In this concept note, prepared as background for our article for the World Economic Forum, we explain how approaches to blockchain and cryptocurrency need to be grounded in a clear appreciation of the relationship between technology and society. That clarity is important not just for discussions on blockchains and cryptocurrencies, but for all software technology, as it becomes so powerful in our lives. We will therefore develop a lens, called “integral technology,” to assess the positive and negative aspects of any technology and apply this to recent innovation on the field of distributed ledgers.

Deepmind’s AI interpretation of Escher’s famous hands

When we hear people comment on blockchain and cryptographic currency being good or bad, we are often hearing different assumptions about the relationship between technology and society. So first, let us review the various ways that people look at that. The Oxford English dictionary defines technology as “The application of scientific knowledge for practical purposes…” That is different to how the word is typically used to refer to the “artefacts” – or things – of technology, such as the arrow head, the mobile handset, blockchain, or nuclear missile. By describing both “application” and “practical purposes” the dictionary suggests that technology is best understood as a system of intentions and outcomes. That system involves people, knowledge, contexts and the transformations that are involved in creating those artefacts. These are what we identify as the five aspects of any technological system, which is what we will mean when we refer to a technology in this concept note. The power of this systems perspective on technology is that it invites us to consider further the wider context of politics, financing, iterative redesign processes, the side effects and finally the values that shape technologies. Which is what we will do now.

Is Technology Something to Love or Fear?

We humans attach a great deal of importance to technology because it seems to be able to meet many of our needs and desires. It brings aspects of our imagination into physical reality in ways that then reshape our lives and what we might imagine next. This utility of technology makes selling it very possible, but also means there is less emphasis given to the costs and consequences of those desires being met in those ways.

Given its centrality in civilisation, a range of perspectives on our relationship to technology have arisen.Some optimists believe any negative consequences are worth the benefit, and that the march of technology is synonymous with the march of human progress. This view is called “technological optimism”. Others believe that technology takes humans further from their natural state, isolating them from the world, and causing numerous new problems which often require further technological solutions. These “technological pessimists” can point to a range of dangerous situations such as nuclear waste, climate change and antibiotic resistance, to then question the hubris that humanity may have exhibited in thinking our technology meant we can exert influence on nature without an eventual response of equivalent impact on ourselves. The German philosopher Martin Heidegger argued that modern technologies have a quality of seeking to dominate nature rather than work with it, in ways that stem from – and contribute to – the illusion that humans are separate agents acting on nature.

Some of these optimists and pessimists don’t think that we humans have much influence on what is happening. Such “technological determinism” is the view that technology can be understood as having a logic of its own and develops as an unfolding of consciousness in ways that we, our entrepreneurs or our politicians, will not, in principle, control. Current debates about the merits or risks of blockchains and cryptocurrencies often echo these perspectives. Some argue it will change, or even save, the world. Others argue that it will collapse the financial basis of our nation states. Still others argue that whatever our view, it IS the future – as if it cannot be stopped.

Counter-posed to these views on technology has been the “technological neutralist” view which suggests that technology is neither inherently good or bad for humanity and therefore needs responsible management to maximise its intended benefits and minimise its unintended drawbacks. That view is the most widespread in the field of Science, Technology and Society (STS) studies. Sociologists have revealed as pure fiction the apolitical view of technology development as flowing from basic science, to applied science, development, and commercialization.  Instead, a variety of relevant stakeholder groups compete to influence a new technology and they determine how it becomes stabilised as an element of society.

Therefore, despite the pervasiveness of “great man” stories in our culture, technological innovation is not the result of heroes introducing new ‘technologies’ and release them into ‘society,’ starting a series of (un)expected impacts. Rather, innovation is a complex process of “co-construction” in which technology and society, to the degree that they could even be conceived separately of one another, negotiate the role of new technological artefacts, alter technology through resistance, and construct social and technological concepts and practices.

We share this perspective on technology. It invites us to see how innovation is a social process that we can choose to engage in to achieve public goals. We are not, however, “technology neutralists”, for a few reasons. First, we do not believe that all technologies have the same level of negative or positive potential prior to their human control. That is because all kinds of different phenomena exist under the one banner “technology”. For instance, while nuclear fission constantly produces poisons which require millennia of custody, smart decision-making algorithms only impact the world insofar as their decisions are acted upon. Second, we do not assume humanity to be the autonomous agent in our relationship with technology. Rather, we are influenced by the technologies that shape the society we are born into. Canadian philosopher of technology, Professor Andrew Feenberg explains this situation as humans and technology existing in an entangled hierarchy. “Neither society nor technology can be understood in isolation from each other because neither has a stable identity or form” he explains.

For us, “technological constructivism” is the perspective that technology and society influence each other in complex ways that cannot be predicted and therefore require constant vigilance by representatives from all stakeholders who are directly and indirectly affected. The implication of this perspective for innovation in blockchain and cryptographic currencies is that the intentions of innovators and financiers are important to know and influence, and that wider stakeholder participation in shaping the direction and governance of the technology is essential. This is the approach that we base our view of developments in software in general and blockchains, in particular.

The Technological State of the World

Humanity faces many dilemmas today. Some of these are brought about by our technology, some are not, and we may hope many can be solved by a sensible use of technology in future. Climate change is the result of our rapid use of technologies to burn fossil fuels and tear up forests. Malnutrition is the result of a wide array of factors, which are difficult to blame on technology, though its persistence despite the “green revolution” would make technological optimism a questionable position today.

One field of technology which may be exceptional with regard to regulation and the lack of it is Artificial Intelligence (AI), which describes the ability of computers to perceive their environment and determine an appropriate course of action. Narrow forms of AI are already in use. They often confer a tremendous advantage to those who use it well, and its use by the victorious Trump campaign, and the victorious Leave campaign (of the Brexit referendum) are raising huge questions about the justice of using people’s own data to manipulate their voting intention. AI systems tend to be very complicated and sometimes produce unexpected results. But because they save labour, for example by automatically judging loan applications or driving vehicles, there is commercial pressure to simply accept the automated decisions to reduce the costs. As AI is applied to more and more areas of trade, finance, military and critical infrastructure, the risks and ethical questions proliferate.

