an application to enable sovereign promise-backed monetary community currencies
Our Credit is an application that enables communities to launch their own sovereign promise-backed mutual credit monetary currencies for their benefit. These currencies are designed to be: value-stablenot inflationary like traditional fiat money and not deflationary like most cryptocurrencies but value-stable because it follows economic activity with credit expansion and contraction that provides just the right amount in circulation, unenclosableit runs distributed using Holochain, and as long as there is at least one peer willing to run it, it will exist, censorship resistantnot under anyone's control or authority, interest free, frictionlessno inherent transaction fees, real-time, managed and run collectively without requiring an intermediary institution like a bank — where peers extend credit to one another.
It aims to make it straightforward for communities to launch, manage and interact with their currencies. Every currency will be independent from any other, both technically and valuably.
This application is free and open-source, and is made by Our Movement — itself a movement aiming to promote radical social change by catalyzing the emergence of resilient communities.
Our financial institutions, be it central banks or private banks, have complete monopoly over money creation and they create it out of nothingit's not backed by any asset at all and lend it with interest. This results in a lot of problems, simplified as:for more detailed information, please see this article published by The Zeitgeist Movement
- Money is created as debt: whenever someone takes a loan — the money supply expands, therefore debt is the engine of economic growth
- The money supply is under private control: only about 5% to 15% of all money supply is created by central banks, the rest is expanded by commercial banks by lending credit — as part of fractional reserve banking
- Bank deposits are not secure: due to fractional reserve banking, banks only keep a fraction of the money in physical form — and if there is a sudden high demand for money from customers, it causes bankruptcy
- The money supply is pro-cyclical: creates boom-and-bust cycles by commercial banks lending credit aggresively to boost profits during times of economic growth and being restrictive to lend credit during recession to minimize risk
- The money supply fosters inflation: money loses value as time passes. More stable currencies depreciate on average a couple of percent annually, while other currencies depreciate even more — and in some cases, currencies suffer double digit inflation rate. In 2017, there were 24 countries with more than 5% inflation rate and 21 countries with double digit percentage inflation rate
- More debt than money in circulation: total debt can never fully be paid back because there's always more debt than money in circulation
- The monetary system is unstable: between 1970 and 2010 a total of 425 financial crises affecting member states of the International Monetary Fund was officially recorded: 145 banking crises, 208 monetary crashes and 72 sovereign-debt crises
- Interest fosters wealth concentration: due to Pareto effect, those that already have money will benefit by gaining interest on their deposits from people that don't have and need those funds
Perpetual economic growth forced by the process of money creation is also the engine of our civilization's downward spiral, to name a few trends like: mass species extinction, climate breakdown, biodiversity and habitat loss, ocean acidification, soil depletion, etc.
Credit and banking access
In our current financial system, access to credit is very expensive because of: interest that is inherent, the process of scrutinizing all loan applications from commercial banks that requires a lot of human resources, and profit. Credit is also inaccessible for a lot of people and SMEs because they're deemed unworthy or risky by the banks.
Banking is also inaccessible to poorer people due to high maintenance fees, and lack of banking branches in rural areas.
Community currencies (including asset-backed currencies) are an alternative to traditional fiat currencies and will break the monopoly of banks (commercial and central) over money creation and management. These are the main points where they differ:
- Exist solely as double-entry-accounting with debits and credits (where the sum total is always zero) and not as physical units
- Are promise-backed and community peers extend credit to one anothercredit is very easy accessed where everyone starts with a default credit limit, and is adjusted by the system based on trasacting history of the last 3 months and not banks
- Are devoid of interest and fees
- Credit expansion and contraction follows economic activity and allow the currency to breathe naturally and makes it effectively value-stable, which is in stark contrast with fiat money that is perpetually inflating and loses at least 1.5% of value annually
- Management and rules of the currency are set by the community itself as opposed to out-of-reach banking institutions
- Cost close to nothing to be created and managed as opposed to traditional fiat money that implement different technologies to prevent counterfeiting of paper cash and coins and a very expensive infrastructure for commercial banks to secure deposits
- Enable a steady-state economy as opposed to fiat that forces the economy to grow forever exponentially
Prominent examples of mutual credit currencies are: Sardex (a B2B mutual credit currency, being used in Sardinia, Italy) and Holo fuel (a micropayment mutual credit currency to be used for distributed web hosting, which will go live sometime in 2019).
Our Credit is a free and open-source application that enables communities to launch their own sovereign promise-backed monetary currencies for their benefit, and implements principles covered in the previous section.
Given that in this day and age almost everyone has a personal smart device~95% of humans aged over 15 have smart phones (source), even in poorer societies, makes the use of Our Credit very accessible — and transacting happens in real-time and can even operate in personal networks without an internet connection, as long as peers have funds to spend. It also runs efficiently on hardware with very low-end specs — so no need for the latest gizmos.
The application is free of charge with no fees to be paid to anyone, and its source code is publicly available for independent inspection at any time. Each currency is an independent holochain, and all the data generated is: transparent, verifiable in real-time and solely exits in devices of members of the respective community — which further instills trust among the participants.
It is made on the open by a community of people from around the world, who have no vested interest on the project itself.
Multiple studies have shown that community currencies: develop local economies, encourage local trade, increase trust among community members, strengthen the social fabric, promote self-sustainability — among others.Stockholm Univesity | The case of Sarafu-credits: Examining how a community currency can contribute to sustainable livelihood in informal settlement (source) Univesity of Copenhagen | Voucher Systems for Food Security: A Case Study on Kenya’s Sarafu-Credit (source)
To make it easy for any community currency for global use, meaning e.g. someone travelling (or purchasing online) from Quito to Nairobi to be able to spend their currency — as long as it has value in the local community, will be exchangable to any other currency through Our Exchange platform, among others. The traversal will be made possible via global asset-backed mutual credit currencies like: Holo fuel, Our Funding fuel, Our Bnb fuel, Our Data fuel, Our Transport fuel — to name a few.
Due to major mobile operating systems like: iOS and Android, sadly not allowing apps to run in the background, it makes running a currency using Our Credit solely on the smart devices of the participants a bit harder — because most people don't spend much time using a payments app on a phone (unlike social media apps for instance), therefore the currency needs a lot of data redundancy. This might result in a lot of data being synced between nodes, and end up creating a lag in transactions. It can be resolved easily with a dedicated server (which could be a modest device like Raspberry Pi) that runs all the time and configured as supernode.
To assist legitimate community currencies, Our Movement pledges to provide support with dedicated high-availability (HA) servers that act as supernodes — should a community decide they need such help. Obviously this is a temporary hack, until mobile operating systems evolve enough to allow apps to run in the background, at least those defined by the user.
This software is free and open-source, and its source code is licensed under Peer Production License (PPL).check Peer Production License for more information
The application is in the ideation stage and will be built using HolochainHolochain is a DLT framework for writing fully distributed peer-to-peer applications. It is open-source and is made by Metacurrency Project for data storage and integrity and QMLQML is a declarative language designed specifically for composing efficient App User Interfaces. It is open-source and is made by Qt Project for the User Interface (UI). It will be accessed most commonly through web browsers but there will also be native apps for major Operating Systems. The application will be fully distributed and run among its peers.
our-credit.org website code is licensed under CC BY-NC-SA 4.0 — unless otherwise noted