Crypto-currency Exchanges: Online crypto-currency exchanges are websites where you can buy, sell or exchange crypto-currencies for another digital currency or fiat money (USD, EUR etc)
Anyone associated with this emerging technology should be asking a question: What is the future for Crypto-Currency Exchanges? The following is our estimations.
The Future of Crypto-Currency Exchanges
Imagine if you could buy and sell a crypto currency without any direct exposure to counter party risk. Imagine if the fees were lower and there were no withdraw limits. Imagine if you could trade against all currencies including gold and silver. Imagine if there was one order book with the best liquidity the market can offer. This is possible today but it is currently one of the best kept secrets in the crypto-currency space. The question remains: What can I (the person reading this) do to use this emerging technology to my advantage and that of my friends and family? Well consider these Facts:
Roles of an Exchange : Posted by Daniel Larimer on January 5, 2015. (http://bytemaster.github.io/article/2015/01/05/The-Future-of-Crypto-Currency-Exchanges.)
Before diving into how crypto currency exchanges will work in the future, lets review the roles that traditional exchanges perform today.
1.) Receive crypto-currency and issue IOU
2.) Receive fiat and issue IOU
3.) Process an order book
4.) Redeem IOUs
Each of these roles has a high degree of trust and direct counter-party risk because at all stages you are transacting with an IOU from the exchange. To get the best liquidity and lowest spreads requires a large and active order book and this means that most people gravitate toward a few core exchanges and everyone is exposed to the same Counterparty Risk. BitStamp is an example of one of the highest volume Bitcoin exchanges and I have thousands of dollars locked up on Bitstamp that are completely inaccessible at the moment because its service has been temporarily (I hope) suspended.
There is a large time delay associated with moving money into or out of an exchange, which means that traders must keep their funds on the exchange. This magnifies the amount of risk to users of the exchange. It also magnifies the risk to all users in the Bitcoin ecosystem. Whenever there is a large security breach it results in significant sell pressure from both the thief looking to cash in their loot and from regular users hoping to sell before the thief.
Centralization Compromises Privacy
Crypto currencies depend upon a public ledger which makes privacy challenging because everyone can see every transaction. Bitcoin gives every user one or more account numbers, and that gives many people a false sense of security. People assume that as long as no one knows your account number and you use a new account number with every transaction that no one can tie all of your Bitcoins to your real life identity. This is where the large centralized exchanges become a problem. In order to comply with government regulations they must know everyone they do business with. Since almost every other Bitcoin transaction flows through an exchange, the exchange learns who everyone is and can start to track who is doing business with whom. Coinbase is already closing accounts based upon who you do business with after withdrawing your Bitcoins.
If we want to have even the slightest bit of privacy we need to divide the exchange functionality among hundreds of parties who are unlikely to collude to compromise identity. This is not economically practical today because the exchange order book creates market incentives that naturally tend toward centralization in just a few exchanges with the vast majority of market share.
If privacy concerns you then I recomend my article on “How to maintain Privacy with BitShares”.
Separation of Powers
There is no reason why the same entity needs to be responsible for issuing IOUs and for processing the order book. It is only because these two roles are combined that we have a tendency toward centralization in the Bitcoin exchange space. If we want to create a decentralized exchange then the first step is to move the order book on to the blockchain where everyone can see it.
Exchanges should become mere gateways that receive USD and issue GatewayUSD on the blockchain. Later they receive GatewayUSD and then execute a wire transfer. They will make their money entirely on transaction fees and not from a percentage of market fees. Check out my earlier blog post about the benefits of becoming a BitShares gateway.
The blockchain will allow users to trade BitstampUSD against BitfinexUSD in order to easily move funds from one gateway to another. Users can even trade BitstampUSD against BitstampBTC or BitstampUSD vs BitfinexBTC.
Unfortunately, simply moving the order book to the block-chain is not enough because the market will naturally centralize around a few gateway IOUs and the markets for them. BitstampUSD is not fungible with BitfinexUSD because they have different trust profiles and regulatory considerations. Any of these IOUs are subject to default just like the IOUs that currently exist on the exchanges’ internal databases. What we need to do is move the trust from individual issuers to the block-chain.
Collateralized Blockchain IOUs
The heart of BitShares is the BitAsset system which enables the creation of 300% collateralized IOUs from the BitShares network. A BitUSD has all of the properties of Bitcoin combined with the price stability of the US dollar. At any point in time you can sell a BitUSD for about 1 dollar worth of BTS. If at any time the value of the collateral falls below a certain point the blockchain will automatically buy back the BitUSD with a dollars worth of BTS.
