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Transition Currency 2.0 - an online banking system for local money

UPDATE (10th June 2011)

Dear Transitioners,

This is a note to say that we have now began work building a service infrastructure for complementary currencies (Transition Currency 2.0).  We are working to the 'Request for Proposal' attached below with some minor modifications.  The Dutch complementary currency foundation QOIN are now partners with nef and Transition Network in the development of the service infrastructure, having worked with us from the beginning on the scope and functionality of the system and having now also made a significant financial investment via a Dutch philanthropic donor.

After a competitive tendering process, we have chosen to use the Cyclos open source software for the back-end of the platform which is a tried and tested system for CCs connected to legal tender as with the existing Transition Currencies.  Cyclos has been developed over a ten year period by the Dutch NGO the Social Trade Organisation with whom we have strong links. 

Cyclos is also set up to run mutual credit, timebanking and C3 schemes and has been used by hundreds of CCs throughout the world.  We will be building a new user-interface (front end) on to Cyclos working with the UK web-design agency Isotoma and the Dutch Digitekst company to make the necessary modifications to Cyclos as well as developing an SMS gateway that will enable CC transfers by text as well as online.  

We expect to pilot the scheme later this year and early next year with the Brixton Pound and Bristol Pound schemes and with a timebank schemes in Amsterdam.  We are seeking a third pilot in the UK also.

We are still very open to suggestions or offers of support on development, legal and compliancy issues, governance/partnership and how we effectively communicate the scheme once it is up and running.  We will shortly create a full 'project page' for TC2.0.

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This is a new blog about the development of a new shared online payment system to support existing and new transition local currency schemes (and other social currencies).  Transition network is working with nef (the new economics foundation) to deliver the project.  We believe that an electronic currency can help us complement the existing paper-based systems and helps us overcome some of the barriers they face.   Aims of the project include: 

  • Reducing the transactions costs and enhancing the convenience of using the currency for all users
  • Generating better information on how the currency is circulating amongst businesses and users and thus what interventions would be useful in enhancing the scheme
  • Creating greater flexibility in terms of:
    • the reach of the currency (e.g. enabling regional schemes or inter-trading between transition communities)
    • alternative backing for the currency (i.e. alternatives to sterling such as kilowatt hours or underutilized assets)
    • enabling local clearing houses to accept the currency (e.g. local authorities or transport authorities – most of which have now moved to electronic payment facilities) including business-2-business models (mutual credit/commercial barter) to incentivise businesses that are involved to trade with each other and give them additional, non-interest bearing credit lines (i.e. additional liquidity)
  • create sustainable organisations that meet the costs of running the currency by having income built in to the system, through the charging of redemption fees for example which is much easier with electronic payment
  • opportunities to include the financially excluded, in particular through use of a mobile phone as a means of payment as has occurred with the MPESA scheme in Kenya and, potentially, the use of micro-credit schemes 

The project is still in the early stages but we are now keen to hear from Transition initiatives and other interested parties  across the UK (and further afield) about your experiences and thoughts on how the system could best serve your needs.  Particular areas we'd be keen to hear about are as follows:

  • any existing software packages/systems that you think we should examine as we develop the functional design for the payments infrastructure
  • any thoughts you have on the governance of the system. We need to find a balance between transparency and wide stakeholder engagement, with efficiencies of scale and financial sustainability.
  • legal advice on digital money/legal tender issues. If you know of anyone with experience in this area and particularly if they'd be interested in helping pro-bono please let us know.

Please do also spread the word amongst your networks about the project. 

Please feel free to comment on this blog or contact josh.ryan-collins@neweconomics.org if you wish to submit ideas/thoughts.  Please note we will not always be able to respond to queries. Further blog posts will keep you updated over the course of this and next year. 

Look forward to hearing from you all.

Josh Ryan-Collins

nef (the new economics foundation), London

nef is one of the UK's leading 'think and do' tanks campaigning for ecological sustainability, social justice and well-being.  We have a long track record in supporting the development of local currencies in the UK, including introducing timebanking to the UK, supporting LETS and more recently the Brixton Pound. You can find out more about nef's work on monetary reform here: www.neweconomics.org/projects/monetaryreform and our work on local economies here: www.pluggingtheleaks.org.

