Written in response to a proposal re: the transition group’s “Peoples Energy Charter”
Communications with DCENR with the launch of the Green Paper on Energy Policy in Ireland
And in summary of a talk delivered at the Young Friends of the Earth Ireland meeting in Carlow last September 27th 2014.

Re: an energy charter that is for and of the people, I want to present here a number of details that might help with understanding a bit of the layout of the push for centralized renewable utilities in contrast to the strategy necessary to developing community cooperative renewable energy.

Policy is important, and with that in mind I would advise to keenly keep an eye on the Friends of the Earth Ireland’s work on new policy recommendations for renewable energy that involve the community. This involvement of the community may or may not be authentic. Friends of the Earth are also good friends of the Green Party in Ireland, as elsewhere, and it should be noted that the Irish party leader Eamonn Ryan is a member/adviser/associate of the green investment group E3G (http://www.e3g.org/showcase/green-investment-bank/), an investment body for large scale centralized renewable energy projects. I suspect that the measures for community involvement may yet be piecemeal rather than authentic, where I would see ‘authentic’ as being an investment in Community Owned RE, with the initial investment made in such a way as pays a fair dividend and contains a buyout period after the initial investment where the community become owners of the infrastructure created. This follows as a materially applicable version of the Business Source commercial OS software model in terms of national and natural resources.

In addition to this, I want to point out the movement that is being made by the P2P global community, whereby licensing is being created (e.g: the Commons Based Reciprocity License) which enables the production of knowledge, research, and design commons, is producing a natural alignment of the commons and cooperative models. The result of this convergence is Open Cooperativism – and the open cooperative has a number of defining characteristics that distinguish it from the traditional, and steadily liberal cooperative form.

An open cooperative is a different model than that which we are used to.
*New/Open Cooperatives must work for the common good, a requirement that must be included in their own statutes and governance documents.
*New/Open Cooperatives must (co-)produce commons.
*New/Open Cooperatives must include all stakeholders in their management. Coops need to be multi-stakeholder governed.
*Finally we must address the issue of global social and political power. Following the lead of David de Ugarte and the lasindias.net global cooperative, we propose the creation of global phyles. A phyle is a global business-ecosystem that sustains commons and their community of contributors.

It is a global response of local character working with the maxim: “If its light its global, if its heavy its local” implying that knowledge, research, design etc, which are ‘light’, constitute a global commons protected by reciprocity license. Manufacture, production, cultivation etc, which are ‘heavy’ are done locally. The wider network mutualize needs through participatory mechanisms like ‘open book accounting’ forming a globally connective, but locally autonomous network.

Within these local nodes, commons based physical production as well as contributory/participatory labor/exchange systems are accounted for via localized analog systems interfacing digitally with the global. This means that people can live in the context of enforced austerity, be ‘cash-poor’, but be rich in terms of local services and opportunity, while establishing networks of communication, supply and exchange spanning the globe.

How does this model work with Open Community Cooperative Energy? Here scale is important. We see, through the process of countless local coops emerging around the EU, that localization diminishes costs and significantly raises the quality of life and health in the communities where it is most active and variegated. (the liberalisation of agricultural cooperatives in Ireland from 1950-1980+ is a clear example of the failings of single function models and the necessity for variety and participant-producer ownership and governance) The adherence here is to ‘distributed models’, – with ‘distributed’ as in ‘systems’, not as in ‘transport’,- but not yet to ‘coordinated distributed systems’, which is where we need to go.

The connection between Open Source as applied, in order, to research, design, distributed production, and application as per open cooperativism, has been little investigated in relation to Renewable Energy. There is a naturally emergent alignment between this step by step process and the development of community cooperative energy such that we can thoroughly avoid the mistake of currently advancing centralized RE utilities.

How does this work?

