Outlining an economic system by and for the common good
Posted on December 28, 2015 by Alicia Trepat Pont | Blog
This Blog Post is a contribution by Faircoop: The Earth Cooperative for a Fair Economy.
This post’s goal is to provide knowledge and understanding on the system of alternative currencies. We recommend you to take some time to go through this highly interesting journey through the creation of money and P2P movement to end up with an alternative to the current system and even to the already famous Bitcoins. Enjoy & spread the word!
#Faircoin #P2P #SystemicChange
In the past few years we have been experiencing an unprecedented systemic crisis that is destroying the planet. Greed and the lust for power of the few are wreaking havoc not only with our natural environment but also with the social, economic and productive fabric humanity has striven to build for centuries. However, for the first time in history citizens have in their hands the ability to develop systems of exchange, knowledge and networking through technological innovations based on Free Software, Open Source methodology and P2P-based distribution, facilitating the development of alternatives to today’s dominant systems.
In recent years a new disruptive technology has come into play: The Blockchain. Through the revolution enabled by this technology, we at FairCoop wish to create a monetary, economic and financial system which supersedes the established one and whose basic principles are orientation towards the common good and the fair distribution of wealth for all. In this article we explain how we propose to do it.
FairCoop. The Earth Cooperative for a Fair Economy
Outlining an economic system by and for the common good
Nobody is now denying that we are at a time of profound change and what looks like an evolution towards a new era, due both to the economic and social crises we face to varying degrees in all corners of the planet, but also to the technological revolutions we are witnessing concurrently.
The key issue in this evolution towards a new era is not so much in how this development takes place, since the current systemic crisis indicates clearly that we are already immersed in the change, but rather in the role of communities taking advantage of this emerging new technology and how it seems to be radically changing the way we relate to each other.
For the first time in history perhaps, we the people face great changes, but with certain advantages, not only in the increased access to information that these new developments have given us, but in the fact that many of these are still free technologies, largely in the hands of citizens and freely accessible to all – unlike technological developments in the past which have been captured by an elite few – and are readily and quickly available to any citizen who by using their intelligence and knowledge can leverage and improve the technology for the benefit of the common good.
We are facing an historic moment in which the real source of wealth and opportunities is a collective intelligence that gives humanity the ability to progress and improve on an equal footing, showing that material wealth is not what makes human beings thrive but the ability to create. And also for the first time we know that our goal is to thrive, and to do it in a conscious balance between ourselves and the environment around us; thrive together, because there is no other way.
We know that there are many challenges facing us in multiple areas, and from the perspective of FairCoop we want to influence the monetary,economic and financial system, one of the key elements where change is needed to create a new world in which all of us belong. A new opportunity opens before us in which awareness that the current situation and indeed the very fabric from which it is created is unsustainable, but with the added chance to leverage the new technology that is emerging, and ensure that its development is in the hands of citizens. It could mean not only an economic paradigm shift, but one affecting aspects of our life that are as yet unimaginable to us.
How did we get here?
Since ancient times humans have devised different ways to give things value in order to exchange them. Debt has been a key driver within the concept of money from the beginning. Debt between peers and in appropriate situations, barter, formed the basis of an archetypal P2P economic system which was subsequently appropriated by the State. Today we are starting to regain this P2P exchange system through the use of social currencies and cryptocoins outside of State control.
In recent times money is back in the spotlight due to the manipulated economic crisis we are facing, which to many of us is more of a scam. The system that is currently used for the creation and distribution of money could be said in fact to be a scam which in turn has led to the re-emergence in recent years of local currencies as an alternative to this monetary system that progressively leaves out increasingly large parts of the population. It is in these situations that citizens come together to create alternatives, and in this scenario social currencies resurface.
Social money has always been part of economic and monetary history; just remember how these forms of money were used in wartime (such as during the American Civil War or World War II), as well as in times of economic crisis – or simply as an alternative to a system that does not include everyone, such as capitalism, as shown with the ECO in Catalonia.
But to understand how we got here it’s necessary to review briefly the current state of money creation, because therein lies the root of the great economic and social problems we face. Most of us have been taught that money is created by the government, when the reality is that over 97% of money is created by private banks.
