Tipjoy.com, a possible home for CraigBucks
The main trick is to have a currency that - unlike dollars, which are lent into existence by a bank - is instead worked into existence through an exchange. One person in the system is willing to be debited for what he gets from another. And everything stays completely transparent. Eventually (like in a file-sharing system) a person taking but not giving ends up in too much virtual debt to acquire more goods and services without finding something to do or trade with someone.
Coincidentally, then, I came across TipJoy, a pretty robust little system through which people can pay each other "tips" via the net, or even Twitter. Tie the TipJoy system to an alternative currency database instead of dollars, and the system should be able to work. The more transparent it is, the more people will be able to determine just what the unit of currency is worth to everyone else.
And as "Winston" suggested we call them over in a discussion at Rushkoff.com, why not call them NewMarks?
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The IRS would be all over that in a heartbeat.
Bartering income isn't exempt from income tax:
http://www.irs.gov/taxtopics/tc420.html
if you do create a counter-currency and it starts to take off, don't attach the success of your currency to you or your organization... the banks will literally kill you for this.
The Flooz story has something to say about alternate currency. Hacking and such is very risky in a system like this.
I refuse to get behind any future-currency system that isn't called Credits. Or, preferably, Galactic Credits. This was my major problem with the Euro.
'@Merreborn: Suppose an individual is living "off the currency grid" so to speak, ie. not using or owning any form of gov't fiat currency. How does the gov't expect him/her to pay the appropriate taxes on any exchanges he makes if he decides to file one of those Form 1099-B things? The gov't will only accept the currency they back I assume and not whatever goods the individual is moving/producing. So Is it fair to expect the individual to go out of his way to trade his goods for currency in the particular amount he owes according to the Form 1099-B even if he doesn't use that currency (or any fiat currency) for his normal business transactions?
you should look into Ithaca Hours, which is an existing currency like you described.
http://www.ithacahours.org/
note that there is a fixed exchange rate to the dollar, so, just between you and me, i'm not exactly sure what it accomplishes. But, may be worth looking at. if you haven't already.
Woah, thanks for the post. I make Tipjoy, and have loved BoingBoing for years.
Alternative virtual currencies are a pretty popular topic in the geeky libertarian circles I operate in.
Tipjoy's fee structure is a lot like cash too, where we take a cut only when the money leaves our system, not per transaction. That's analogous to fees in exchanging currencies.
We power payments over twitter too, which adds a cool mobile component that would be needed for CraigBucks. After you link up your Twitter account to Tipjoy, just tweet something like "p $2 @ev" to send $2.
Ohh, and we have an API to let anyone build something like CraigBucks on top of us.
Forgot the link to our API: http://tipjoy.com/api
We're having an API contest right now, actually: http://tipjoy.com/APIcontest
What's the conversion rate for NewMarks to Linden Dollars?
I think it's a great idea when you can look into the eyes of the people you're trading with.
The problem I see with connecting such a system to the internet is the ease with which people can game this system.
I create lots of dummy accounts and one receiver account. I put each dummy account into debt as far as they can go, giving all my Kongbucks to my receiver account, then I abandon the dummy accounts. If I set up a script to automate this, I don't even have to deal with the tedium of doing this manually.
Forgive me if you've addressed such a problem elsewhere, but since it's still a continuing problem in reputation and social networking systems, I assume it's not a solved problem.
Of course, you could require all kinds of scary personal information as proof that I'm a real person, if you think people would be willing to divulge it. I probably wouldn't be.
This is slightly unrelated, but I just released this a couple days ago and it may be useful to anyone working with this project:
Our free/open craigslist monitoring library makes it very easy to scrape craigslist and monitor auctions by email. I recommend anyone in here check it out if they know a little ruby, or want to to work with craigslist in an automated fashion.
The IRS would be all over that in a heartbeat.
The IRS wants a world where everyone files a W2. If the system is set up to punish bog-standard business people who file 1099s, the reaction to barter income will be draconian.
I haven't noticed anything addressing the problems that were brought up last time you posted this.
Who do the servers belong to? How do we know they will stay online? How can we be sure the database admins aren't able to create more money?
Sure, the database can be distributed, but they can still be simultaneously hit with DOS attacks. Do I trust Craigslist to stay online more than I trust the US Government to remain?