To understand the emergent model it helps to contrast with the old model. To summarize: Oil is extractive by character, it is based on extractive processes both materially and by intent. In turn it generates more practices following that same logic of extraction. The ensuing development of capital, coming from oil extraction and what it enabled, was protected and enshrined by ‘intellectual property’ rights, copyright, and patent-protection. Today we see a transition, and one definitive characteristic within this transition is the shift from this model of extraction, IP, copyright, and patent protection to its inverse, generative mutualisation, OS, copyleft, and commons based ‘reciprocity licensing’.

(to note: Commons-based ‘Reciprocity’ licensing is so based due to its implication that anyone contributing to the commons can use the commons, even for commercial purposes, but those not contributing to the commons must pay via the license agreement.)

To continue with the principle of transition above we can note a recent story in the media that attracted a lot of attention regarding the status-symbol par excellence of the era of capital, the (formerly) oil guzzling automobile. Two months or so ago, Elon Musk, the CEO of Tesla Motors, the worlds leading electric car manufacturer, Open Sourced all of its patents and research. Within three days Mercedes, BMW, and Volkswagen signed up to the program. This story encapsulates the initial stages of the transition in terms we can clearly understand: “the shift from this model of extraction, IP, copyright, and patent protection to its inverse, generative mutualisation, OS, copyleft”
– but whats missing? –
The creation and protection of a commons that is horizontal and respects the collective rights of all beings.

And so how in practice has this model operated in terms of renewable energy in the old model and what does this ‘natural alignment’ imply in practice?

Well, in the academic research and development of renewable energy technology the universities put young ‘knowledge capital’ to work via highly specialized and technical application to the development of technologies already sold prior to even beginning research programs that form the body of the student’s masters program or doctoral work. I recently met a German RE technology student who was about to begin his masters in the technical institute in Berlin. His work involved the development of an atomic layer switch on solar panels such that they do not exceed a temperature limit beyond which they boil the water in the cistern, damaging both the heating system and eventually melting the panel itself. His masters program included a lead researcher and 5 students and the result was already patent protected with a buyer for the technology sourced prior to the program even beginning.

The question here is one of global context, given the urgency for change – who benefits? Not the students doing the work, nor the greater world but by a rent-model. It is rather the holder of the IP, who sells it, and the company to whom it is sold for development and concurrent sale as a product, who are the immediate benefactors of this marriage of academia, R&D, IP/Patent Protection and Commerce.

Research Gate (www.researchgate.net) is the largest global repository of fully Open Source scientific research on the web. Here scientists and researchers of all fields publish their research outside of journals, making them freely accessible to all. In the former case of the masters student, the student, who is really the primary producer of the value, has no rights to the value created. Due to their ‘specialization’ in their particular field they have no understanding of how to develop their research into a working model, and that model into a product, nor of how to get that product to its logical market. This is where the alignment of community cooperative energy with open research, open design, distributed manufacture, and open cooperativist application becomes clear.

In the new model, the creator of the research can protect their work with a reciprocity license. This gives them rights to the research as available in and to the commons. From here, if a private company want to develop this research for profit, the original creator must be remunerated as according with the terms of said license. Likewise, the open design community can access said research in the open source design of renewable energy devices which become a new constituent of the RE commons. From here distributed manufacture, using OS application of 3d printing, laser-cutting, CNC routing, machining, and for a site-specific example, open source print photo voltaic, can form the last step of localized production and application of Community(Open)Cooperative RE projects.

Value generation and distribution in terms of this process can be mapped, accounted for, and distributed accordingly with the use of models such as the OVN (Open Value Network) and the VAS (Value Accounting System) as in development by Sensorica in Montreal, and the cooperative economic structure can be innovated to include the participatory designation of ‘indivisible reserves’ by translocal participants of the emergent Open Cooperative Economy.

This allows communities worldwide to develop localized applications in areas inclusive of and beyond Renewable Energy. The creation of a Renewable Energy Commons of open research, open design, distributed manufacture, in league with community share release strategies to raise the local capital for community cooperative energy generation by these means – This – is a viable model, and a potential strategy for community cooperative renewable energy development. Not only this, this same model applies across the board in a variety of sectors.