There have been three distinct changes to our economic system which have been important in the journey that got us where we are now. Firstly the elimination of the gold standard, which provided a reference for money creation and value, secondly the relaxation of regulations which led to the merging of savings and investment bank and finally the mandate given to private banks by the state, allowing them to create money from nothing when making loans to individuals and organisations.
The combination of all these elements, linked to state policies based on neoliberal economic principles has meant, on the one hand that the economic system is now based on debt (since States alone can no longer create the money supply necessary for economic activity without interest8 but now have to borrow from the big banks, this has led states to owe money it is impossible to pay), and on the other that we depend on private banks to finance us. As a result we have a debt based rather than democracy based economy and system of production, with no real ability to ever repay the debt and this is creating serious problems for people, society and the economy in general.
There are many citizens’ groups currently putting great effort into explaining the current economic system to the public in an attempt to bring this debate to the street level, and whose work allows us to delve deeper into this matter. Therefore we will not do so here, except maybe a brief explanation of the system of money creation is necessary in order to understand why we need a profound change in this area.
Free Software and Open Source technology in the hands of citizens as a tool for change.
Without losing sight of the fact that the situation we are currently facing is due to a convergence of different forces, and taking into account that only a holistic vision can really give us a useful overview of the situation, for the purpose of brevity we will focus in this article on knowledge, interconnection, and cooperation, as areas where technological developments might be applied.
In this regard one of the greatest impediments to commons-based developments has been patents and so-called “intellectual property rights”. Under the prevailing idea of being for the good of humanity, a world of corporate monopoly interests is hidden, which has resulted on too many occasions in recent history in situations where monopoly and manipulation have prevented free development. It’s important to consider the negative aspects of this system and the results are there for all to see.
Against this monopoly movements such as Free Software, Open Source and Copyleft have risen, P2P technologies are developed and the hacker movement of citizens has been created; united under the same idea: fight against this system that inhibits development, and give rise to a social and cultural movement which can demonstrate that free access to knowledge, culture and progress is crucial to development based on the common good and for the commons.
In this new scenario born nearly three decades ago now, we see the greatest advance in the history of mankind since progress began its exponential growth in the nineteenth century. We are witnessing the rise of technology in all aspects of our life (YouTube was founded in 2005 and it seems to have been there forever, not to mention smartphones which in four short years have made our lives so easy we do not believe we could ever have lived without them); a revolution in the era of knowledge, with unprecedented access to information and most importantly, a role for the ordinary citizen in the development of these new technologies thanks to open source and the innate human need to cooperate with others in order to thrive.
A clear example is all the technology developed around collaboration between peers, otherwise known as P2P. This development has brought a number of benefits and advances in the way we relate to each other, and how we share and store information. It has highlighted the strength of the human being when in possession of appropriate awareness and tools, weakening the dominant system and finding solutions to problems through more even distribution of information (exhibit ‘A’ is file sharing networks – Napster and similar software being the classic example – which jeopardized the copyright and cultural industries, forcing them to consider what citizens do or say, and secondly the development of cloud storage which has reduced the cost of, and greatly facilitated, the storage and distribution of information).
The latest example of how citizens can be an active and essential part of technological development, helping us transition to the era of post-capitalism is Bitcoin, or more specifically the technology that supports it, Blockchain. Since its inception in 2009 we see how it has gone from contempt and prohibition to massive investment (over $480,000,000 last year and almost $1000,000,000 in the last two years), and the reporting has changed from constantly negative to analysing the advantages and possibilities of this new technology. And this is just the beginning.
Like any technology that is under development it is difficult to entirely explain the possibilities it presents. This is especially true when this technology can result in the creation and use of entirely new applications, touching on issues or areas that we had not even thought of up to now. Although the intention of this article is not to do a thorough analysis of this innovation, it is however necessary to explain what it is and how it works.
The Blockchain is simply a database distributed between computers participating in a network; an accounting record, with features that make it secure, fast, inexpensive, transparent and inclusive, which uses a cryptocurrency – Bitcoin – for registration of transactions carried out within the system. Though the cryptocurrency concept may be new to us, we must be aware that for some time now we have been using digital money – every time you make a transaction through your online banking service, or use a credit or debit card you are using digital money. Having accepted that, one can relax and not be too baffled by these concepts, which as we have seen are not so new after all. Let’s see how this new type of digital money, a cryptocurrency, works in more detail.