When you hold BitUSD the value of your holdings will remain pegged to the dollar so long as BitShares itself has reasonable volatility. When I say reasonable, I mean it can handle greater volatility than Bitcoin has ever seen in its life time. The price of BitShares would have to fall to less than 1/3 its starting price in less than 24 hours and then stay there. No legitimate, widely adopted crypto-currency has ever seen that kind of price movement. This means that BitUSD is secure against just about everything but an unfixable software bug in the BitShares protocol itself. By the time BitShares matures to the level Bitcoin is at today you could expect the probability of that kind of bug to be similar to Bitcoin having that kind of bug.
If you want know more about how our market pegged BitAsset system works then checkout my detailed article on the subject.
Global Unified Order Book
Once the market adopts BitUSD and BitBTC as more reliable and decentralized alternatives to BitstampUSD and BitfinexBTC you will see the majority of trading volume move toward BitUSD vs BitBTC. The only time someone would want to move from BitUSD to BitstampUSD is when they are in the process of withdrawing to the traditional banking system.
The impact of a global unified order book is to end all arbitrage opportunities, minimize spreads, and maximize liquidity. By having the trades executed on the BitShares network you also eliminate high-frequency trading and front running. High frequency trading and front running depend upon centralized exchanges with high volume and deep markets. If the vast majority of trading activity were to move to a decentralized, trust-free exchange then the remaining centralized exchanges would be much less appealing to high frequency traders.
Lower Market Fees
BitShares charges per-transaction fees, just like Bitcoin. Currently these fees are less than $0.01 which means that you could place an order to convert $1000 to 3 BTC for just $0.01. If you were to do the same thing on Bitstamp then they would charge you 0.5% or a total of $5. For this single trade BitShares is 500x more cost effective. It also means that traditional exchanges have wider spreads because the exchange fee becomes built into the spread. For all practical purposes the fees saved here should cancel out any extra fees associated with the BitUSD / GatewayUSD spread.
BitUSD to USD Gateways
Many gateways will prefer the low risk approach of one-for-one redemption and will simply allow the GatewayUSD to float against BitUSD with a small, but variable, spread in the market. Users would end up paying a small variable conversion cost as they exit from BitUSD to fiat USD through GatewayUSD. On the other hand, many users will want a direct conversion from BitUSD to fiat USD. In this mode of operation the gateway takes care of providing all of the liquidity within a fixed percentage transaction fee. The gateways will then compete on offering the lowest possible spread. Once this happens then BitUSD is effectively as good as USD with a small fixed conversion fee. This fee will likely be no more than the withdraw and deposit fees that current exchanges charge. BitShares will be a fully operational exchange with many banking partners and no limits. At no point in time will user deposits ever be subject to default or confiscation by an exchange or gateway. A truly decentralized exchange will have been realized and the original vision of BitShares complete.
2015: The Year of the Decentralized Bitcoin Exchange
So now we turn our focus to the issues at hand. How does this apply to Agriculture and the future of the enterprise? How does all of this apply to my situation and help my life? I think we have an answer:
From the Book entitled: "Knowledge and the City, Concepts, Applications and Trends of Knowledge-Based Urban Development – Francisco Javier Carrillo, Tan Yigitcanlar, Blanca García, Antti Lönnqvist - Author, Co-Authors we offer the following information from excerpts in the book, full credit to the author and co-authors identified.