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My friend Ronan McLoughlin was member 951 of home of poi back in 2003, a website dedicated to the global renaissance of the traditionally Maori art of swinging poi . Back then the ‘jedi’ move, the most difficult move that existed, was the ‘behind the back weave’. Today there are over 150,000 members of this website today, and in true networked learning tradition the art has complexified becoming a complex physico-structural kinetic artform of geometric shapes, translations, and spacio-temporal pattern. As the artform and community developed together a global supracultural community of practice emerged with festivals, learning events, shops, tour routes and key seasonal places around the world, as well as spin offs in jewelery, fashion, and so on.

I was a jedi back in 2003, these days, not so much. Ronan on the other hand has maintained his ‘jedi’ status, and ten years later is one of the ‘grandfathers’ of this collaborative and emergent supraculture.

Around 2007 Ronan invented ‘contact poi’, it was a simple innovation of the poi playing style based on the ball and strinng structure of the object, using rope, a 100mm contact juggling ball and a juggling club handle, that opened the range of possibility as to what could be done with the object. ‘Contact Poi’ refers to the influence from Michael Moschen’s innovation in ‘contact juggling that we now recognize as David Bowie’s hands in the Labyrynth. Because of Ronan’s position within the practice, his unique innovative skill with this object, and the influence he generates in that community by virtue of his creative process and general character, ‘Contact Poi’ became a thing.

The owner of one prominent European juggling prop manufacturing and distribution company, a maker and online seller of juggling props, was contacted by Ronan to talk about production of the object, and in a subsequent communication breakdown, this company continued to mass produce and sell the model with no benefit accrueing to Ronan whatsoever. Ronan is lovely, and this doesn’t bother him much, but it bothers me.

We started together in the practice of object manipulation back in university in Galway in 2003. We have been brethren since, most people confuse us for being brothers though we are not directly related at all. In this last 11 years I have watched him develop this artform, along with the community, a collaborative community, that built up around this process. I find it unfair and unjust that a specialised distributor should absorb the value created by this process and by this man, my friend, and artist, for something that he has created, and popularized by his influence, effort, and creativity.

Had I known about the peer production license in 2007 I would have suggested it to him, but even though I was familiar with the P2P movement, and with OS licenses such as the Creative Commons license, I did not fully understand the global context of production, value, and the workings of capital. Now that I understand this somewhat, the application in this case is clear.

Ronan lives in West Cork, at the moment he is renovating the ‘top-cottage’ and making nut butters, kombucha, and kefir, while attending a course on food production and getting to market in a nearby town and works two days a week at the family speciality food and wine shop The Lettercolm Kitchen Project in Clon. I wish for Ronan that he had had his efforts honoured by the application of the Peer Production License, as it fits the kind and heartful person that he is. Instead, others profit by his efforts, and he continues creating regardless. Making that which others eat and sustain themselves by. Hopefully he will have more luck with the nut butters and holy well water kombucha and kefir!

By writing this I intend to show a few things. First of all, this is a clear example of a case for the application of the Peer Production License among the global circus and flow arts community, and I would like folk to know that these tools are available to communities that self-organize. Secondly, I want to show the need to educate and disseminate materials in a way that makes the tools we are developing here in the networks of the P2P Foundation and through the collaborative economic communities – accessible to other supracultures those who could benefit from them.

For people in the Circus and Flow Arts Community wondering what the PPL is and how this relates here is a link to find out:

For circus and flow artists wondering what the PPL is and how to use it , follow this link :
http://p2pfoundation.net/Peer_Production_License

Watch Ronan at play in the video below and please make comment and conversation…

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The Capital/Income ratio in Europe, 1870/2010

The neoliberal ‘ethic’ and practice is fueling increasing economic inequality around the globe. We are seeing ‘economic divergence’ as policy design weighted by lobbies creating conditions for a society that is fundamentally divided into an upper percentile of “”have’s”, and the greater majority of labouring and suffering human beings.