There are more intense concerns being expressed recently about more general forms of AI that include capabilities for software to be self-authoring. That does not mean consciousness, nor mimicking consciousness, but that overtime the software could develop itself beyond our understanding or control. It could ‘escape’ from a laboratory setting, or within specific applications, and disrupt the world through all our internet-connected systems. Astro-physicist Stephen Hawking said “The development of full artificial intelligence could spell the end of the human race. Once humans develop artificial intelligence, it will take off on its own and redesign itself at an ever-increasing rate. Humans, who are limited by slow biological evolution, couldn’t compete and would be superseded.” Some even fear that, a rogue AI might only be disabled by killing the whole internet. Combined with the resilience of blockchains, which cannot be switched off at any one place, this possibility is a step closer. This potential existential danger invites a new seriousness about software regulation. But our concern in this concept note is more with the way machines in the service of powerful organisations are already shaping certain aspects of our lives with little accountability and that the field of AI is almost completely unregulated.

Introducing the Concept of Integral Technology

Given these problems, it is self-evident that humanity needs a better approach to technology. How might we frame that approach? Concepts of ethics, responsibility and sustainability have all been widely discussed in relation to technology. Given our systems view of technology, we find Integral Theory to provide a simple prompt for considering its implications for society. It invites us to question internal and external impacts of any system and its embeddedness in wider systems. We are going to propose that humanity needs to develop a more consciously integral approach to the development and implementation of technology. Key to this concept is that technologies need to be more internally and externally coherent. Internal coherence describes how their design does not undermine the intention for their creation. External coherence describes how their design does not undermine the social and political system that they depend upon and which holds technologies and their protagonists to account, as well as the wider environment upon which we all depend. As that social and political system would be undermined by increasing inequality, so the effects of technology on equality are important to its integral character.

To aid future discussion, here we outline six initial characteristics of such integral technologies.

1) Meaningful Purpose: The technology system is the result of people seeking to provide solutions to significant human needs and desires, rather than exploit people for personal gain. A positive example is the development of technologies for cataract operations that can be offered affordably for the poor. A negative example is the development of financial algorithms to front run stock market trading.
2) Stakeholder Accountability: A diversity of stakeholder opinions are solicited and used during technological development and implementation in an effort to avoid unexpected and negative externalities. A positive example is the cryptocurrency Faircoin for which everything is decided through an assembly; a negative example is bitcoin, in which computer mining stakeholders approve or veto new features based on their interests in maintaining power and profit.
3) Intended Safety: A technology does not cause harm when used in the intended ways, and those using it in unintended ways are made aware of known risks. A positive example is the indications and contra-indications on pharmaceutical labels; a negative example is when pesticides are marketed to be used just before the rice or grain harvesting to increase the yield, when that increases likelihood of toxic residues.
4) Optimal Availability: As much of the knowledge about the technology as safely possible is kept in the public domain, in order to reduce power differentials and maximise the benefits of the technology when other uses for the technology are found. A positive example is open source software which allows anyone with the right skills to deploy it for any purpose they choose; a negative example is the ingredients of cigarettes which are not published and make it harder for affected parties to build a case against the manufacturers.
5) Avoiding Externalities: The way in which the artefacts of the technology affect the world around them are considered at an early stage and actively addressed. A positive example is the design of products to use a circular flow of materials from the Earth and back to the Earth. A negative example is how addiction to computer games may be contributing to obesity in the young while the games companies continue to pursue similar goals.
6) Managing Externalities: Subsystems for mitigating known negative externalities are developed at the same time as the technology and launched alongside it. A positive example is the system of regulations that mandate regular physical inspections of aircraft. A negative example is government migrating social service administration to the internet and not ensuring the poorest have the computer access, skills and support they need to use the new system.

Integral Blockchain and Post-Blockchain Technologies

In the past year Bitcoin has been criticised for the huge amounts of energy it consumes to secure the blockchain. At the time of writing, some compare the consumption to that of Switzerland. Such consumption is not a necessary feature of securing blockchains, but the initial design choice of the inventor, with a system called “proof of work” being used to issue new digital tokens. Other systems like Ethereum also use “proof of work” and are similarly reliant on the computer-mining companies for whether this climate-toxic code is replaced. Sadly the “proof of work” systems of these leading technologies remain. Whereas some proponents of these technologies argue that they are not so environmentally bad, due to servers being located in cold places near renewable energy sources where energy is wasted, these are somewhat defensive post-hoc excuses. Clearly the environmental appropriateness of their code was not one of the design parameters in the minds of the designers.

In the case of Ethereum, the speculation in the price of Ether affects the price of Gas which is used to process transactions. That means that as the price balloons, the system loses its attractiveness for supporting activities that are high volume and low cost. It also transfers funds from the many who would use the system to the few who speculate on digital token value or own the computer-miners.

We contend that systems which are not internally coherent will eventually experience a disintegration of their intended or espoused purpose. In addition, systems which are not externally coherent will eventually experience a disintegration in their public support and their environmental basis. The situation with Bitcoin is probably unsolvable, and its carbon footprint may lead to significant regulator intervention in time. Ethereum has a wider set of aims and so despite the continual delays in moving substantially away from Proof of Work, it may still be able to address the barriers to progress presented by the short-term interests of those controlling the mining computers. However, there is no doubt that this form of governance-by-hash-power is currently an impediment to Ethereum becoming a more integral technology.

Given these difficulties, we would like to point out some lesser-known projects, which we regard as showing exemplary integral traits.

Providing the same smart contract functionality as Ethereum, the new Yetta blockchain is intended to be sustainable by design, with the low energy requirements of its codebase being moderated further by automated rewards for those nodes using renewable energy. It will also enable automated philanthropy to support the Sustainable Development Goals (SDGs).