Bitcoin was born in 2008 when Satoshi Nakamoto created the genesis block of this blockchain-based technology. Nobody knows exactly who Satoshi Nakamoto is. It is an alias used by the developer (or developers) of this emerging and disruptive technology.
Since then a lot has happened around this cryptocurrency, both in terms of its ideological underpinnings and its development from a technological, commercial and economic standpoint. Regarding the first aspect, the ideological – due to the “romantic” nature of its anonymous creator and being a tool based on P2P, much has been said about the origin and purpose of this new technology, initially in terms of its revolutionary aim to serve the people, and now with the current prevailing view that a form of anarcho-capitalism is at the core of this new way of relating to money and economics.
With regard to its technological development we can emphasize that in the past two years large amounts (about one billion dollars in venture capital) have been invested in developing an ecosystem around Bitcoin (wallet software, infrastructure, financial services and exchange with other crypto-currencies, mining, payment systems, …) that allow this technology to integrate into the current economic and financial system, and it should now be clear it is that it is here to stay. This is evident not only by the increased investment in this new technology, but by the fact that you can already use it in your day to day life.
One can buy Bitcoins at ATMs in many parts of the world, use Visa and Mastercard credit cards and recharge them with Bitcoin, use the ATM network in Spain to get Euros by paying with Bitcoin, pay bills and payroll, purchase from online retailers like Dell, Microsoft or Ebay, and even the Spanish Ministry of Finance considers Bitcoin a taxable good that acts as a means of payment (it is subject to VAT generally but exempt from it when used within the scope of financial transactions).
Before proceeding we will briefly describe how the technology works and take a look at the pros and cons of Bitcoin itself. We are going to start with a definition that will help us to understand what Bitcoin is.
Bitcoin is a digital, finite, decentralized currency distributed through a P2P network based on the free distribution blockchain protocol with which users can make direct transactions with each other without the need for an intermediary. It has been said to be private, simple, safe and low cost.
How cryptocurrencies work
– Users initiate a payment using a software wallet
– This and other pending transactions are disseminated through the global Bitcoin network
– After a few minutes, the “miners” – computers or networks of computers – combine hundreds of transactions into a block
– In order to mine the block and complete the transaction, a mathematical equation that will increase in difficulty (which is called the Hash) must be solved.
– Other miners validate these transactions and if they are approved, the miner who solved that particular equation will receive a reward in new Bitcoin
– The mining block is then added to the chain of blocks (blockchain) which serves as an inviolable public record and where all transactions are stored.
Once we have an overview of this new technology we can begin to analyse the advantages and disadvantages of this new technology (Blockchain) and of Bitcoin itself, so that we can begin to see the new opportunities that are opening.
We start with the negative part of Bitcoin; its main disadvantage is the high energy consumption required, being based on PoW. ‘Proof of Work’ means that in order to ‘mine’ and thus receive the reward of new Bitcoin there needs to be a proof of work done (i.e. calculations carried out by the combined computing power of the computers involved in the network), and as the difficulty or Hash is constantly increasing, this means increasingly more powerful computers are needed to continue mining, making it energetically inefficient.
There are other types of validations that get around this problem such as PoS (Proof of Stake or “holding” based on the saving of cryptocurrency in a wallet program) or PoC (Proof of Cooperation currently being developed by FairCoop for our cryptocurrency, Faircoin, see below). On the other hand we now see that Bitcoin has a purely speculative value and therefore is creating what is coming to be called the “Aristocracy of Bitcoin”, with this new cryptocurrency being left in the hands of a few – with all the risk that this entails.
Concluding this part of the analysis, we must not forget that, as we said at the beginning, all this new technology is based on open, distributed and free code, so that we as ordinary citizens can take advantage of all the advances that are taking place in this space and can therefore appropriate this technology and start to improve those aspects that might most negatively affect the development of a new monetary, financial and economic system that puts its focus on people, fair distribution of wealth, and the common good.
This is the goal and focus of FairCoop as discussed below.
FairCoop as a means for creating a new monetary and economic system.