1.4 Constraints and Alternatives in Current Economics: The following is a excerpt from Constraints and Alternatives in Current Economics. In this section, a contrast between the increasingly apparent constraints of the received culture versus the rapidly emerging alternatives is carried out. Such contrast is iterated through seven categories: values, concepts, models, measures, practices, institutions, and roles. We have skipped the section on "values"
Roles of an Exchange : Posted by Daniel Larimer on January 5, 2015. (http://bytemaster.github.io/article/2015/01/05/The-Future-of-Crypto-Currency-Exchanges/)
1.4.2. CONCEPTS: The wide incapacity of the economic establishment to predict and adequately respond to the current economic crisis—already spanning 7 years and with no end in sight—has catalyzed concerns over the soundness of neoclassical economic tenets. Exposures of General Economic Theory failures are now common (Fox, 2011; Guesnerie, 2012; Kay, 2011; Keen, 2011; Kirman, 1989; Soros, 2012; Stiglitz, 2010). “How did economists get it so wrong?” is a question few people would disqualify Paul Krugman (2009), a Nobel laureate in economics, from asking. “There are Idiots: Look around” was a related assertion attributed to Larry Summers, another prominent economist (Klein, 2009). In doing so, Summers might not have been thinking particularly of his fellow economists. He was simply stating a simple matter of fact that was systematically neglected from economic thinking: human economic behavior is prone to mistakes, sometimes big, long, unquestioned mistakes (Johnson & Kwak, 2011; McLean & Nocera, 2011). Nowadays, behavioral economics has set the record straight by exposing the empirical (and rather intuitive) evidence about human economic performance: most of us do not make precise calculations on the expected utility of every alternative action, most of us cannot store all the necessary information to weight potential outcomes, and most of us do not have the will to consistently pursue even what we may believe is in our best interest (McFadden, 2013; Thaler, 2000; Thaler & Sunstein, 2009). “How did economists get it so wrong?” is a question that resonated not only all over Main Street but also in Wall Street and mainstream media such as Business Week: “What Good Are Economists Anyway?” (Coy, 2009); The Economist (2009): “What Went Wrong With Economics?”; The Atlantic: “Will Economists Escape a Whipping?” (Posner, 2009a, 2009b); The Financial Times: “Sweep Economists off Their Throne” (Rachman, 2010); Newsweek: “Blame The Economists” (Hirsh, 2010); Knowledge@Wharton (2009): “Why Economists Failed to Predict the Financial Crisis”; Time Magazine: “Economists: A Profession at Sea” (R. Johnson, 2012b). It is a similar question to one asked candidly by Queen Elizabeth II at the London School of Economics in November, 2008, after the crisis surprised almost everyone and cost 25 million pounds of her personal fortune: “Why did nobody notice it?” (Pierce, 2008, p. 1). This is also a question addressed directly by Michael Reiss when he examined the assumptions underlying the current financial crisis (Reiss, 2011). Similarly, Justin Fox (2011) traced the genealogy of the economic debacle of 2007 onward to the basic acknowledgment by Summers mentioned earlier: we can all be idiots. Yet, the economic profession is selective in terms of analytic intelligence if only for the amount of calculus students must master for graduating. How could economists, otherwise clever people with above average intelligence, have collectively failed to foresee the impending perfect storm that was forming before their eyes? We have already referenced to functional stupidity earlier in the chapter the paradox by which otherwise very talented people can engage into quite irrational behaviors. Besides the culture of control and “don’t ask, don’t tell” ethos pervading the financial establishment as discussed earlier, Keen (2011), provides a detailed account of the process by which critical judgment on the rather unintuitive assumptions of neoclassical economics is systematically defused through the professional economics curriculum. In yet another critical account of the economic crisis, Michael Lewis concludes the obvious after a thorough technical account of the subprime mortgages collapse: “There were idiots. And no one was looking around” (Klein, 2010). Resourcing to a precursor of functional stupidity, Lewis quotes Tolstoy: “the simplest thing cannot be explained to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of doubt, what is laid before him” (Lewis, 2010, p. 31). There are a number of tenants that economists, particularly from the neoclassical tradition, have long held as self-evident and, hence, are treated with dogmatic reverence. The whole issue of seriously considering a scientific re-foundation of economic science has come in force after the subprime crisis (Buchanan, 2009; Corning, 2011; Schultze & Newlon, 2011; Swensen, 2012). That might not be a less taxing undertaking as is a unified theory in physics. But some steps in that direction might be advanced by consolidating a number of criticisms over some fundamental economic concepts that have been raised over the last few decades but have, however, been systematically neglected by the establishment. It is difficult even to select, organize and present a convincing set of such concepts under revision. Certainly, there