Also dissatisfied with how both proof-of-work and proof-of-stake consensus algorithms reward those who already have the most, Faircoin developed a ‘proof-of-cooperation’ algorithm. More than that, there is an open assembly in which the price of the coin is determined every month. This also is an attempt to stabilise the price of the coin and deter speculators and the erratic price movements which arise from their profiteering. They hold that a medium of exchange is not supposed to be a vent from which value can be extracted from the economy.

One post-blockchain project, Holochain, is currently raising capital in an Initial Coin Offering (ICO). The communications team has made many criticisms of conventional blockchains. For example they have massive data redundancy built in, which causes such a problem for scaling that the original intention of these projects is now being compromised with such innovations as the Lightning networks. Another being that since blockchain tokens are assets without liabilities, they cannot have a stable value and thus constitute a poor medium of exchange. Holo tokens therefore are issued as liabilities, which means they have a purpose and a more stable value as long as the project lives.

“If someone tells you they’re building a “decentralized” system, and it runs a consensus algorithm configured to give the people with wealth or power more wealth and power, you may as well call bullshit and walk away. That is what nobody seems willing to see about blockchain.” – Art Brock

Another project called LocalPay, which we both work on, seeks to build a payment system for existing solidarity economy networks. Its protagonists believe that payments infrastructure is too critical and too political to be put only in the hands of monopolists and rent-seekers. Instead, infrastructure which is held in common, equally available to all, is the basis of a fairer society. They too, understand money as credit, with somebody always underwriting its value.

While none of these technologies is perfect, they are Integral Blockchains and post-Blockchains as they seek to be internally and externally coherent. The internal coherence of a Distributed Ledger Technology (DLT) means that the code and business model does not undermine the intention for their creation. External coherence of a DLT means that their code and business model does not undermine the social and political system that they depend upon and which holds the technologies and their protagonists to account, as well as the wider environmental system upon which we all depend. As that social and political system is undermined by increasing inequality, so the effect of a DLT on equality is important to its integral character. The four projects we highlighted all seek to integrate these considerations into their codebase and business model, rather than bolt on social or environmental considerations at a later time.

The Need for

Concerns about technology are growing. Warnings over unregulated nanotechnology and artificial intelligence are now widespread. Warnings about the socially and politically damaging effects of social media are growing. There’s a wider problem with how technology is financed and implemented in a free market system that means technology companies’ first duty is to deliver short term profits to shareholders. This means many technologies are developed in a hurry and much software is rushed to market before it is even finished. Many costs and negative impacts are hard to pin directly on the manufacturers, and thus sometimes nobody is accountable. The history of technology is one where resistance to development from society leads to stabilisation around control and access to technology. Recently we have had massive diffusion of new electronics such as the mobile phone and social media, while the systems for affected stakeholders to hold these technological systems to account do not yet exist in the ways they have done in other sectors.

The law is supposed to provide for unanticipated victims of technology and thus incentivise providers to take precautions. This clearly isn’t working nearly well enough perhaps because of the difficulty and expense of using the law and perhaps because some consequences are very hard to prove to the satisfaction of a jury. You may recall the decades of failing to prosecute tobacco companies because the link between cigarettes and lung cancer could not be proven easily. So if the law were better to favour the victims, then technology companies would do more to research and mitigate the secondary effects.

We will not be surprised if legal action will begin to be taken against platforms like Facebook on behalf of millions of claimants for a range of concerns. That might involve teenagers with clinical depression that has been correlated with social media usage, or relatives of those who then committed suicide. Companies like Facebook may point to their internal systems to address such risks, and whether that is sufficient may be debated in court sometime in the future. Such legal action may bankrupt some firms, or trigger changes. But to achieve a wider shift to more integral technologies there will need to be a shift in philosophy that the law alone will not be able to compel.

It is time for a new era of wisdom in the way we make and deploy our tools. A move from the knowledge of making things to the wisdom of making things – what we call an era of “technosophy”. In the field of digital technologies, this means the urgent development of new forms of deliberative governance, that uses both soft and hard forms of regulation. The forms that this will take need to be developed, but there are many examples from other sectors, where technical standards are agreed internationally and incorporate into national law. That would need to be done in ways that shape not stifle digital innovation, but also enable stakeholders to alert regulators to risk-laden projects, such as those using AI.

One idea might be to introduce a requirement that before software technologies can be deployed by large organisations (over 200 employees OR over 50 million USD turnover, with subsidiaries analysed as part of their parent companies), the software needs to be certified by an independent agency as not presenting a risk to the public. Such certifications could be based on new multi-stakeholder standards that would establish management systems for responsible software development. Any change of the software code that would be deployed by a large firm would need to be notified to the certifier of the underlying software before release, with a self-declared risk assessment, based on guidance provided by the standards organisation. Systems would need to be established for determining whether particular software types and uses pose heightened risks and require more oversight. For this approach to work it would have to be worldwide, so as to avoid firms moving to jurisdictions that avoid these regulations. Therefore, there is a rationale for an international treaty on software safety to be negotiated rapidly with significant resources marshalled to help these regulations to be appropriately implemented globally.

In developing this idea, we know that many protagonists in software innovation may be appalled. There is a strong anti-authoritarian mood amongst many computing enthusiasts. But it is time to realise that some technology optimists are becoming the new authoritarians, by enabling the diffusion of technologies that have wide effects on people worldwide without them having any influence on that process other than one role – if they can be a consumer. The challenge today is not whether there should be more regulation of software development and deployment or not, but how this should be done to reduce the risks and promote the widest human benefit. We offer the concept of Integral Technology as one way of helping that debate (and not as a template for regulation).

Unfortunately, in the hype and the reality around Distributed Ledger Technologies (DLTs) we don’t see many ideas and initiatives thinking beyond the initial value proposition and promised returns to investors. Some technologies like Bitcoin seem to us to have betrayed all the aims of the founder and early adopters, yet claims of internal and external incoherence are met with very questionable objections by their near fanatical adherents. The various projects to promote social or environmental good appear to be marginal to the main thrust of this sector, and many add such concerns on top of existing code and governance structures that are not aligned with the project goals.  On the other hand, incumbent banks and their regulators have often express dismissive or negative views of DLT technologies which suggest they do not understand the problems with existing bank power and practice, or the potential of DLTs. In some countries outright bans on DLTs or cryptocurrencies are not the result of wide stakeholder consultation on questions such as what and for whom systems of value exchange should be for.