How does new money enter the system? It sounds like it's essentially directly proportional to the number of users. You say that I can go into "debt" as I start out, and then there comes a point at which I can no longer go into debt, but this is logically identical to just giving every new user 100 new NewMarks, and preventing them from going under zero.
With this system, you are first of all subject to the gaming of the system that trebonius suggests -- just create a bunch of fake users (they need not even be fake -- get a munch of real users from China, who would never use the system themselves, to sign up for you).
You also have a fundamental problem that wealth doesn't simply increase proportionally with people. If I am at the poverty line and I have six children, I don't suddenly have six times as muh money to take care of them. Instead I go broke because I can't take care of them.
I think that the big problem here is that we imagine this whole system working for little, play stuff, like a new Tipjoy, where the fact that the system can be gamed and doesn't really make sense when scaled is not so important, and then just image that you can scale up from there to a serious currency. You can't -- the two are really different.
You rock out, Ivan!
Yes, what we are talking about is actual electronic commerce. I can't wait to game the system.
It would be interesting to mashup both microloans and stock markets. It would be interesting to see.
This may be a good way to track labor, in lieu of membership fees for hackerspace groups, like ours in Pittsburgh ( http://www.hackpittsburgh.org ) -- I'll have to bring this up at our next meeting, and after I pay my membership dues via paypal.
How about Tipjoy and Bounties for Getting Things Done.
I want a macro recorder feature in the GIMP, I put up a page detailing the request, some folk tipjoy into the Bouny pot and other folk propose themselves for the job and are voted on like digg or reddit and once someone has enough votes they get the job (perhaps job sharing coallition negotions would take place amongst the board leaders).
P.S. I live in the UK and I want to vote PIRATE PARTY in the upcoming European elections - I hope everyone else in Europe will and the pirates will win.
Have a look at http://currencies.twollars.com does exactly what you're looking for. Allow you to create your own currency (LETS or Balance based) on Twitter.
Anonymous @5, it might not be fair, but that won't stop the government from demanding it. That was one of the issues behind Shay's Rebellion in 1786.
@5: No, there aren't special rules for people who claim to be living "off the currency grid" (whatever that means) (*). They have to pay taxes just like everyone else. If you're just trading small amounts of monopoly money with your friends for fun, you can probably get ignored for awhile, but they won't ignore you forever. Case in point: Second Life.
(*) Though there *are* special rules for foreign income in currencies which cannot be converted into US Dollars (blocked currencies). If you cannot physically convert your income into USD to pay tax, they let you report it now, and pay later. Even for this there's an exception: taxes on Fulbright grants can be paid in the blocked currency. See Pub 54. Aren't tax codes fun? They're written by people who really did think of everything, and get continually tested by people hoping for a loophole.
The largest alternate currencies are, of course, frequent flyer miles, which represent billions of dollars of value. I did a lot of research into the history of alternate currencies - going back to greenstamps, when I was working on creating something called "karmacash" - a chit based system to allow exchange between non-profits. Drop me an email and I'll tell you more. No sense reinventing the wheel.
Having participated in a barter club/organization/scheme for a while back in the 80s that was called BXI, I have some experiences that may help save reinventing the mistakes.
As a beginning computer consultant, BXI seemed like a great match for me; I had an easy way to trade for BXI credits during any slow times, and I had zero cost of goods.
The problem came trying to use the credits. Merchants producing tangible goods, reselling goods, and often even service organizations with other employees had short lifetimes in the organization because they were quickly overwhelmed by people like me who had a large amount of spare credit. They figured out fast that the hard cost in dollars for their goods or employees was never equalled by the greatly reduced purchasing power in trade credits they received in return.
Why? BXI took a cash cut on every transaction - they had to in order to stay alive. And while this effectively devalued their credits with every transation, this was a minor problem.
Part of it was that everyone in the system ended up charging their full rate, or often times well over their dollar-based rate to cover for the cash loss and the fact that they'd have a radically limited market for their goods. That ended up being a huge reduction in purchasing power -- at least for people like me who never pay full retail.
For some businesspeople it made sense -- lone wolf consultants, businesses with extremely high margins and/or a great deal of spare capacity. For example, a good friend of mine ran a chain of video rental stores and did well enough from it, although he once remarked to me how hard it was to get rid of the trade scrip saying, "there's only so many times you can visit a dentist." He had tens of thousands of dollars in trade scrip that he couldn't find a use for.