How can ethical investors work with the Commons to create conditions for ‘convergence’, the condensation of the gap, and minimisation of socio-economic inequality?

Tailored investment funds can act to stem divergent increase in wealth inequality, acting rather as engines of convergence mobilised by a coherence between the ethical investment community and entrepreneurial coalitions working in partnership with the state according to the logic of the Commons.

In his recent work Capital in the Twenty First Century, Piketty shows that the current economic process of moving toward greater economic inequality, and ultimately economic divergence, is based on the on the fact that the current rate of return on capital increasingly exceeds national economic growth, currently by close to seven fold, a trend which is steadily intensifying. This sustains and compounds economic division with return on capital enriching the investment class, who increasingly capture resources and the means of production, creating a global context of an artificial scarcity that steadily actualises itself in real scarcity, as a result of the destructive effect of the process on the well being of both people and the planet.

To address this situation, I am proposing a new form of investment fund based directly on this observation. This fund creates a space for people, socio-environmental enterprise, the state, and private investors to work together for the enhancement of the common good. Its main ingredient is essential to the nature of the fund:

‘r = g’

The rate of return on capital investment being equal to, does not exceed the national rate of economic growth.

This ‘convergence strategy’ acts to counter increasingly divergent economic inequality. The architect Christopher Alexander, in his magnum opus ‘The Nature of Order’ noted that in creating something it is imperative to look at its particular scale, and to make sure that the new piece coherently reinforces the immediately smaller, and the immediately larger scales. With “r=g” the common well being increases proportionately to the return on capital, forming an ethical basis for a ‘Commons-Partner-State’ relationship.

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PLC is a project to create a range of domain specific languages (DSL), for the legal profession. These languages are designed to be easy to use, flexible, logically consistent, human readable, and machine readable. PLC stand for “pure legal code”.

“The project builds on top of existing low level open source code bases, and seeks to integrate these in a way in which non-technical professionals can design and implement their own legal constitutions using an easy to use English like syntax.

Initially we are focussing on designing languages for creating organisational structures (constitutions and member agreements), together with a range of voting options, and revenue sharing arrangements.

The languages themselves are being created by teams of programmers and legal professionals, with the aim of reducing the complexity and cost of creating custom legal agreements between parties. It is envisaged that these languages will be of use to a range of professional and causal users (legal and technical coders), enabling them to easily create and embed “legal apps” into clients web sites, or mobile devices.”

Discussion

“Over here at #LiquidLaw we are developing a technical basis for implementing Government as Platform, which we are calling PLC. PLC is a programming language for the legal profession, which can be applied to a range of constitutional arrangements that an organisation may seek to make. Programming in PLC will create both the legal and administrative frameworks for the organisation, and can be applied to social enterprises, private companies, and democratic organisations.

PLC is designed to be a programming language with a difference – it is social code. Social code is the ability to code for ambiguous or socially defined constructs using the familiar legal decision making techniques (juries, arbitration, judicial review, constitutional voting). Output can be taken from one socially defined process, and input into other functions written in PLC.

The language itself is envisaged as an evolving set of domain specific languages, which utilise agile development, to facilitate the creation of an evolving body of code, which is both programming language, legalese, and a well formed legal document, at the same time. It should have multiple representations in a similar fashion to the current Creative Common licenses: a legal code layer, a human readable layer, and a machine readable layer, but extends this to include more language relevant features.

In addition to the familiar three layer model of legal code, we seek to enable both lawyers, and lay people (programmers and system administrators) to code their own agreements through the use of an English like syntax, or visual programming tools. In other words we want to facilitate a form of legal mashup, that lay people can use to create their own custom organisational structures and arrangements.

The methodology is based around the concepts of literate programming, and Language Oriented programming, in order to create the doman specific languages that the end user can utilise to create tools for their communities. Finally there is another paradigm that we can borrow from that can help us picture how real world legal tools, can be created from this language: scaffolding and automatic web application creation.