Therefore, we believe a technosophical approach to blockchain and cryptographic currencies is currently absent and needs cultivation. It is why we urgently need more international multi-stakeholder processes to deliberate on standards for the future of software technologies in general. In the field of blockchain, one event that may help is the United Nations’ half day high level discussions on blockchain, taking place at the World Investment Forum in October. Whether wider political and environmental conditions will give humanity the time and space to come together to develop and implement an appropriate regulatory environment for the future of software is currently unknown, but it is worth attempting.

We provide a background to blockchain and cryptocurrency innovation in our free online course on Money and Society.

We also offer a Certificate in Sustainable Exchange, which involves a residential course in London (next April).

Our academic research on these topics includes a paper recently published on local currencies for promoting SME financing, a paper on thwarting a monopolisation of the complementary currency field and a paper on our theory of money, published by the United Nations.

Professor Bendell is the Chair of the Organising Committee of the Blockchains for Sustainable Development sessions at the World Investment Forum 2018 at the UN.

We produced this concept note on the IFLAS blog for rapid sharing. To reference this Concept Note:
Bendell, J. and M. Slater (2018) Integral Technology in Blockchain, Cryptocurrency and Beyond, Institute for Leadership and Sustainability, University of Cumbria.

The image used in this post is a reworking of Escher’s drawing that reflects the entanglement of author and authored. The image was reworked by Google AI project Deepmind, in its “dream” state, to produce the image you see. Deepmind is learning to identify the contents of images. This technology will be used to save lives, sell stuff and to kill with impunity. Reworking Escher’s hands in a rather bizarre fashion reflects our perspective of “technological constructivism” and our belief that the potential of AI to soon achieve (with human action and inaction) autonomous general super intelligence (amongst other dilemma, particularly climate change) means that we need a “technosophical” approach that more wisely assesses and governs technology systems.

Send comments to drjbendell at gmail

Photo by Daniel Kulinski

The post Integral Technology in Blockchain, Cryptocurrency and Beyond – a concept note for discussion appeared first on P2P Foundation.

See the shared notes from this session too.

Photo by richard winchell

The post Open 2018: Global Mutual Credit: Is it time for a Co-op coin? appeared first on P2P Foundation.

Participants can view and comment on each other’s assignments in the forum, and can interact as they wish, with tutors commenting on assignments in the forum. Lessons Two and Four are followed by one hour webinars with the tutors, which occur on Saturday mornings at 10am. The first iteration begins February 2015, and the next will be in quarter three of 2015.

The following text is reposted from the Institute for Leadership and Sustainability:

A free online course at Masters-level will enable you to understand the past, present and future role of money in society. The 5th cohort starts 20th August 2017 and lasts 8 weeks (one lesson every two weeks). Enrol here.

The course is therefore highly interdisciplinary, drawing upon anthropology, sociology, history and heterodox economics. It is designed by Professor Jem Bendell PhD (IFLAS) and Matthew Slater BD (Community Forge), with additional tutoring by Leander Bindewald MA (IFLAS).

Typically 50 to 100 people complete the full 4 lessons, and many then continue to interact in the Alumni Forum. Over 20 have progressed to attend the full certificate course in London.

The next offering of the MOOC (Massive Online Open Course) starts online on August 20th 2017 and runs for over 2 months, with four lessons:

Lesson One: An introduction to money: functions, forms, and fallacies

Lesson Two: The history of money and its discontents

Lesson Three: The problems with mainstream monetary systems

Lesson Four: Alternatives

Each lesson begins on a Sunday, consisting of a audio-narrated slides of less than two hours (which you can listen to when you want within the following days), followed by two hours of personal reading and one hour to prepare a written assignment of around 500 words, which must be submitted by the following week.

Participants can view and comment on each other’s assignments in the forum, and can interact as they wish, with tutors commenting on assignments in the forum.

Lessons Two and Four are followed by one hour webinars with the tutors, which occur on Saturday mornings at 10am (UK time). You need access to a decent broadband connection but do not need any special software to engage in the course. If without a powerpoint viewer, participants can view lessons on youtube. Participants cannot start the MOOC late.

Sign up at http://mooc1.communityforge.net The next offering of the MOOC after August will be in February 2018.

At the end of this MOOC you will be able to:

• Critically assess views on the form and function of money and currency by drawing from monetary theories
• Explain theories on how social, economic and environmental problems arise from mainstream monetary systems
• Explain alternative forms of money and currency and the theories on how they can support better social, economic and environmental outcomes.

The full schedule follows below. On the MOOC you will be joined by participants on the Certificateof Achievement in Sustainable Exchange, which is a credit-bearing module offered by the Institute for Leadership and Sustainability at the University of Cumbria. Four days of classes in person at the Docklands Campus in London begin in April 2017, featuring Professor Bendell, Leander Bindewald and a range of guest lecturers. These classes explore the wider issues of currency innovation and the collaborative economy. There is a fee for the certificate, not the MOOC. You must have started the MOOC in order to enrol.

The Tutors 

Matthew Slater is a software engineer who specialises in open source software for community currencies. Co-founder of Community Forge, which produces software for and hosts over 100 local currencies, he is a regular commentator on grassroots initiatives for community control of currency and credit.

Leander Bindewald is the coordinator of the EU funded project Complementary Currencies in Action, and a regular commentator on currency innovation.

Photo by Sole Treadmill

The post Money and Society MOOC – starts again August 20th 2017! appeared first on P2P Foundation.

Since ‘political economy’ became a subject in the 18th century, the predominant political dichotomy has been framed as labour versus capital. Marx talked about ‘control of the means of production’ as the essential political power that the workers needed to wrest from the capitalists. A great deal of activism and political theory continues in that vein: Gar Alpowitz work What then must we do? is all about rebuilding worker-owned coops and similar institutions. We have 150 years of history testifying to their effectiveness.