And as it turned out, dentists tended to do quite well. Masseuses less so. Once in a while a restaurant would come up, but they'd be swarmed by credit-holding members and most of them, within a week or a month be refusing scrip.
But most other businesses did poorly. It was impossible to find a contractor, many businesses who signed up had low grade or even shoddy products (but sold them at high grade prices), and many treated credit-holders as second-class customers. I personally ran into a few shady characters, but hey, that's probably me.
BXI only worked for me for a short amount of time. Quite soon I had too much business to handle and was hiring people. It didn't take long for me to drop out of the system after that -- given a choice of dollars or credits, dollars won out every single time. It didn't bug me to pay taxes in cash or the extra cash to BXI for transactions; it was the lack of available services that killed it for me.
In the final calculation I probably came out slightly ahead of even. But I'd never do it again. None of the schemes I've ever heard of, including this one, are able to overcome the fundamental reality: we don't need an alternative currency. As much as I dislike aspects of the system we have, all of the barter systems I've ever heard of only seem to add things I dislike even more without solving any of the problems we really ought to be solving.
I'm much more interested in microloans, interest rate caps on all forms of loans, greater financial education to all.
Moving away from the dollar grid is a great idea, but instead of resorting to alternative currencies, I think a better, simpler, more direct approach -- and one that is beyond the jurisdiction of the SEC and IRS -- would be to reduce the sway that economic incentives have over our lives in the first place.
I tend to be pretty cynical about 'human nature', but in a world where everyone hates their boring stupid pointless evil jobs, take a look at Linux, where people write code for fun, fame and kudos, just for the joy of doing it! Isn't this what life should be about? Or look at the how-to videos on Youtube, where people share their expertise for free. Or look at barn-raisings, or brush-clearings, or trash pickups -- as long as you're not doing it 24/7, that shit is fun, people! Or say you're having a cookout: in effect you're a short order chef who's not getting paid, and yet no-one has a problem with that. It's a day out. You don't need to get paid either in USD or galactic credits, and you don't need an HR Block accountant or a LETS bookkeeper to make a note every time you put another BBQ-ed rib on someone's plate.
Anyway, in the spirit of the previous debt/koan thread, here are some bumper stickers:
Less career, more life.
Use less money. Use more humanity.
Don't do stuff for money. Do it because you want to.
If you need to incentivize it, you're doing it wrong.
You can't buy neighborliness.
Spend more time with the people and things you love.
Economic necessity is an illusion.
You have nothing to lose but your mindset.
Watch TV? I don't think so.
What would your 14-year-old self do?
Treat others as people, not economic units.
I'm not a consumer, I'm a person.
Economics isn't science, but it sure is dismal.
Yeah, I was thinking about pure "favor" networks before I was turned on to alternative currencies. And before that, I was thinking about communities and friends.
Sometimes, the application of complementary currencies appears to promote social relationships in towns, though.
There are plenty of people who can address the admin/hacker/security issues, though. I'll bring some of them over.
I think the critical distinction for me is not that you'd do someone a favor because you're both part of a favor network, or that you're building up credits or karmic brownie points or other external incentivized reward, but just because it's a neighborly thing to do. I think the mistake is to try to put neighborliness on a formal 'economic' basis. I think if you try to impose fairness, you just end up with an arms race.
Which is not to say that complementary currency schemes won't promote social relationships -- I'm sure they often do. But wouldn't a cook-out or barn-raising or little league or an excursion into amateur dramatics achieve the same community building function a lot more directly with a lot less headache?
So Douglas, let me ask you: what persuaded you to move on past the 'communities and friends' approach?
TipJoy is useful as a payment system. The example on the TipJoy site explains it well: "p $30 @whoever thanks for spotting me last night! Great catching up with you!" (a tweet).
So I forget my wallet. Someone agrees to spot me some cash at the bar. I can then demonstrate to them that I've "transferred" money to them (In reality you have the ability to cancel any TipJoy transaction before you settle with them - essentially the TipJoy notation on twitter is just a MARKER - I WILL give you this money when I pay TipJoy for all the markers I've issued - THAT'S a problem because I could say "p $25 @rushkoff Now send me your new book!" and he'd send it and I'd never settle with TipJoy.
Frankly, I think TipJoy is interesting as an alternative paypal. If it were tied to a credit/debit card and AUTO-settled, no cancellations possible or required a dispute system or SOMETHING - then it would be genuinely useful.