Comments

Matthew Slater's picture

Requirements

 Josh please bear in mind that I'm working full time to meet all these needs in Drupal, a modern platform! This will enable money flows to integrate with normal web sites. The technology requires a standard web server, and is easy for small groups to set up and manage, indeed with Community Forge its free. Its highly configurable and works alongside all kinds of other functionalities. Intertrading is coming, SMS transactions are coming. Its highly configurable and works alongside all kinds of other functionalities. Intertrading is coming, SMS transactions are coming.

josh ryan-collins's picture

Drupal

Thanks Matthew, just to make clear we will be having an open tender for the actual design/build and will also be talking to a number of developers (including yourself) in constructing this tender. 

Josh

Anonymous's picture

Transition Monetary Reform

Glad to see someone interested in monetary reform, but afraid Gold is a nonsense..

Try 'The Future of Money' by Mary Mellor for a much better analysis of prospects for monetary reform, that is far more relevant to Transition issues than mining a non-renewable resource that has no practical use-value, and is only valued by magpie-types: www.redpepper.org.uk/The-future-of-money/

P.S. Great initiative, look forward to Local Authorities and Ecotricity etc being more willing to accept local currencies now.

Spencer's picture

Gold

I take your point - mining gold is not very environmentally friendly.

 

 

Ann Monroe's picture

RSS Feed?

Could you enable an RSS feed for this blog so those of us who want to follow this project can do so more easily?

 

Many thanks -

josh ryan-collins's picture

RSS feed

Hi Ann, I'm afraid the Transition network website currently does not have RSS functionality - but they are working on it!
Best

Josh

Ed Mitchell's picture

RSS feed sorted

Hi Anne,

this is done - thanks for spotting it :)

Spencer's picture

Alternative currency backing

Josh,

The Mark Brown, chairman of Transition Town High Wycombe, gave me the link to this blog because I am very interested in community financial initiatives.

I worked as a banker (investment, commercial and retail) during the transition of Communist Eastern Europe to Market Capitalism. I am now a qualified accountant working in practice. I am very interested in monetary reform. The current monetary system means slavery to debt and growth. Banks pump up the property market mortgages to the highest levels that our person incomes can withstand leaving us burdened by debt for life. The creation of money through debt means that economic growth is the only way to manage the debt burden. I am sure none of this is news to you!

I am very keen to contribute to what you are doing - I think my experience in banking and accounting could prove useful with risk and governance issues. I would be more than happy to work as a volunteer.

You suggested Kw hours as a backing for currency. I see problems with this.

The cost of electricity varies greatly during the day. Currently utilities are looking for these cost variances to be reflected in prices to consumers. At what time in the day would a the traded Kw hour represent? People would want to trade in at peak times. 

Also with renewables there may be a lot of wind or sun one week and none the next. The effect on supply means that the demand and price may change with the weather.

As energy costs rise a utility issuing Kw hours would make a loss on the traded Kw hours when they are redeemed. As the utility would not know when the Kw hour will be redeemed they will not be able to hedge this exposure.

For the Kw hours to have value they must be redeemable. If a transition town person in Totnes trades some seeds with a transition town person in High Wycombe would the respective utilities in each town accept each other Kw hour futures?

How would you monitor the value of the Kw hours verses GBP. Traders with revenues of over £60k would have to pay over VAT to HMRC. For this they will need cash. Corporate tax is the same problem.

I think Kw hours would be hard for people to understand. I am an accountant with experience analysing the banking and power sector and it took me time to get my head around Kw hours as a backing for currency. These comments may reflect that I do not even understand it.

What could work really well is a community investing GBP in a new mini-utility and getting Kw hours as dividends. However, these shares could not really work as a tradable instrument outside the local community.

For 4 millenia people have traded with gold successfully. Why not use gold as the backing for the Transition Currency? Some economists are arguing we need to go back to the gold standard.

The gold could be held by a custodian as bullion. People could exchange shares on this pooled gold bulliion electronically. The size of digital transactions could be grams of gold (worth £28 at current prices) and cents (worth 28p at current prices) and half and quarter cents.

You can get a historical and spot quotes of gold's value in every mainstream currency.

Unlike Kw hours anyone can create money supply in the gold system by putting in cash which is then turned by the exchange into bullion. Using scrap gold merchants, jewellery could be paid into the exchange and converted into bullion. The people running the exchange would never have to physically handle gold by using scrap gold merchants.

Gold is a very good crisis hedge. It's value goes up when everything else goes down.

In a time of financial crisis local communities can withdraw their gold as coins. To secure your person gold you just bury it in the garden!