The movement has waxed and waned, but never (yet) overcome its antithesis; capitalists have the power to issue almost unlimited credit, and social movements, however popular, seem always to be on the back foot. I am dubious whether worker-owned institutions will ever dominate the economy. On the one hand we see economic justice trying to break out in many forms and places, and on the other dark and powerful forces are suppressing them: laws are being changed to make coops less competitive, and occasionally countries which swim against the neoliberal flow suffer a CIA-led regime change. The Power that controls property also controls the law, the media, the security forces, the military and the banks.

The industrial age needed machinery and factories and hence empowered those with capital and property to invest. That thinking has carried through to the digital era in which a Silicon Valley start-up needs huge amounts of money to engage a raft of skilled people to create (and create a market for) a plethora of unneeded tools, one of which might survive and be sold for a massive profit. Yet there is nothing about the internet that necessitates that capital-centric way of creating wealth. Platform cooperativism is the notion that the digital ‘means of production’, the platform, should be owned by, governed by and should enrich the participating value creators. As an approach and as a tactic, it is a straight extension of rudimentary 19th Century cooperativism into the digital age and cyberspace. In which case we should anticipate it working as it always has on the sidelines but never to impact the wider economy.

Why Protocols?

I believe another strategy shows promise. Let us not focus on property and ownership and control, but on relationships and protocols and collaboration. There are plenty of precedents to work with, but I haven’t seen this thinking applied in the platform cooperativism space.

By protocol I mean a language, convention, or standard. Use of such things cannot be restricted, prevented or monetised any more than use of a word, gesture, or social code. The Internet is essentially a set of protocols such as TCP/UDP, http, HTML, which led to a highly egalitarian participative infrastructure. That need not have been so: in a parallel universe, Microsoft R&D invented the web and now every page is a visual-basic-enhanced word document; MS Office is the only tool for authoring web-pages, and it costs $5000 for a licence and still looks wrong on Firefox!

Fortunately that particular dystopia was avoided because we had those open protocols. I think that is why the early Web inspired a great deal of optimism about the levelling of the socio-economic playing field – recall John Perry Barlow:

We are creating a world that all may enter without privilege or prejudice accorded by race, economic power, military force, or station of birth. We are creating a world where anyone, anywhere may express his or her beliefs, no matter how singular, without fear of being coerced into silence or conformity. Your legal concepts of property, expression, identity, movement, and context do not apply to us… We believe that from ethics, enlightened self-interest, and the commonweal, our governance will emerge. A cyberspace Independence Declaration

The basic internet remains free as designed: we still pay nothing for example for sending an email or retrieving a web page but something has gone wrong. The Internet continued to grow, as with all technologies, as new layers were built; the internal logic of each layer is entirely independent of the others just as the stable atomic model of protons, neutrons and electrons owes nothing to the fuzzy quantum reality on which it is based. Gradually the capitalist interests worked out how to replicate their own logic and structures in cyberspace. On top of the open protocols they built pay walls, monetised services and enclosed spaces. The rules are different at every level. In 2017 it seems normal that platforms large and small, own data and control economic territory for the benefit of private investors. The biggest platforms have the most users and the most money and the most political power and that is why I find it hard to imagine any platform like minds.com competing head-to-head with Facebook, and winning.

Beyond platforms to protocols

I want to expand upon this argument:

A platform cooperative or a platform company model is not one that takes full advantage of the potential to have a truly distributed network. They still have a central platform operator at their core, providing coordination, quality assurance and, most essentially, trust. However, it is possible to go beyond platforms to protocols – to commonly agreed ways of operating. Thus anyone who agrees to the rules can become a part of the network.Mikko Dufva

Ride-sharing is the poster child of the sharing economy, the pressure point chosen by platform cooperatives, and the current fiefdom of Uber. It could be considered a natural monopoly, which is to say it involves infrastructure which need not be duplicated – users don’t want to have multiple identities, apps, user interfaces, price structures etc. PayPal creator Peter Thiel is being lauded by businessmen for arguing that these monopolies are desirable and that competition is for losers. Since he doesn’t address the social question of how monopolies should be owned or governed, we should assume from his investment strategies that he intends to own as many as possible himself.

So Uber’s near monopoly, won as a direct result of having unimaginable access to money, is an invaluable commercial advantage in itself because without serious competition it can squeeze the market for all it is worth. But be careful what you wish for; should Uber fall from grace, the market would probably splinter into many incompatible pieces, which benefits neither the people with cars nor those who need rides.

A platform cooperative ride-sharing service sounds like an attempt to form a cooperative and compete with Uber by recycling profits and remunerating workers better. Its not a very convincing business plan even if the allegations about illegally to sabotaging its enemies are not true because Uber has resources to undercut any competitors until they choke.

But an open protocol for ride-sharing changes the game completely. Anyone could sign up to the network and announce their intention to travel or willingness to chauffeur. A simple algorithm would connect them and at journey’s end they might remunerate each other in cash, Bitcoin, home-brewed cider or anything; the line between giving a friend a favour and earning a crust would be very grey. There would be no middle men collecting rent or dictating how drivers should behave as representatives of the company. The open protocol creates a free market – not in the neoliberal sense of Wall Street being able to flush out the economy of any country it likes with imaginary dollars, but in the sense that suppliers and customers can meet without middlemen, regulators or rentiers. This is less optimal for collecting taxes and running protection rackets, but more optimal for granting everyone access to the economy, and probably much more efficient in terms of using underutilised transport infrastructure.

