For all the talk those of us at The MetaCurrency Project have gotten into about the meaning of open, the meaning of currency, and various subtleties therein, the core of The MetaCurrency Project is actually very simple. IMHO, it boils down to the following question: What would it take to make the role of 3rd party record keeping irrelevant?
For those of you who need a quick overview, 3rd party record keeping is what a bank does. It is also what a commercial barter organization does and even a timebank. When the records are denominated in terms of dollars, it is an official IRS designation. For those of us comfortable including things likes 5-star ratings in the definition of currency, 3rd party record keeping also refers to Yelp!, Ebay, etc, since they keep the records people make about fellow users.
The ability to record stuff that happened in the real world, and derive useful information from those records (such as account balances, or average user ratings) is obviously very powerful. Just being in the business of 3rd party record keeping can concentrate massive amounts of wealth (just look at the banking industry). What's more, as the failure of many local currencies has shown us, this architecture can be highly fragile, subject to the petty personal politics that so often run rampant in activist circles.
What if we had a way to perform all the same functions, but without the middle man? What if our records could be distributed in such a way that they couldn't be tampered with, and privacy was still protected? We believe this shift would open up vast new possibilities for how we organize ourselves economically, as well as offer a resilience to our economy heretofore unrealized. In essence, that has been what The MetaCurrency Project has been trying to figure out how to do for the last few years. And, this is a more difficult challenge than you may think....
However, I for one would be delighted if someone out there figured it out no matter who it was.
as you know, banks do not concentrate massive amounts of wealth because they are 3rd party record keepers but because of legal tender laws and fractional reserve lending. those are the problems, not the people managing the recordkeeping.
ReplyDeleteA very interesting take on it all, Alan. I agree that this issue of a 3rd party is at the core of these innovations, the essence as you say.
ReplyDeleteOn the other hand, it is useful to ask just what the role of that third party is. Record keeping is only part of it. Contracts, agreements and their enforcement is the real core. That's what the records are about, the contracts and agreements between the parties.
I think that is why Art puts so much importance on the Open Rules part. In the 3rd party system, the broker sets the rules by offering only certain contracts and agreements. But opening up the rules process only begs the question of what such a process looks like. Not the ultimate rules, but the social processes by which we find effective rules that serve our common purposes and not just the purposes of the 3rd party gatekeepers (the banks, the Fed, Ebay, and all your examples).
I think that is why Michael's initiative Open Stewardship is also very important.
@herestomwiththeweather the fact that banks are empowered as the sole issuers of money via fractional reserve is only possible because of their position as centralized record keepers. if it were possible to perform the same function without centralized 3rd party record keeping, the issue would be entirely moot. In essence, there would be no there there to empower, government monopoly or no.
ReplyDeleteI would also contend that the same applies just as much to commercial barter exchanges and other centralized attempts at alternative money systems. Removing the need for this role entirely would be a pretty serious disruptive technology, IMHO.
@Gerry The rules are centralized because the record keeping is. You need rules (or at least a meaningfully defined context) for how to make records, and where else could you have those other than in the same hub as the records...
ReplyDeleteSo I think of the question of rules as completely interlinked with the question of record keeping. This is why Art has focused so much attention on distributed computing as a necessary component interlinked with distributed record keeping.
@AlanRosenblith the term "centralized record keeper" is ambiguous and possibly confusing and a clearer term is "third party record keeper" - for instance, one could easily use the term "centralized record keeper" to describe the intention of the metacurrency project. just because such a system existed would not make the issue moot. if i have to pay taxes in legal tender, then i'm going to demand legal tender for payments.
ReplyDelete@herestomewiththeweather records can be kept in one central place (i.e. a bank, or a barter exchange) or they can be distributed among the users (like what happens in a skype chat). The MetaCurrency Project is trying to provide infrastructure for the latter, not the former.
ReplyDeleteI agree though that the legal tender question is real. However, if we can remove the friction in the market caused by centralized 3rd party record keeping (such as transaction fees, overdraft charges, insufficient access to capital, etc), I suspect banks won't have much of a choice but to adapt their mission to the new possibilities afforded by the technology or risk being driven out of business (like newspapers and the record industry).
One more thing re: legal tender. If we don't focus on currencies based on the quid-pro-quo agreement, this isn't a problem. I am most interested in how we can use non-monetary currencies to expand the success of commons-based peer production (wikipedia, open source, etc) into other sectors of the economy. That would be really be an end run around the whole enchilada if you ask me... :)
ReplyDeleteAlan, I'm pointing to the rules for making the rules, hence my connection of Open Rules to Open Stewardship. I don't think you can make the former without first having the later in a somewhat robust form. At least within the scope of the trust communities involved.
ReplyDeletethanks for the clarification. count me in for avoiding the whole enchilada.
ReplyDeleteI get the end-around as a long term strategy, I'm just not sure the best path to get there. The whole trading system has been adding wealth to human-kind for a long time, and I don't know that we want to totally get beyond all that. To be sure, the "winners" of that game are capable of gaming the systems of power for a long time. They may damage the future for all to keep what is really only a perceived advantage. The socialization to scarcity runs deeps in all economic classes.
ReplyDeleteWe may have to beat them at their own game first before we can get the chance to try ours.
"What would it take to make the role of 3rd party record keeping irrelevant?"
ReplyDeleteA distributed system like bittorrent combined with encryption could probably do it. The key is to prevent counterfeiting. That is the most important thing a 3rd party offers. It could be done by the peers in the network rather than by a third party.
The third parties we have traditionally trusted with our money (banks and government) have become the biggest counterfeiters. Yet, according to a recent survey, most people still trust banks more than their neighbors. The obstacle is more social/psychological than technological, I suspect.
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