FairCoop is a global open cooperative that organizes itself outside the limits and controls of the nation-state. We at FairCoop understand that a key element in building this new world is a transformation towards a more just monetary and economic system. We believe that there are too many things that do not really serve humanity and that in some cases we ourselves can contribute to their transformation:
– We live at a time of unprecedented economic inequality as never before has 10% of the population owned 85% of the wealth. This situation must be reversed creating a just economy in the hands of a global network organized by citizens and without intermediaries;
– The dominant economic models are based on unsustainable growth and should be changed in favour of being more in harmony with natural ecosystems, as we now have the technology that can allow us to live in synergy with the planet;
– We live in a centralised and hierarchical political system that must be replaced by a more bottom-up P2P politics; decentralised, transparent and direct, using new technologies to visualize and experiment with new ways of doing politics;
– We must overcome individualistic and competitive dynamics and instead strengthen cooperation and solidarity, creating opportunities for mutual support;
– We must also understand that knowledge should be free and not be held privately. This is why we encourage a system of protection to put a stop to the practice of making private profits from the commons.
Our objectives are clear: to cooperatively build a system whose principles can be summarised in the following points:
- Redistribution and economic exchange between equals
- Open political participation
- Decentralization of organizational forms
- Production of commons
- Open sharing and distribution of knowledge
To achieve this we focus on Faircoin as a cryptocurrency that we can build on in order to redistribute wealth as is required in building a new global economic system.
Because Bitcoin is based on Open Source, over the years hundreds of ‘altcoins’ or alternative currencies have been created whose intention is to adapt or improve the basic cryptocurrency concept in order to create alternative currencies that fulfil different functions. It has opened up a world of possibilities where money creation is in the hands of anyone with the knowledge, skills or need to create an alternative to the current monetary system that we find ourselves both limited and subjugated by. While many of these coins, essentially the ones that do not have an underlying project backing them and justifying their existence, are doomed to disappear, many could survive as long as they fulfil a useful function.
Faircoin was developed with the intention of serving the common good. Faircoin is the currency that FairCoop is developing and is the seed for further development not only of a new currency but of an entire economic and financial ecosystem intended to support and secure the ultimate goal we seek: to help make the transition to a new world, reducing as much as possible the economic and social differences between humans, and simultaneously contributing to a new global wealth accessible to all mankind as a commons.
Faircoin overcomes the disadvantages we discussed earlier that are characteristic of Bitcoin. The first and most important is Bitcoin’s lack of energy sustainability.
Faircoin is currently using a ‘Proof of Stake’ model to achieve distributed consensus between peers, which is to say that our form of mining is based on saving currency and not on computational capacity, and so does not require large computers and high energy expenditure (that is, it is not based on owning large and expensive computers but simply on saving money, so is accessible to anyone).
Faircoin also serves as a store of value throughout the FairCoop ecosystem, as opposed to the current speculative interest in Bitcoin, which is why it is not being accumulated in the hands of a few, but is being redistributed in social and and environmental projects, as we shall see in the next point. We are currently developing Faircoin 2.0 with which we will introduce a new concept: PoC (Proof of Cooperation) with the aim of creating a stable, robust network that is consistent with our principles.
But a new economic system needs more than one currency; in fact we need a series of tools that complement and help to shape the new system which emerges a little more every day.
FairCoop tools and resources
FairCoop aims to provide a set of tools and resources that enable the creation of a new economic system, which we will summarise here:
Fairsaving. This is a saving service provided by FairCoop. It also has a dual purpose as it acts as a store of Faircoin value. Fairsaving gives you the ability to save your Faircoins as well as providing a wallet service to all those who are new to this technology and do not feel comfortable maintaining their own wallet, or those without an internet connection or device on which they can manage their savings. There is only one requirement: the commitment to save your Faircoins for at least 6 months before being able to spend them.
FairMarket. This is the current focus of our development efforts. FairMarket is an online decentralised global market, for all those who wish to offer their products and services and for those who wish to use Faircoin as payment. It is currently in an alpha development phase but in the near future will also serve as a platform for Faircredit, the mutual credit system for members of FairCoop.
Coopshares. A collaborative investment platform aimed at providing financial resources and liquidity to both FairCoop itself and those related cooperative and social economy projects which face major difficulties in obtaining funding.