Gold can be traded easily intracommunity and internationally.

Gold is really easy to understand. Gold has X Factor. It could really catch on outside the transition town community.

The gold exchange could be a mutual company. I would be very happy to volunteer my work for it.

Kind regards

Spencer

 

 

 

 

Sam Nelson's picture

Emissions reduction currency anyone?

 Our group in Western Australia is attempting to create a community currency backed by reductions of Greenhouse Gases.

Using greenhouse gas reductions as a source of value for a currency would have the following advantages.

1. The accounting standards that are relatively easy to use exist and have been approved internationally by governments, business organisations, and standards committees.  Mechanisms already exist for ascribing and trading rights to these reductions as voluntary offsets.

2. Actions to prevent global warming have a real, well recognised and universal economic value that exists irregardless of access to markets or policies of governments.

3. Engaging in activities to prevent global warming (such as conservation, planting trees, installing alternative energy) are accessible to most people as a democratic source of wealth.

4. Actions to prevent global warming, because they benefit everyone including non-humans, are seen as a source of good will.  Good will is perhaps the most important ingredient for acceptance of a currency.

As opposed to kilowatt hours, kilograms of carbon dioxide equivalent global warming prevention, has a value that does not fluctuate in response to a market if they are used as a currency and not a credit in a government scheme.  This distinction is very important.

If we look at the science we can set an economic value of global warming prevention that is optimal for incentivising greenhouse gas reduction activity in society.  We can then tie the buying power of the currency to the concentration of greenhouse gases in the atmosphere, rather than to any market.  It thus could become a reliable, slowly appreciating, store for wealth and in this respect would be superior to national currency.  

While other local currencies encourage trade and economic activity they are not seen as a reliable way to store wealth and spend it globally.  The two systems, emissions reduction currency and LETS/B2B, working together could make serious headway in developing an alternative, more sustainable economy globally.

josh ryan-collins's picture

Request for Information and Monetary and Functional Design

Hi everyone

Please find attached the monetary and functional design documents for Transition Currency 2.0.  Also at the start of the document is a 'Request for Information' for anyone who would be interested in actually delivering the e-currency platform. We'd be very grateful for your thoughts on the documents and if you could forward the RFI to anyone you know who you think would be interested in helping us (software developers, currency experts etc.)

Many thanks

Josh

Erick Brenes's picture

C3 Method

An interest based system will always favor the accumulation rather than facilitate trade. Given the TIC's available, it is possible to design an Internet based system that stimulate barter and/or credit within a network of consumers and businesses. I recommend a study and develop a STRO method called C3 (Circuit of commercial credit and/or consumers) that uses s opensource software called Cyclos (http://project.cyclos.org)

Please contact us for farther information.

Erick Brenes

chrisrockstrom's picture

Allignment

Hi Josh,

Matthew Slater notified me of this effort a while back but it has taken me a while to follow up.  For those who don't know me, I was a co-founder and catalyst of BerkShares and a convener of the Fund for Complementary Currencies, a small fund circle under the Rudolph Steiner Foundation which made grants to complementary currency projects.  I'm excited that you, in partnership with NEF, are undertaking this critical and overdue project.  But I am sure you are aware, there are many other initiatives going on trying to do the same thing.  By now you obviously know of Mathews project.  We have talked about the establishment of an international body that could help develop technology standards for allowing inter-platform exchange of data.  I am also talking with RSF and Threshold about the creation of an online community resiliency platform that could be a central mashup of relevant communication and organizing tools including

  • crowd funding,
  • project management and governance such as Bettermeans,
  • Local banking portal
  • community currency
  • webinars and virtual meetups
  • CMS and CRM,
  • ect.

It is really critical that we align now to bridge all the efforts taking place to move the world toward thrivability.  It is my belief that we must be brand agnostic, that is, what ever we develop must be white label-able.  So instead of choosing between Drupal or Joomal we should create protocols that communicate between the two platforms.

Our intention is to develop a meta-network umbrella organization that can help build alignment around technology standards for sharing data, online tools related to projects, events, identity, etc.  The organization will be "open" in that anyone can comment, add suggestions, or offer a service.  The code will be open source.  Anyway, I think it would be advantages for all of us to collaborate rather than replicate our efforts.  

Kevin Wilson's picture

Any updates on this?

Any updates on this project? Our TI is currently working on a local currency and it would be nice to know what else is going on in the world...