The end result is the ability of the lay person to create the essential organisational infrastructure for their project, including the legal agreements and web/mobile applications that can help them administer the project in a legally robust fashion. Taken together with concepts such as open data, and application programming interfaces we have a flexible set of paradigms (and indeed in many cases actual implementations), for Government as Platform.”

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URL = http://www.openlabtools.org/

Description

“The OpenLabTools initiative aims to provide a forum and knowledge centre for the development of low cost and open access scientific tools, with an emphasis on undergraduate and graduate teaching and research. The programme will officially start in October 2013. In order to bootstrap this initiative, a number of MENG projects (4-5 per year) will be offered to establish the core components required for such tools; these include data acquisition, sensing, actuating, processing and 3D manufacturing. Protocols, designs and tutorials will be published on this website. These components will be subsequently combined to establish a documented collection of instruments, to be developed and maintained by a community of undergraduate and graduate students of the University.

We anticipate that the core tools will be rolled out in undergraduate laboratories from 2014 onwards. We would like to invite anybody interested in this programme to get in touch with us and explore ways to contribute, either by using the tools (once ready) or by supporting their development.

The programme benefits from the financial support of the University of Cambridge through the University’s Learning and Teaching Innovation Fund. The Raspberry Pi foundation has also generously supported the innitiative by funding five summer internships in 2013.”

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JOLOCOM develops the Social Dynamic Graph, which is the graphical interface for a mobile P2P Network application that connects People, Ideas, Projects, Skills, Places, Things & facilitates P2P ValueXchange.

“… the Social Dynamic Graph (SDG) helps You to create an agile and responsive network based upon the virtual design of living systems. The Social Dynamic Graph (SDG) brings you a new perspective and additional information beyond contemporary social communication and interaction about people, topics and there locality. That way You can integrate Your immediate and indirect environments faster and deeper then ever… You can use the Social Dynamic Graph on Your desktop-computer, tablet and smartphone to connect to concrete sustainable action scenarios in Your area of interest… from art, social business, nature or food to learning… and Doing it Together (DiT) with others.”

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A “food gleaning and supply-sharing program, called Cropmobster, spearheaded by Bloomfield’s General Manager Nick Papadopolous, has created simple and effective solutions to address food waste and hunger and increase farmer visibility in a decentralized, community-based way”. [1]

URL = http://www.cropmobster.com/

By Dani Burlison:

“It started in March,” says Papadopolous. “Standing in our vegetable cooler on a Sunday night it finally clicked that, wow, there is a lot of food left at the end of the week that should go to people.”

His response was to mobilize; to get this food away from the compost and onto tables. He began by posting deals on Facebook. He was honest about the situation, letting people know that they had excess food and that they’d love to get this food to people, as well as help cover some of their costs. On the first weekend, someone texted Papadopolous, “I’m in!” The second weekend, the same thing happened.

“Both of those times,” says Papadopolous, “it was people just like you: moms, parents, whoever, driving out the very next day for perfectly edible wonderful organic food and distributing it to their neighbors. Everyone got a really great deal, we recovered some of our costs, we got to meet some amazing people and build new friends in the community.”

Experiencing the quick and relatively simple benefits of his crowdsourcing solution, Papadopolous thought of the benefits local grocers, distributors and anyone with excess food could experience. He teamed up with a friend to build Cropmobster, an instant alert platform that anyone who has excess food can post to. Community members can also make posts asking for donations of plant starts for school or community gardens and even, in the case of several elders who have used Cropmobster, asking for donations of food or garden supplies for personal use. To date, Papadopolous says that anywhere from twenty to thirty school gardens have been planted with seedlings that would have otherwise gone to compost.

“All of these great groups are out there in our community doing awesome work,” he says. “But there is no community exchange or infrastructure to allow folks to communicate and to mobilize and use crowd-sourcing and decentralized systems to really tackle some of these problems.”