This article’s title suggests that a protocol could replace a platform as a basis for a cooperative infrastructure. More accurately, it seems to me that an open protocol diminishes the role of the platforms and changes the operating environment by:

• the main benefit to users of a monopoly is built in to the protocol, so there is no benefit to users of having the market dominated by a monopoly.
• suppliers and customers can interact without paying middlemen (which was one of the early promises of the internet)
• users benefit from no longer being captured inside walled gardens
• the question of data ownership is probably handled in the protocol, not in law, and not by a 3rd party, which reduces costs.
• the platform owner is no longer responsible for what happens between suppliers and customers, reducing the need for surveillance and fees.
• the law of the land applies only to the traders behaviours, and thus is much simpler

A changed economy

In short, most of the functions of the platform are no longer necessary and in its absence there is room for new kinds of organisations to fulfil new kinds of function. The new kinds of organisations could compete on the basis of what value they can add to the protocol, or they could just cooperate to make the users lives easier. To stay with the concrete example of ridesharing.

• Companies could develop paid apps which compete on the best user experience
• Drivers of old bangers could organise to ensure constant supply and that they don’t undercut each other.
• Drivers could organise mutual insurance and/or finance.
• A system could be built on top of the protocol to help set up multiple passengers with multiple destinations in the same car, perhaps taking a small cut of the savings.
• A private ambulance service could be imagined, along with haulage companies, a postal service, long distance travel and regular commuter ridesharing.
• if the protocol didn’t handle it, a 3rd party service would be needed to ensure that drivers and/or passengers were identified or had a certain reputation.

Likely such a protocol widely deployed would render our transport ecosystem unrecognisable. It might obviate most full time driver jobs in favour of hitch-hiking 2.0 approach. The free market would level out the full time driving jobs and the unemployment of drivers and costs and revenues, leading presumably to a more equal society (at least until driver-less cars took over!)

The role of blockchains

The blockchains are already making this happen because blockchains are basically protocols which allow open participation. Blockchains can perform some of the critical functions of platforms without being owned by any one institution, namely:

• store data
• execute contracts
• manage payments.

This article about Arcade City makes it clear:

In the end, Arcade City will be a protocol composed of Ethereum smart contracts supporting a global logistics network with an entire ecosystem of apps and businesses running on top of our infrastructure. What SMTP is to email, Arcade City will become for distributed logistics.

For all the bluster about Arcade City being an upcoming platform coop, to me it seems there is no platform in the sense of a thing which can be owned & sold. What then does the brochure site mean when it claims to be owned and operated by its members? It seems to me that the language is wrong.

The human factor

The benefits and challenges of co-owning and operating a legal entity such a cooperative within a legal jurisdiction, are quite different to the benefits and challenges of using, governing and stewarding a universal protocol. Regrettably Arcade City has now forked after a disagreement in the board, which poses serious questions about the claim that its members were in control. Technology alone will not create the society we want; at a more fundamental level, we have to learn to work together.

Professor Jem Bendell and I have explored these ideas further in our new paper Thwarting an Uber Future for Complementary Currencies: Open Protocols for a Credit Commons especially as they relate to payment systems, which we argue is the ultimate Death Star platform.

Photo by Glassholic

Photo by Glassholic

The post From Platform Cooperativism to Protocol Cooperativism? appeared first on P2P Foundation.

“Bruno Chies: Let me go back to complementary and alternative currencies. Do you mean they are a way to empower people directly on a local level?

Matthew Slater: If they would work, they would empower people. But they don’t work when people don’t use them. If they were to be used, it would mean that communities are acting in solidarity with each other are empowering each other. The reality is that most people don’t seem to feel very much solidarity others and they certainly don’t express that by using a complementary currency. So, the tool is there but we lack the consciousness, awareness or will to use it. We the people, need to start working together, taking on responsibility, taking on leadership roles, and not relying on authority figures and governments to do it. This is difficult because we’re also paying taxes. There’s not a lot left over these days. We tend to chase the money and we do what the people with the money tell us to do. Which leads to the need to compete with each other and the wasting of resources in the process. If we want to be sovereign, we have to either find sources of money that don’t come with a value obligations, that are already aligned with what we want to do, or we’ll have to do without money.

Talking about real utopias, you envision an economy in which complementary currencies play a role but economy is not fully monetized. There are spaces in the economy for gift, barter and exchange with complementary currencies.

In this utopia what people would do would be a much closer expression of what they value, because they don’t have this top-down monetary system, expressing the values of either the tax recipient, the philanthropists, or the trillionaires. You wouldn’t need everything to be monetized. Everything is monetized now because the economy is huge and it still has to grow. More things have to be monetized so that a greater proportion of our activities can be taxed and more money has to be borrowed. If that wasn’t the case, then there would be much less need for money. It’s by no means an impossible utopia, there already are tiny societies working like that. It seems that when our societies grow bigger they become dysfunctional. We need to bring the self-determination level down to the local, small groups, because the system is less easily corrupted this way.

That makes sense, and I think this is a very good bridge to your Credit Commons project. Is this a way to connect local economies operating with complementary currencies and create more solidarity?

Yes, I think that’s exactly it. The tag line is ‘money for the solidarity economy’. Some people would argue that it’s not money, it’s merely a system of exchange. But that is a function of money, so it depends on what your definition of money is. It seems to me that what’s needed is a global protocol to help us exchange with one another. Credit Commons could be used locally or intercontinentally; it’s only a protocol.

How does it differ from other platforms, like Community Forge or Community Exchange System (CES)?

Because it’s a protocol, it is not a platform. CES is a platform with hundreds of groups in it that trade with each other and have nominal balance limits that are not harshly enforced and there isn’t really any governance about what the credit limits or the exchange rates should be. The Credit Commons seeks to formalize that arrangement as well as open it up to groups outside that platform. The only requirement becomes running software that implements the protocol. I’m also likening it to a cryptocurrency. It’s not a currency but it is a distributed ledger and that means we can all agree on what the ledger says.

Is it based on blockchain?

I haven’t gone so far as to specify the blockchain. It would be a consensus algorithm. For example, Ripple… It’s called a permission blockchain, which means you don’t need the mining. The clients trust each other, so they don’t have to fight or compete. They trust each other and the ledger stays intact, as long as they’re all good. That means an outsider cannot come in. The thing about Bitcoin is that anybody can implement the protocol and participate, but they have to do the mining to make sure it’s good. In the permission blockchains you just do it with your friends and the people you trust.

