Michael Linton, Open Money
Innovation in money is really quite rare. While the carrier (the medium) is increasingly digital, almost all the money itself (the message) is still massive and substantial in nature, a commodity supposed to carry value in itself - limited quantity, goes anywhere, issued by authorities - money 1.2, 1.3 maybe, but still money 1.n. It's still simply stuff. And definitely "their" money, not ours.
The value in a 1.n money is intended to be in the money itself, not in the users. That's how it works.
But consider the consequent patterns. Our income comes from anywhere, our spending goes anywhere. The "original" sources and "end" destinations are all well out of our reach and completely beyond our control. And this is true for all - people and organizations alike - we don't know where the money we spend is going, and we don't know where it's coming from. Most problematically, we don't know whether it's going to continue coming. These are the realities of markets confined to money 1.n. It is not healthy that we are all so driven. Fortunately there are other possibilities.
As with web 2.0, so money 2.0 is emergent from the context of information systems. Money 2.0 is information, not mass or commodity. It measures, it moves and it is a social agreement. Both as individuals and organizations, we can create our own community currencies with each other - monies that will circulate within our networks, communities, associations.
And it's only "with each other" that community currencies can work. The private currencies proposed by Hayek and corporate currencies like AirMiles (m$ & goo$ maybe?) are going to succeed and/or fail not so much on the status of the issuer, as on the quality of the community of users. The most productive forms will be those most compatible with the medium, and the needs and purposes of the users will be much more important than those of the corporation.
The term "open money" applies to the field of opportunity for such community currencies, which will be realised / expressed in forms of socio-economic neo-tribalism.
Money cultures and technologies will co-evolve more rapidly beside and beyond the established structures than within them. Mobile technologies for money - MPESA, OBOPAY for instance - are establishing in the developing world where landlines and conventional banking are unrealistic. Before any such systems were released for "real" money between "real" users and "real" bank accounts, you can be sure they were tested on virtual users and virtual banks, and moved virtual money. Systems that can support "real" money can readily support other currencies in parallel - how long before we have chips with everything?
The ability to move discrete currencies through the supply chain will have many applications. It will for instance make agreements - such as that between Burger King and Florida tomato pickers for a retail price hike to pass through to the farmgate - much easier to implement and monitor, to "follow the money" and make sure it indeed goes where it is intended. Virtual currencies can also track the accumulation of carbon and other environmental costs, as in the BT Carbon Disclosure project and recent developments in product labelling in Japan and will likely provide the infrastructure for such urgent initiatives as TEQS.
From theory and projection to the matter of practical demonstration. The community way program (youtube video) - is a general application intended to not only do what it does - raise funds for community needs - but also act as ignition for local / regional open money development collaborations. It is designed for anywhere with a population over 100,000 (or less), for anyone with access to internet (direct or indirect), anytime they're ready (almost). All parts are well tested and the whole has been verified under adverse conditions, occasionally and briefly.
Until very recently, we could not provide on-line multi-currency accounting support to remote communities - local independent services and operations were required, with varieties of complications. And, until such independent networks can be linked, the benefits of applications like community way programs are mainly available to smaller businesses operating in single markets, as larger corporations are active in widely distributed markets.
However, recent open money systems and software development now provide for global networks, and so open many possibilities for major corporations. If time allows I will speak briefly about some of these, and particularly about community development funding models that bring the ethics and purposes of microcredit to the context of money 2.0.
About the author
Michael Linton, not formally educated as an economist, has been active in the development and implementation of virtual money systems since 1982 - LETSystems and related tools in particular.