Past deals on Cropmobster have included gleanings of four acres of peaches; six acres of premium grapes; farmers selling ten bunches of basil for $1 each; restaurants and bakers offering truck loads of stale bread to pig farmers; and dozens of egg-laying hens finding new homes.

Based in Sonoma County, Cropmombster has reached beyond the county lines and in less than a year is now utilized by hunger-relief organizations, churches, farmers, ranchers, retailers and individuals in 11 northern California counties. It has caught the attention of local and national community leadership, too. From agriculture commissioners, farmer advocacy groups and people like Slipstream Strategy founder Tamsin Smith and Assistant Chief of Natural Resources Conservation Service James Gore, who both serve on the groups advisory committee, groups and individuals are watching closely and stepping in to help. One can hope that the concept can continue to spread to where it is needed the most.” (http://www.shareable.net/blog/cropmobster-connecting-the-dots-between-farms-food-waste-and-hunger)

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Massimo Menichinelli:

“The current concept of FABMoney is of a mutual credit currency, with demurrage (a time-based devaluation) for promoting transactions, and without interest for promoting collaboration instead of competition. Each transaction happens every time a user of a FabLab help another user, and therefore he/she receives one or more FABs (F). The online platform will map these transactions and rebuild a social network analysis of them, rendering these transactions as Open Data through Open API (probably it will be a REST system). In this way, we would reach two objectives:

• we would encourage a social collaboration inside the FabLabs, and outside of their buildings and all over the world, enabling new business initiatives;
• at the same time, we would map the social capital of the collaborations inside the FabLab community (through social network analysis), understanding both the economical and the social impact of FabLabs.

The project is still under development (there is only one Drupal module available, but maybe we can build it with Django for implementing social network analysis with NetworkX and a javascript library for visualization like D3, SigmaJS or CytoscapeJS), with its own website at fabmoney.org, and a mailing list for discussion here. If you are interested in the project, please join the mailing list and introduce yourself. The FABMoney project will succeed only if tested in more than one lab, and only if it will become a collaborative effort. We need to test it in different contexts to understand the best currency design features!

A further explanation: why not Bitcoin or one of its forks? Bitcoin has been the first great example of having a global p2p currency, but its implementation was focused mostly on its technical features and anonymity (which we have seen, through social network analysis, it’s not completely valid). The currency is not based on collaboration but on computing power, and therefore it is not suited for the goals of improving the social impact of FabLabs.

Why not LETS or similar existing systems? These are very good example, and we may probably learn and adopt a lot from them, but we need the currency to link all or most of the FabLabs, and we need to implement social network analysis and Open API at the same time, in order to give the community a map of its own self-organization.” (http://www.openp2pdesign.org/2013/economy/fabmoney-a-p2p-currency-for-collaboration-in-fablabs/)

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Emily Parker writes:

“Xinchejian, founded in 2010, means “new workshop.” It occupies a rented room in a Shanghai warehouse. Members pay around $16 a month to use the space and tools, and on Wednesday nights it is open to the public. The Taiwan-born David Li, a 40-year-old programmer and a co-founder of Xinchejian, wants to lower the barriers for experimentation and play. “It’s not about getting together a group of geeks doing something. It’s a conduit for people to say, ‘This interactive stuff is not that scary, not that difficult.'”

One of these tinkerers might develop the next groundbreaking technology, or at least that is the hope of Chinese policy makers. “Chinese industry has to change. It has to migrate to the next stage. Right now it’s purely contract-based. We execute what other people design,” says Benjamin Koo, an associate professor of industrial engineering at Beijing’s Tsinghua University. Others wonder why China doesn’t have more internationally celebrated brands or a homegrown innovator like Steve Jobs.

The Chinese government has taken an interest in the maker movement. Not long after Xinchejian opened its doors, Shanghai officials announced a plan to build 100 government-supported innovation houses. Last November, according to Mr. Li, the Communist Youth League of Shanghai helped to attract over 50,000 visitors to a Maker Carnival, where makers exhibited their creations to the public.