is no academic consensus on the target and purpose of such review. But for the sake of the current argument (that we seem to be experiencing a transition from a material-based to a knowledge-based economics), there are some suitable candidates. We have grouped them as follows: (a) homo economicus assumption and rational expectation hypothesis (REH), (b) efficient market hypothesis (EMH) and market failures, and (c) indefinite growth and environmental sustainability. Since the third group is discussed within the Measures subsection, let us briefly comment on the first two. With regard to the homo economicus assumption, it is traceable to Jeremy Bentham rather than to Adam Smith or John Stuart Mill, as usually thought (Keen, 2011) and has seen many variations. It involves a sense of rationality insofar the agent optimizes the utilities of perceived opportunities as a consumer or of economic profit as a producer. In its modern form as rational choice theory, it has had an enormous influence not only on economics but also on social sciences, politics and culture at large. Recently, the prominent German thinker Frank Schirrmacher (2013) has undertaken a critical analysis of the cultural costs associated to this paradigm. The REH, in turn, basically implies that the decisions by individual economic agents, even if potentially wrong, are in average statistically correct. This is akin a proverb attributed to Abraham Lincoln: “You can fool some of the people all of the time, and all of the people some of the time, but you cannot fool all of the people all of the time.” Both ideas converge in assuming that, in principle, the behavior of economic agents is rational and aggregate action self-corrective. The problem with this appealing idea is not what it conveys, but what it conceals. People are frequently biased by a number of factors, people often act more emotionally than rationally and people respond gregariously to group behavior (Dow, 2011; Frydman & Goldber, 2012; Sen, 1977; M. Woodford, 2012). After Bacon introduced the Theory of Idols to prevent biases in scientific practice and the whole philosophical and sociological traditions of the analysis of ideologies have done (Blattberg, 2010), the phenomenon by which human beings are subject to irrational assumptions and behaviors is now studied in systematic experimental research and has been summarized by Thaler (2000) as follows: (a) optimism and wishful thinking, (b) overconfidence, (c) false consensus effect and (d) the curse of knowledge (Thaler, 2000, p. 133). What is inevitable is that the ideas of homo economicus and the rational expectations hypothesis are contrasted with empirical evidence from behavioral science (Kahneman, 2013; Thaler, 2000; Thaler & Sunstein, 2009). By the time this chapter was finalized, Robert Shiller, arguably the economist who most clearly anticipated the sub-prime crisis and who warned on the stock market bubble, was awarded the Nobel Prize in Economics. He has been regarded as a champion of bounded rationality in financial markets and has recently advanced guidelines for a banking system that actually serves social improvement (Shiller, 2013). With regard to the EMH, it draws on the previous concepts and has many versions. Basically, it says that in the stock markets the house always wins, suggesting that it is impossible for individual investors to consistently beat a self-adjusting market under publicly shared information.
Although a mitigated or “semi-strong” version gained influence at the end of the 20th century, the current economic crisis and the empirical results from behavioral economics have irreversibly eroded this concept. Guesnerie (2011) clearly locates EMH at the root of both the economic crisis and the conceptual foundations of economics. The Economist (2009) picked up the pieces after the financial crash regarding its impact and the counter-evidence from behavioral economics, suggesting how the concept might evolve in further renewed versions. More recently, the same source gives credit to Nobel laureate in economics Daniel McFadden by acknowledging that “evidence from other disciplines does not just explain those bits of behavior that do not fit the standard models. Rather, what economists consider anomalous is the norm. Homo economicus, not his fallible counterpart, is the oddity” ( The Economist , 2013a, p. 1). Market failures constitute a major battleground between received neoclassical economics and emerging paradigms. Intended as a mere collection of oddities and exceptions to the rule, market failure has become a major theoretical liability. Market failure is another term for inconsistencies in the outcome efficiency of pursuing self-interest. Among its most recognizable expressions are the following: Information asymmetries (one market party is better informed than another). This is certainly of interest to KBD and knowledge markets (see Chapter 8 ). Noncompetitive market structure (where monopolies and several other market distortion emerge). Such structures are disrupted in knowledge-based markets. Principal–agent problem (a tension between the interest of one party that represents and another party being represented). Received views on transaction terms are being disrupted by Internet. Externalities (positive or negative consequences of transactions upon unintended parties). The industrial economy is looking increasingly loaded with negative