Until then I'll just use m.paypal.com.
Tipjoy looks very nice. Douglas's concept to, "...take everything that works so well about transparent, local currencies and apply them to non-local communities with shared values." is great, this is the future of value transfer. The only issue I see is size. Local community currencies and LETs work great for small communities, if you expand to say 'nationwide' you lose that personal connection with the person you trade with... If you are trading with someone who lives 35 miles away and that you see once a week at the meetup, you are not likely to benefit from 'gaming' the system and stealing credit. A network of these local systems could be linked up on a statewide or national basis, provided the units or backing of units is identical like silver ounces. Assuming the local community maintains the integrity of it's own system and users, there is no reason, Seattle 'Stars' can't be traded for San Diego 'sandollars' is the size of the unit is equal.
The best online software I've seen for creating your own currency is www.trubanc.com or loom.cc With both of these, the user creates his own units of currency, backed by nothing or some value like gold which makes the other users accept it better. These are OS programs anyone can set up and begin using, if you as a participant want to accept another users currency, you do so on faith knowing that user's history and performance. Don't like the issuer, don't accept his currency. In these cases, the servers can be hosted anywhere, the software is free OS, the only person who can create currency is the issuer, and you are the issuer of your own currency. No personal info is used (EVER) the folders which hold the currency have either numbers or nicknames. No value is issued for free so there is no 'debt' on any accounts.
Mark
editor@dgcmagazine.com
Skype IM digitalcurrency
please excuse the length... I guess it's been brewing for a while...
Annette Loudon from Sydney LETS here.
http://www.auslets.org/sydney/
We trade online using the Community Exchange System - http://www.ces.org.za/ It was written by some nice South African guys, and free to use, though we've started pitching in Operas to help with maintenance. There are currently 134 systems around the world using this system.
Sydney LETS is growing fast. We have about 400 members, about 100 actively trading. Only 3000-4000 Operas being traded a month at the moment (which may be more like 6000-10000 if we traded services at market rates rather than 20 Operas/hr).
[ g a m i n g / l e e c h i n g ]
In regards to the gaming concerns - Sydney has a policy of unlimited +/- balance which leaves it open to abuse. We haven't had much problem with this, but we see it being a potential problem as we grow, so we're working on systems to make sure that we're not vulnerable to gamers and leeches.
One of our core values is that contribution is essential, so we're teasing this out into a policy/system at the moment. Basically if you're taking and have never given, or taking a lot and giving very little, you're on our radar, and if you're a scammer, we'll cut you off. We haven't put numbers and timeframes on it yet, but should do so in the next 6 months or so.
The system Doug's proposing is a lot larger and geographically dispersed, more likely to attract some naughty/greedy folks. So some ideas I've been tossing around are...
- e-bay style feedback
- automatic user rating (ratio of buying to spending) + time on system shown on all posts
- trading with a high ranking leech brings your rating down
- spending cap that grows in proportion to your earnings, maybe going unlimited after a certain length of time + earning
- earn a certain amount before being allowed to spend (not really in the spirit of things)
- members have to be referred by an existing member + referring member takes a hit if that member they invited misbehaves (slow + harsh)
I'm quite happy to pay "income tax" on units of barter. I still *have* available work hours. What I don't have is a *job*. I can still collect unemployment for a while, trade my labor for something of value, an UI will be fine with it because I'm not earning actual money.
Sigh me up. Need someone to exchange labor for NewMarks in NYC? I'm in. I'm also happy to trade objects for NewMarks.
JJASPER - yeah, it seems like it could be a good way to get people working again. stupid to have people sitting around, getting broke, just because Federal currency is going through a scarce phase.
We haven't quite worked out how Australian social security views LETS. But even if they've previously considered Operas to be assessable income I reckon they might be more prone to relaxing their policy under the current circumstances.
Douglas Rushkoff wrote:
"I came across TipJoy, a pretty robust little system through which people can pay each other "tips" via the net, or even Twitter. Tie the TipJoy system to an alternative currency database instead of dollars, and the system should be able to work. The more transparent it is, the more people will be able to determine just what the unit of currency is worth to everyone else.