Officials have also visited Xinchejian, and for now, Mr. Li sees their involvement as a positive development. He notes that the lack of accountability in the Chinese political system sometimes encourages innovation and risk-taking. “The policy makers we meet here are genuinely very curious. They have the resources. They are not afraid to try,” he says. “They could build bridges to nowhere, and they will still have a job.”

But simply building more hackerspaces won’t transform China into an innovation hub. The country’s education system is widely criticized for its emphasis on the gaokao, or university entrance examination, which rewards rote learning. Mr. Li thinks the larger issue is China’s rapid development and the great pressure people feel to provide for their families. He says that some of the best hackers in Xinchejian are the “second-generation rich,” who are set for life and thus free to experiment.

Whatever the cause, many Chinese simply don’t have time for tinkering. Tsinghua University’s Mr. Koo, originally from Taiwan, described going to one of China’s top high schools and asking a group of some 400 people how many had enjoyed five minutes to themselves since childhood. “Nobody raised their hand,” he said.

Now he is trying to teach Tsinghua students the maker spirit, giving them opportunities to work with their hands. Mr. Koo’s classes are project-based, and “every team, starting from the first year, has to do something on their own.” He gets funding from the university for his students’ projects and for organizing maker events. “I will spend some departmental money to buy a box of toys so they can physically construct anything.” (http://online.wsj.com/article/SB10001424052702303722604579111253495145952.html)

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Hal Hodson:

Image: Peter Cade/Getty

“INSURANCE is an unfortunate fact of life. We pay large premiums to cover ourselves for bad events that often never happen. But there is another way. An online insurance firm called Peercover lets groups of people insure each other on their own terms and at a fraction of the cost.

Insurance is the latest financial service to get a shake-up from peer-to-peer (P2P) dynamics. Already, individuals can lend money for a return with interest. Similarly, people wanting to exchange currency can avoid banks and instead use P2P services to find other people looking to make the opposite trade.

“The changes in financial services that are happening now are happening more quickly and dramatically than anything we’ve seen over the last 100 years,” says Ron Suber of peer-to-peer loan company Prosper. “Peercover is a great example.”

P2P insurance is simpler and cheaper than mainstream methods. “People are paying profit and overhead to insurance firms when they pay premiums,” says Peercover co-founder Jared Mimms. Peercover groups don’t collect premiums. Instead, every individual in the group has a stake – each is both insurer and insuree. The group’s founder sets the initial conditions for that group, including what can be insured and the maximum value of an item. The payout for a claim is split between all members but is only made when the majority of the group approve the claim. The amount you pay out is directly proportional to the value of the goods you have insured, as calculated by Peercover’s algorithms. Someone insuring a $400 cellphone will pay a larger proportion of a member’s claim than someone who is insuring a $100 cellphone, for example. Members who fail to pay are ejected from the group and are no longer covered.

The reason all this is possible is, as with other P2P services, because of the rise of new ways to pay online. “The kind of insurance we’re interested in wasn’t possible a few years ago,” says Mimms. “It only became possible because of micropayments.”

Behind micropayments are breakthroughs such as the virtual currency Bitcoin and the payment network Ripple, which Peercover uses. Both charge an extremely small fee for processing a transaction compared with traditional models such as credit card companies, making payments as low as 20 cents feasible.

Initially, Peercover’s focus is on building groups to cover small things like cellphones, and what Mimms calls positive insurance. This is where a group pays out when a member reaches an agreed goal, such as giving up smoking. But he has grander visions too, such as health insurance, where large groups of Peercover users could negotiate preferential rates for treatment.

“The technology allows for the potential of collective bargaining in the negotiation of healthcare costs in which groups may band together to practise some of the bargaining techniques used by governments and traditional insurance behemoths,” Mimms says.

Ellen Carney, an insurance industry analyst with research firm Forrester, says Peercover points towards the future of insurance. “It’s very clever. This model is at the historical roots of so many insurance companies.”

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