externalities, such as the exhaustion of nonrenewable natural resources, global warming and further sociopolitical consequences (Alperovitz & Daly, 2008; Parenti, 2012), while the knowledge economy offers unprecedented positive externalities, such as transparency, knowledge spillovers and public accountability; Public goods (non-excludable and non-rivalry goods) such as clean air and open-source knowledge are by definition, intangible assets. From the perspective of KBD, the following series of widely held assumptions seem to be in need of major revision: (a) “individuals are consistent utility maximizes”, leading to (b) “market prices self-regulate through the aggregation of (a)”, which leads in turn to (c) “demand and production can grow indefinitely as a consequence of (b)”, which sustains the use of (d) “GDP as the leading indicator of the state of a nation”. Alternatively, a number of institutions are embracing new economic thinking. Behavioral economics (Cartwright, 2011; Dow, 2011) has been mentioned. George Soros’s (2012) reflections on fallibilism point to a new integration of reason and emotion in economic behavior (Allard et al., 2008; Dow, 2011) and build on the contributions by EAB, evolutionary psychology and heuristics (Gigerenzer, and money have shaped the unsound consumer practices of today has been reconstructed with substantial empirical evidence and analytic criticism (Coggan, 2011; Graeber, 2011; Hudson, 2009; Hudson & Bezemer, 2012; Korten, 2010; Segall, 2012; P. Smith & Max-Neef, 2011; Soddy, 1983). One line of analysis digs into the basic mechanisms of economic behavior in human groups, as tackled by economic anthropology and sociology (Gudeman, 1986; Braudel, 1992; Harris, 1974; M. Harris, 2011). Evolutionary economics, in turn, sheds light on social economic processes from a bounded rationality, nonequilibrium and complex systems evolutionary perspective (Frank, 2011; Higgins, 2013; Nelson & Winter, 1982, 1985). Also, political economy is a scientific tradition being revitalized by the advent of postindustrialism and pointing out contradictions in current economic systems such as the extent to which bond labor (such as debt bondage, debt peonage and slavery) prevails as opposed to free and voluntary contractual job relations (Brass, 1999, 2011; Graeber, 2011) characterized by temporal autonomy.
The Global Agricultural Development Business Trust (GADBT0 has included the previous excerpt of the referenced material simply as a pre-cursor to lay the groundwork for our demonstrated solution in an attempt to revert the customary understanding of the tool we use to relieve the pains of our democratic catastrophe, and open the flexible mind on the concept surrpounding the new application of a centuries old ideal - The Co-Operative. Or to continue in the words of the preceding authors as found in Section 8.4.4. of the book: Cooperative Dealing The global surge of collaborative movements is indicated by the UN declaration of 2012 as International Year of Cooperatives. The economic, behavioral, technological and cultural aspects of social interdependence are now being better understood and managed, as documented in the website [Co-Operation.org]Co-Operation.org . Building on collectivist production traditions and making creative use of ICT, this ancient movement is experiencing a renewal, opening new spaces to innovation and entrepreneurship. Thus our recognition of emerging crypto-currency exchange(s) and the role such technologies could play in "righting the ship". Our quote continues:
A community that practices cooperativism and mutualism is best defined as a community that is organized democratically, allocates rights and duties to its members and works for the sole interest of the community. Members offer services for other members, so they are considered simultaneous clients and owners of the cooperative. An example of a cooperative is the Co-operative Group, a group of people and businesses acting together for their common good as one big business and in economic consumption, from value on ownership, to value on access (Botsman & Rogers, 2012; Gansky, 2010). By setting up a network, communities can now share, rent, swap, barter and give goods and services. A few examples for collaborative consumption are Zipcar (a service that creates a community of people who are able to share their cars) and Taskrabbit (an online community that allow users to do everyday tasks for others in exchange for a fee). Collaborative-consumption.com is an online network that aggregates information, from news and seminars to events and other resources, that further elaborates on the economic and social impact of this new consumption model. Therein, a distinction is drawn between Product Service Systems, Redistribution Markets and Collaborative Lifestyes as types of collaborative consumption. Co-housing is a type of building development designed and maintained by the people living in it. It is characterized by having common areas and by having a neighborhood layout that encourages social interaction between the habitants. Although maintenance is done by individuals in the community, these acts are not to be considered a source of income, as these tasks are part of being within the co-housing development. Cohousing.org is an online aggregator of news, information, classified ads, legal advice and helpful procedures that help new applicants to co-housing.