Fairstarts. This project is a network of incubators and accelerators for the collaborative peer production economy based on freely available open knowledge. Supported by collective investment through Coopshares, it aims to provide support such as technological, legal and financial assessment, counselling, networking, plus physical and financial resources to projects sharing our values.
Commoney. Project in development for a public bank in the service of the common good. Supported by the Blockchain technology developed by Ripple10 and Stellar11 which facilitates exchange between existing currencies: fiat money, social currencies and cryptocurrencies, quickly, easily and securely. This way we ensure that you can use every monetary tool in the most convenient and appropriate way. We think it can especially be a vehicle linking social money projects – which are more locally oriented – to a global-level currency (Faircoin) that meets the same requirements as social currencies and can extend their advantages to interconnect this new economy on a global level.
Faircredit. (In Development). Mutual credit tool that aims to be our greatest monetary innovation. Faircredit is a global monetary system of mutual credit backed by Faircoin, which will serve as a vehicle of economic exchange and also credit expansion and contraction between the members of FairCoop, thus reducing the need to spend Faircoin and deepening its role as a store of value, while at the same time promoting more appropriate mechanisms for the extension of credit and economic exchange.
Unlike Faircoin, Faircredit will only be used within FairCoop and cannot be used to conduct transactions with individuals or companies that are not members of FairCoop.
In addition to these tools FairCoop has other basic resources at its disposal:
Fairfunds. The aim of these funds is to allow Faircoin or solidarity economy related projects to be able to fund themselves. These funds have an initial endowment of Faircoins in order to achieve this goal. Also these funds can be constantly replenished via the permanent campaign on Coopfunding14 the open, cooperative crowdfunding platform founded by the Cooperativa Integral Catalana.
Presently these funds are threefold:
- The Global South Fund. The aim is to allocate these resources to fight inequality and restore global economic justice. We propose to empower communities and cooperatives excluded from access to basic resources or the means to produce wealth by using open source; i.e. methods of production which can be shared and replicated. This fund, its characteristics and its many objectives require a specific organisational structure to make it possible, mainly the creation of nodes of support in as many parts of the world as possible, which can take on the task of linking FairCoop with those collectives needing empowerment, enabling validation (to avoid possible deception and abuse), and thus generating a network of mutual cooperation on a global scale, based as much as possible, in the regions themselves.
- The Commons Fund. Strategic projects aimed at generating commons for the benefit of all mankind. Its objective is to finance projects that co-produce intangible assets such as information and knowledge in key areas such as health, energy, food and economic systems, and projects that promote networking on a global scale to generate material commons. The main objective of this fund is to promote open knowledge and merge it with open hardware to empower communities in all possible ways while creating commons.
- Technological Infrastructure Fund. The resources of this fund will be allocated to technological, economic or educational projects that promote the spread and ease of use of Faircoin as a currency or as a stable vehicle for saving, plus other technologies related to exchange, finance and payment processing needed for the economic system that FairCoop is building.
But all this would not be possible without a community of people who participate in the construction of this new system.
How FairCoop is Organised
The FairCoop project began in September 2014 with an initial team including Enric Duran and the Catalonia Integral Cooperative; Michel Bauwens and the P2P Foundation and Amir Taaki, representing Hacker ethics and principles, in addition to many other people and initiatives around the world.
It is based on the open cooperative model proposed by Bauwens which includes four key elements:
- Cooperatives have to be statutorily oriented toward the common good.
- Cooperatives need to have governance models that include all stakeholders.
- Cooperatives must be actively co-producing the creation of intangible common goods and materials.
- Cooperatives should be organised on a global basis socially and politically, even when producing only locally.
From this promoter group what we call the Fairforest developed, based on a metaphor in which each element in the forest is autonomous and distinct but related, forming an overall ecosystem which makes up the FairCoop. Our forest is made up of groups of people formed into councils and commissions which are the trunks and branches that give life to this ecosystem.
The councils, in this analogy, are the trunks of the trees in this forest. A council is formed by a group of people, between 6 and 8, elected by the FairCoop community. Each year, elections are held to elect new members and thus offer everyone the opportunity to participate and cooperate in this growth. Council members are known throughout the community and are evaluated continuously, so for this reason it is important to build trust among all stakeholders and also that all processes are 100% transparent and open.
