage. The ebarts system employs machine learning to assess the frequency, value, customer feedback and interconnectivity (how many trading partners) of each account holder to update their credit rating. This in turn will be used to alter the account holder’s trading limit––increasing it in accordance with their previous use of ebarts.

Every account holder will have a profile on ebarts.com where they can advertise what they have to offer and what they want. Account holders can also trade on participating websites through an ebarts plug-in. ebarts will also be tradable in shops, markets and face-to-face between traders via mobiles and handheld devices. Many transactions will be dual currency, as ebarts is used by local retailers and businesses as part payment for goods and services. Businesses and individuals can donate to community groups, who in turn can use ebarts to pay ‘volunteers’.

It is important to note that ebarts has no value outside the system. It is not underwritten or backed by the platform provider; its value lies entirely in the mutual trust between traders. If someone is not considered trustworthy, there is no compulsion to trade with them. Because of this, along with the transparency of the system, and the fact that every credit is linked to a debit, the opportunities and incentives for fraud are limited.

In addition, if a trader spends with no intention of providing goods and services in the future, they are limited by the trading limit on their account. Those who they trade with will still receive credit for the goods and services provided. Furthermore, their dishonest trading will have created currency to circulate within the system. Unusual trading behaviour will be identified, and accounts can be frozen if necessary.

Framework to Evaluate ebarts

Collaborative consumption and social networking are growing. ebarts will build on this success, and create new trusted networks of exchange. ebarts has been designed to:

  1. 1.

    enable people to trade without CM,

  2. 2.

    reduce waste and energy consumption by encouraging local trade, and the sharing and reuse of resources, and

  3. 3.

    bring social networks to life, in real communities, unleashing the potential of people’s natural entrepreneurship and individual talents.

The ebarts platform can anonymously monitor the volume of users and their trading patterns addressing the first objective, contents of exchanges addressing the second objective, and provide data enabling trends in overall ebarts usage to be determined addressing the third objective above.

Data collected over time will provide the basis for longer-term studies on the penetration of ebarts and extent to which it is successfully reaching its intended user communities and achieving the above design objectives. The ebarts platform can be thought of as a laboratory for studying the development of a social economy and its evolution over time. Large data analytics will be at the core of the framework used to evaluate ebarts.

Conclusion

ebarts is a new global digital barter currency with the potential to be as secure, useful and ubiquitous as CM. ebarts aims to enable a thriving, global, barter economy by providing a common currency for use across the existing barter and exchange sector. It will open the barter sector to new people, groups and businesses.

ebarts is also a multiplatform currency designed to supplement CM by enabling economic activities that CM cannot. ebarts can help to stabilise economies because it is counter-cyclical. ebarts provides a new means of exchange and has the potential to enable a new social economy, which brings social networks to life in local communities. ebarts also provides a basis for democratic money.

Lastly, the suitably instrumented ebarts platform will provide the data needed to critically analyse its success in achieving its design objectives as well as a laboratory studying the evolution of ebarts in the future.