Co-sharing is a peer-to-peer exchange of goods or services. It is facilitated by an online portal, where a user can offer their goods or services directly to other users. Although co-sharing is mainly about exchanging goods or services for other goods or services, currency can also be requested or offered for them. An example is Refashioner, an online service providing a platform where users can sell, buy and share retail owned by other users. Retail includes apparel, accessories, shoes, bags and collections. In order to sell an item, you take photographs and provide a backstory (you can also add emotion tags). If the user is not sure on what the selling price should be, the site’s “Fashion Police” can provide one for the item. Commissions for sold items are at 22% and PayPal can be used for completing the same physical place. These spaces offer conference rooms, kitchens and the opportunity to interact with new people and obtain creative input on the projects being worked on. To better explain coworking as a concept, as well as provide resources and networking opportunities, the Co-working Wiki was formed. It is an online platform that bridges gaps between space owners and operators and coworkers looking for them. It also serves as a directory for many coworking organizations around the world. There are several establishments where people come together to cowork, Citizen Space in San Francisco is considered one of the pioneers.
8.4.5 Non-monetary Dealing: Social learning in developing countries and the post-2008 global economic stagnation have given a fresh impulse to a number of ideas and working models for local economies that are not defined by, although they may include, a monetary exchange. On the whole, these re-position financial capital as a means, not as an end, to value balance and to redefine the role of currencies in society. The Frugal and Lean movements look at ways of diminishing production inputs and costs by doing more with less. Frugal innovation is about cost-effective innovation, and the ability to innovate under severe constraints. One example of this practice increasingly popular approach is Frugal engineering. The objective of frugal engineering is too create products that ditch over-engineering, simplify processes and foster competition among research and development teams around the world (Radjou, Prabhu & Ahuja, 2012). This practice promotes perceiving situations of constraint as opportunities for growth. A product example is the Mitti Cool Fridge. Developed by Mansukhbhai Prajapati in India after an earthquake shook his home state, this fridge is a low-cost alternative that does not need electricity and can keep vegetables, fruits and milk fresh for several days. In places where access to electricity is scarce due terrain or natural self-management (Drucker, 2005) and the capitalization of actual resources available to the individual, notably intangible ones. In a way, self-sufficiency is a personal approach to knowledge markets. As an example, Studenomics.com tries to inspire self-sufficiency as an economic model for students going through financial setbacks, including the most important problem they face: student debt. A variation of this approach is the whole do-it-yourself (DIY) tradition, which is now being rediscovered as way to mitigating consumerism. Besides doing repair, maintenance and all manageable home projects, this approach looks at innovative ways to reutilize otherwise wasted resources at home and within the community. The DIY network is an online community of practice providing substantial shared resources. DoItYourself.com is another site providing DIY resources, from ancient passive heating and cooling techniques to how-to videos for home repairs. The Moneyless movement is a deliberate attempt to reduce dependency on monetary and material assets (Boyle, 2012), converging closely with the knowledge markets approach. Related to this trend are some of the alternative economic mind-sets mentioned in Chapter 1 : un-paid work, forward pay, gift economies and cognitive surplus (Elgin, 1998; Jay, 2010; Levie, 2012; Last-ovicka et al., 1999; Wann, 2007). These are distinctive not only as a transaction model but also as underlying values. Some of these ideas are embedded in supports services from loyalty programs, to voluntary work, to blood banks. The extent to which this subeconomies support the continuity and endurance of society, particularly in times of crisis, is becoming more evident. Pay it forward is a movement based on everyone having an option to paying a debt to either the creditor or to a third party. The nature of the debt is irrelevant, and currency is not necessary for the movement to function. Pifexperience.com is a website that serves as an official platform for the Pay it Forward movement. Entrepreneurship sites such as MiBiz carry a whole section on Pay if Forward initiatives. An innovative education funding initiative in Oregon is based on a creative Heuvel, 2013). Cognitive Surplus. According to Shirky (2010), the amount of time we pour into watching TV had soared since its invention, but now, for the first time, it has decreased. Instead, we now pour more time into “online activities and interactive media”. Also, the cost of collaboration has decreased thanks to social networking. Huge collaborative undertakings such as Wikipedia are possible due to this convergence of free time and easier cooperation, called cognitive surplus. Not all projects can reach that scope, and detractors might claim that cognitive surplus fuelled by social networks face real-world problems. Still, the opportunity for all of our collective brainpower to be harnessed is there. Cognitive surplus is another scheme resonant with the essentials of knowledge markets in mobilizing idle intellectual capital dimensions and producing collective wealth out of it. Voluntarism is an activity that any person can perform at their will, for their community or other persons, without expecting anything in return (Beito, Gordon, & Tabarok 