We are currently developing four councils:
- Ecosystem Council. This is the main council, whose duties are making decisions on the overall functioning of the FairCoop, the various economic tools and operations of this system, and to act as an agency to coordinate and organise networking, plus support the local nodes.
- Council of the Global South: Supporting empowerment and self-management at a local level.
- Commons Council: Building open global commons.
- Technological Infrastructure Council: Creating the means by which information flows are shared.
These last three are the councils that manage the Fairfunds, as we saw earlier.
Commissions, on the other hand, consist of the operational branches of our trees. Each council can have different branches according to their needs and objectives. Initially, the only council with commissions attached is the Ecosystem Council; the others will develop with time and as required.
Unlike the councils, all commissions are open-ended: any member can join a commission and give their time to assist with various tasks as much as they can.
How to participate in this new system
FairCoop invites you to participate in the creation of this new ecosystem and therefore you need to know the different ways of participating in the project.
– Using the various tools and resources that FairCoop offers. As we have seen before, we are building many tools in order to create a fully functional ecosystem so right now many tools are still under development, while there are others that we can start using right away.
The main thing is to have Faircoin. It’s very easy to get started, just download a program, called the wallet which we use to manage the transactions made with the currency. Once you have a wallet you can buy Faircoin through Getfaircoin.net.
Once we have our currency we can start using it in shops, cooperatives and related projects that can be found in the directory we have created, save it in the Fairsaving service, or invest in related projects through Coopshares. In the near future you will also be able to use our FairMarket.
– Being part of the community. Become an active member of the community by registering on our website and participating in the Fairnetwork. There are many committees and working groups to which everyone can contribute. Also you can participate in the local nodes that act as territorial extensions. Their aim is to take FairCoop into the real economy by means of a feedback loop that goes from the local to the global, and back to the local. If there isn’t a local node in your region you can participate by helping to create one. The node also acts as a POE (Faircoin Point of Exchange) and as a place to get support and information to help FairCoop expand throughout that area, and gradually, the planet.
– Creating partnerships and synergies with other projects. FairCoop is not an isolated project, but a project that is built by all and for all, also it is designed to grow with learning and experience. It is not a closed system of unilateral decisions, but will grow by using collective intelligence, within an open and collaborative learning process.
To generate valid experiences for the construction of a viable alternative system in all those aspects that make up a society, it is necessary to create synergies with other projects that share a similar vision of a new world whose pillars are the common good, solidarity and cooperation; all this in an open and horizontally-organised context.
In just one year of operation we now have more than 800 members in the cooperative; we have operational local nodes in several regions of Spain, Germany, Portugal, United Kingdom, Greece, Italy, the United States, Colombia, Chile and Ireland. And a window of opportunity is opening before us as Blockchain technology is further developed, and on which we can then build the tools that allow us to glimpse a hopeful future. We just need to join forces, coordinate and empower ourselves – but for the first time we have before us the possibility of creating a new world to which we can all belong.
Fair.coop is an open global cooperative, self-organized via the Internet and remaining outside nation-state control.
Its aim is to make the transition to a new world by reducing the economic and social inequalities among human beings as much as possible, and at the same time gradually contribute to a new global wealth, accessible to all humankind as commons.
Fair.coop understands that the transformation to a fairer monetary system is a key element. Therefore, Faircoin was proposed as the cryptocurrency upon which to base its resource-redistribution actions and building of a new global economic system.
Integral revolution, peer2peer, cryptocurrencies, free knowledge, hacker ethics, degrowth, good living… It all emerges from clear principles and objectives that unite us to help us make the transition to a new world, reducing as much as possible economic and social inequalities among human beings, and at the same time contributing to a new global wealth, accessible to all mankind as commons.
To know more: https://fair.coop
 Blockchain not only offers solutions regarding economic issues such as in the use of cryptocurrencies but extends to other aspects of social organization and is currently being used in new developments in areas such as direct democracy: using the Blockchain to record in a transparent and inviolable manner citizens’ votes; Smartcontracts: intelligent contracts recorded on blockchains, DACs: decentralized autonomous corporations as a form of business organization, reputation systems, the Internet of things … A whole world of possibilities opens up before our eyes making it a certainty that the block chain will be a central element in the organization of future societies.
Tags: Currency, FairCoin, FairCoop, P2P, SystemicChange