Jct: Difficulty determining what the unit of currnecy is worth to everyone else? Not when you're on the Time Standard of Money and everyone knows it's 6 Greenpounds/hour in UK, 60 Greenfranks/hour in France, 20 GreenMarks/Hour in Germany, $12 Greendollars/Hour in Canada, $10 Greendollars per Ithaca Hour in the U.S
Has Mr. Rushkoff not seen the easiest understood common human denominator? Is he still hung up on the problem of trying to determine what the unit of currency is worth?
The whole world knows what a neighbor's Hour is worth already.
In terms of avoiding the gaming of a LETS, have you checked out Ripple?
http://ripple.sourceforge.net/
oooh... Ripple looks extremely interesting!!
I'm always looking for simple systematic ways to minimise potential for abuse of our LETS system.
it's hard to come up with ways that doesn't require too much effort or rule making by the central org. but sounds like ripple may be the answer.
thanks for the tip anon
The problem I see with connecting such a system to the internet is the ease with which people can game this system. I create lots of dummy accounts and one receiver account. I put each dummy account into debt as far as they can go, giving all my Kongbucks to my receiver account, then I abandon the dummy accounts.
Jct: This has never happened in a LETS but since it's so easy, why not?
So, we look at Trebonius' account and see a whole bunch of inputs from dummies no one knows. John Q set up a dummy account, transfered money to Trebonius and then disappeared. Then Fred R sets up a dummy, transfers money to Trebonius and then disappeared. Jerry S does the same.
Of course, Trebonius notes that he worked 4 Hours for John Q. helping him move. He notes he worked 8 Hours for Fred R. doing gardening (at no address"?). He notes Jerry S. worked for 1 Hour driving him around. All this is open for inspection on Trebonius' account for all to see.
Gee, I wonder why no one ever tried gaming an open information system. Might be because it can't be done.
"Who do the servers belong to? How do we know they will stay online? How can we be sure the database admins aren't able to create more money?"
Jct: It's like saying: How can we be sure that that banker at our local poker game doesn't creat more chips for himself. I guess we can't. So how come no banker has ever taken out more chips from the box than cash he put in? Could it be that everyone can see what's going on and in an open information network, where are you going to hide your loot?
"This may be a good way to track labor, in lieu of membership fees for hackerspace groups, like ours in Pittsburgh http://www.hackpittsburgh.org - I'll have to bring this up at our next meeting, and after I pay my membership dues via paypal."
Jct: Bingo. That's what Local Employment-Trading Software is for, trading employment locally, and not internationally. Good luck explaining it to the less insightful.
"Why? BXI took a cash cut on every transaction - they had to in order to stay alive. And while this effectively devalued their credits with every transation, this was a minor problem."
Jct: That's why LETS is so much better. Rather than have to chase everyone for a % of every tran saction, LETS collects a service charge on a yearly basis and has no reason to have to watch over all transactions.
"You don't need to get paid either in USD or galactic credits, and you don't need an HR Block accountant or a LETS bookkeeper to make a note every time you put another BBQ-ed rib on someone's plate."
Jct: They have found that crediting volunteers with their time so they can call on those credits later promote more volunteer hours. You may think you don't need a LETS bookkeeper to give people their due but most people don't stay happy working for nothing all their lives.
"So Douglas, let me ask you: what persuaded you to move on past the 'communities and friends' approach?"
Jct: Perhaps the fact the "communities and friends approach" is so tiny an effort that it barely counts. Why move to a stronger platform when you can ineffective as usual.
"if you expand to say 'nationwide' you lose that personal connection with the person you trade with..."
Jct: How does the fact you can use your VISA anywehre hamper your using it locally. I've been fighting this silly notion for years, people who love the security their local network is giving them and fearing linking to the larger database of traders will somehow get them to stop trading with their local connections?
If using VISA locally were harder because VISA can be used internationally, they wouldn't offer both.
"A network of these local systems could be linked up on a statewide or national basis, provided the units or backing of units is identical like silver ounces."
Jct: Or Hours of time. How many poor people do you think have any spare ounces of silver? How many poor people have any spare time?
"backed by nothing or some value like gold"
Jct: Backed by your neighbor's time is a lot better than backed by gold.
"We haven't quite worked out how Australian social security views LETS. But even if they've previously considered Operas to be assessable income I reckon they might be more prone to relaxing their policy under the current circumstances."
Jct: See my report on Maggie Deahm's Speech to Australia Parliament dealing with the "Deahm Amendment" to the Social Security Act passed in the Australian Federal Parliament in March
1995 at http://johnturmel.com/endeahm.htm