So you really build trust, not through code, but through people.

It’s trust at two levels: 1) if I give you credit, I trust that you’re going to pay it back, and 2) we’re both participating in a trust group, with protocols, and I trust that you’re not gonna hack the ledger. However, I’m not an expert in the software’s architecture, so I’m leaving that open at the moment. The aim of the Credit Commons white paper is to create discussion.

How does that apply to the issue of convenience when using money? A problem with complementary currencies is that they’re very limited in scope and are not very convenient. Do you think that the Credit Commons could change this?

Yes, it should, but not directly. At the moment each complementary currency is working pretty much with its own software or with a family of softwares, but there is no grand interoperability plan, there are no protocols that everyone agrees on. If the platforms are joined together through the Credit Commons but every group is still using their own software, those issues are still exactly the same. It becomes possible for credit to move between platforms when they use a common protocol, a backbone to the system. A platform would have a payment form that facilitates paying somebody in a different platform. But that still doesn’t help you pay for the groceries in the shop.

It might give you access to other markets…

Yes. That’s one reason why we also need to work on the advertisers’ API, in order to see what’s in other markets. There isn’t any way to do this yet.

Are you seeking software developers to this project?

I’d love to involve some developers in this, but it’s hard. We’re talking about hundreds of existing communities that are expressing a real need to go forward in radical reforms and cooperations. I thought this would be very appealing to developers, to have a chance to write some software that will be used in this way. Many activist developers are imagining what’s needed and they think ‘if we write this, we’ll save the world’, and then it doesn’t happen.

Perhaps your advice to activist developers who want to make a difference in the world is to re-learn how to cooperate and collaborate…

And to adopt an attitude of service. You can collaborate and still build something that nobody needs. Be sure that you’re serving people whose values you agree with. That might not be the way to write an app that goes viral, but it is the way to do something that really is useful. Otherwise you’re taking an all or nothing risk.

The term commons usually takes me back to the work of Elinor Ostrom and the question of governance: how can people find ways to govern these commons? How does that work in terms of money and credit in your proposal?

There’s no credit without governance. In Debt the first 5000 Years, David Graeber drew a sweeping portrait of history in which there are times of stability, which is to say times of governance and trust in systems, when we used credit money, and times of instability, when there is a lot of conflict between nations and governance wasn’t something that could be relied upon, which are times of commodity money. Governance is even more important than money. What we need is systems of governance that help us organize ourselves. Money and credit arrangements will follow. There are many people involved in monetary reform, and for many it’s a very compelling subject, but ultimately you cannot really get anywhere with money. The solutions have to be situated at a deeper level. The issue about creating a commons and governing it, is what I’d like to bring attention to with the Credit Commons. We need to think in terms of forming groups of solidarity and have those groups form groups. The Credit Commons presents this sort of nested structure of groups of trust.

Basically it’s an architecture for scaling up trust and solidarity.

Yes, I believe we could do the whole global economy that way.”

Photo by sociotard

The post Matthew Slater on scaling trust with Credit Commons (Part 2) appeared first on P2P Foundation.

Biography

Matthew Slater is a software developer and has been involved with complementary currencies for at least 8 years, since the crash of 2008. He is the co-founder and main developer of Community Forge, a platform for complementary currencies that runs more than 150 LETS and Time Banks. Together with professor Jem Bendell, he has also designed and is a tutor of the free massive open online course (MOOC) Money and Society, directed at people who want to understand money from a social innovation perspective. Education about money and all that it implies is a critical part of what Slater does.

Interview – Part 1

“Matthew Slater is a community currency engineer. He proposes a technology that will scale trust and solidarity beyond the local level, for communities running their economy with their own currencies. ‘You could do the whole global economy that way’, Slater envisions in this new monetary architecture of interconnected complementary currencies. There is, however, no sense of gullible techno-fetishism in his ideas. He is very much aware that technology, and top-down reforms to the monetary system, are not enough to change power relations in society if they are not accompanied by a simultaneous change of consciousness among the people.

In this interview, we discuss his project the Credit Commons (part 2), in greater detail, as well as broad range of topics: his reflections on our contemporary monetary system, the role of complementary currencies for achieving more self-determination at a local level, the importance of governance for the Credit Commons and his view on a more collaborative economy based on solidarity, where relations intermediated by money would be not so prevalent.

Bruno Chies: Let’s start with a very general question: What is wrong, in your opinion, with today’s state-backed money?

Matthew Slater: It’s hard to separate what’s wrong with money from what’s wrong in everything else in society. The fundamental problem with the design of money is that it’s treated in all respects as a commodity which is owned by rich people and lent to everybody else, while money should be a medium of exchange first and foremost. In fact, rich people don’t own money, they’re actually lending it out of nothing. They do have their own assets, but what they’re lending is a legal fiction and it is a privilege that they have been given by the government, the crown, the sovereign, whatever, and can then charge interest on. So that’s a problem that goes deeper than the monetary system, to the system of privilege in society.

BC: What do you think about proposals of monetary reforms at the level of the state, like the Positive Money proposal in which money should be created debt-free and solely by the government, through a democratically accountable committee?

MS: I think it’s great if you regard the monetary system as a separately individual system. But as soon as you start bringing in the critique that a government is owned by corporations, this changes. You start seeing that either a reform like that cannot happen at all, in which case all you can do is raise awareness about how bad things are, or you can say that if it did happen somebody will get to this democratically accountable committee. That committee will never be neutral.

It is not simply a matter of redesigning money and the purpose it should serve…

I think that’s naïve. Money reflects our attitude towards the government, our attitude towards the rich and their attitude towards us. If you changed money, but not the attitude, the attitude would change it back. Money isn’t real, it’s only a reflection or projection of other power dynamics in society.

What do you think is the role of complementary and alternative currencies in the process of transitioning to a different social model?

I think they have several roles. One is to prototype. Another one is to understand more deeply how these systems work. Yet another is to take a little bit of sovereignty into our local groups. I think those are the main ones.

The idea of taking back sovereignty sounds like it is about taking back power and expanding democracy. It this what you mean by it?

I don’t know much about the history of the word sovereignty, but it usually starts with the king. The king is the sovereign and nobody tells him what to do. Sovereignty is not something we can all strive towards, but greater self-determination is something we could. This will always be at the cost of whoever is telling us what to do and how to be. I would like to see a society in which people exercise greater self-determination. A complementary currency could build trust and issue units among a group that wants to exercise a little bit of economic power. Typically, they will issue these units out of nothing, as if they had currency or as IOU credit obligations, because you don’t benefit very much from a currency if you have to buy it first…

Which is the difference between commodity-based currencies and credit-based currencies…

Exactly. You can exercise some sovereignty by creating a unit of account and everyone agreeing that to value it in exchange with each other. These units of account are worthless to anyone outside that group, so they can’t be taken away in tax. It also provides a way to build your own taxing system which leads to self-determination by allocating those resources. When groups come together to work in solidarity, there are loads of devices they can use, hacks and things like that, and a currency is one of them. It helps them to allocate resources and helps them to agree on what they value together.

Such as issue new tokens in order to fund collective projects?

It would be very similar to taxing and spending. If you issue new tokens, their value will go down, but the issuer takes the spending power. This is exactly what governments do. In theory, they spend, which is an act of issuance, and then tax back to prevent the inflation. It’s not the other way around, as the myth of handbag economics suggests. In this myth, the government is like a household, that has to earn before spending, and money is treated as a commodity. If you spend more than you take in, you have to borrow and pay interest. On one side of the economy, ordinary people would earn and then spend, and on the other side, the government would spend and then earn, which would make a good cycle. Now, along with others in government, George Osborne of the British Conservative Party is saying that the government should run a surplus, which means that the rest of the economy must run a deficit. That’s a problem. It looks good for the government because it can say it’s not spending too much, but at the same time it forces everybody else to spend too much.

And go into debt…

The government’s role is to issue money by spending more than it takes back in tax. The difference is the supply of money. That is the theory of fiat money, which we don’t have anymore. Currently, the supply of money is all that the banks lent, that hadn’t previously been saved. The banks have taken on the role of sovereign.

They are creating money out of nothing.

Yes, and that’s a very serious issue because it is impossible to argue that the banks are working with and for the people in their act of issuing money. The banks are profiting from the people by their very constitution. So Positive Money, in restoring the money-creating power to the state is at least trying to tell the story that the state is in partnership with the people, and that, rather than banks, the state has the legitimacy to be sovereign and to issue money. Of course, (neoclassical) economists do not acknowledge that what the banks are doing is issuing money, their theory is that banks only lend money that already exists. But this turned out to be false, so false, that the Bank of England admitted to it two years ago. This myth is taught in economics classes still and the implications of its wrongness are very profound.”

This is the end of Part 1 of this interview. Part 2 discusses the Credit Commons.

The interview was originally published at the Institute of Network Cultures (INC).

Photo by Trenten Kelley

The post Matthew Slater on scaling trust with Credit Commons appeared first on P2P Foundation.

Here is a short interview with key questions, watch the video here:

The post Impact Economy 2015: Arthur Brock, Michael Linton and Matthew Slater on how to reform money appeared first on P2P Foundation.

Community currency engineer, Matthew Slater, reconsiders his opinion of FairCoop.

Having kept an eye on the altcoins for a good while I wasn’t initially impressed by the claims of Faircoin.

There have been several coins issued attached to good causes but without a clear monetary function. The idea is usually to set up a cryptocurrency, premine some, market the brand and sell the premines for a good cause. In this, there is no consideration of what makes the coin a desirable purchase, and the coin is so useless i.e. unused and therefore unusable, that its purchase constitutes little more than a straight donation.

It seemed to me that Faircoin was something similar, but making spurious claims about being more fair in its configuration. It was premined and distributed initially with an airdrop to everyone who had registered. Proof-of-stake is fairer and less energy intensive than proof of work. The undistributed premined coins were allocated for different areas of development. FairCoop activists were easily able to send the coins between themselves and convert them to Euros using Chip Chap.

As I probed I learned that Enric Duran, the mastermind of FairCoop who is famous for borrowing EUR500K and giving it to charity and who is now in hiding, was behind the scenes manipulating the Faircoin price to make it more stable. Clever perhaps, but also a cause for concern. Did he know what he was doing? With activists selling Faircoin for Euros, how long could Duran keep the price up before he ran out of resources and the price crashed?

When I visited activists in Barcelona a fuller picture emerged. It turns out that since wide publicity has lead to a strong demand for Faircoin, Duran containing the price for the sake of stability rather than inflating it. By constant buying and selling, he is cushioning users from the usual cryptocurrency volatility. Also he is not doing so only with his own resources but with a group of Faircoin holders. In a normal crypto this collective power would be extremely concerning but since Faircoin holders trust this group, it is extremely reassuring.

That’s what makes the difference in any financial system. Trust. The cryptocurrencies have attempted to remove trust from money, and in so doing have created dark and dangerous marketplaces. Faircoin is overlayed by the users’ trust in an outlaw “Robin Hood” character, and a pervasive ethic of solidarity.

Furthermore Faircoin is only part of a larger financial system that Duran is building. It is the part that provides a way to move hard value around and withdraw Euros when needed. Alongside that
Faircredit, a mutual credit system (planned)
Fairsavings, a faircoin savings fund which gives a yield while the coins are used elsewhere in the coop
FairMarket, a directory of goods and services for exchange
Fairstarts, an incubator for small enterprises
Fairfund, a way of donating to various organs of Faircoop
Coop Shares, equity crowdfunding

Duran’s achievements in building a financial system outside existing structures are remarkable, and this templates and tools deserve more attention and more support from like-minded movements.

I think Faircoin would be more fit for purpose if Duran and his team were able to calm the price by issuing new coins, rather than using a preprogrammed release schedule. Publishing a target price for the coin and having the tools to maintin it, would deter speculators and reassure serious users.

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