2010). Nowadays, there are a great number of organizations on- and off-line in which one can enroll and volunteer. The Eurofound has documented the substantial amount of time vested into voluntary work in Europe (see European Quality of Life Survey). Some results shed light on whom and at what age people volunteer. For example, higher-educated as well as higher-paid people pour more hours into volunteering. Men volunteer slightly more than do women, and people aged between 35 and 64 are more likely to volunteer (Eurofound, 2011). Overall, all knowledge markets involve by definition the leveraging of idle non-monetary assets. Hence, Capital Systems Mobilization is a more deliberate and conscious strategy to leverage any form of social value, thus widening the space of possibilities (Carrillo, 2002). As explained earlier in the chapter, the combinatory of capitals in knowledge markets is far richer than the traditional combination of material and financial capital (Flores, 2013). Knowledge cities are just beginning to grasp the huge potential of this new combinatory. End of Quote
On a Larger more constructive and personal note, these are good points considering the current democratic mess we find ourselves in, but more importantly, it is the necessary components the GADBT Plan for Crypto-Currency Exchange and the process we implore which will put our users over the top. In short, let us describe the possibilities in this fashion. Let us say for the sake of argument that the Certificate of Birth is actually a registration of a business in the name of the person it was created for, but does not actually work the way it is described or presented, speaking hypothetically of-course. Now, if the person for which the Birth Certificate was to wake up one day and realize that he or she has been hood-winked or tricked (bamboozled), they might want to take their property back from those that had misused or misrepresented the situation, again, Hypothetically, and use it in a way that will benefit them regardless of what is was truly created for. In this way, the person would be able to use the Certificate of Birth as a platform from the private to the public and use their own energy as a kind of money if they were to document their activities through their own crypto-currency. In this way the World-Wide Web could act as a platform for the monetary exchange of the person's true identity "their energy" and use the crypto-currency exchange as a way to exchange that energy for goods and services they need to survive, to function. Let us look back into our administrative guide for this application of such energy in exchange and see what they experts have said about this exchange:
8.4.7 Alternative Currencies and Incentive Regimes
A natural consequence of opening up value exchange possibilities in knowledge-based markets is the direct access to available forms of capital as well as the local and purpose-specific forms of capital representation and exchange. Not only are functional currencies created, but also new transaction dynamics and new ways of effectively engaging agents are being discovered, as in Gamification. Digital currency is money exchanged electronically through a computer network and can be used as an alternative currency. The most prominent example is Bitcoin , a decentralized electronic cash system, that uses peer-to-peer (P2P) networking along with digital signatures and cryptographics to generate currency. As a user, you generate 25 bitcoins if your computer system can solve a complicated algorithm (the solution being a 64-digit number). The bitcoin network adjusts itself to make the algorithm more difficult or easier, depending on how many bitcoins are being created. The goal of the network is to create 25 bitcoins approximately every 10 minutes. This process is called mining, since there is a limited number of bitcoins. While central banks around the world print more Bit-coins can be exchanged for cash in other currencies such as the U.S. dollar or the euro. Since Bitcoin is not backed by a central bank, its main weakness is stability. But the concept behind this currency is having an effect on mainstream banks, such as the Royal Canadian Mint, which launched MintChip, an electronic currency backed by the Canadian government. Local or complementary currencies are used by a small community secluded by geographical location, or bound by a common bond. These currencies address problems such as unemployment or high-interest rates. Local currencies branch off into other creative ventures, not necessarily meaning legal tender. For example, Fureai Kippu in Japan is a currency that lets a user earn credits for taking care of elders in the user’s local vicinity. In turn, the credits can be transferred to the user’s parents (who live in another town, city or state) and can be exchanged for elderly care (Hayashi, 2012). To better understand implementation of local currencies, the Feasta Currency Group was founded, mainly to share experiences online regarding the use of local currencies. Feasta is an online portal, focusing on economic, environmental and cultural characteristics of a “truly sustainable” society that does not necessarily need constant growth. Complementary currencies are exploding worldwide (see the Afterword), and dedicated conferences, journals and repositories are now available. Token economies became fashionable in the 1970s with the rise of the experimental analysis of behavior. Particularly effective in closed institutional settings such as heath care facilities, where they remain popular, these are now being reassessed as community development tools. As an example, Tookets is an online platform in which an alternative currency is created and distributed by its users and allows for a more democratic and dynamic form of charitable donations. It works by allowing enterprises to applying to the website and distributing “tookets” to its individual employees, instead of directly giving money to charitable associations. Employees can then log on to the Tookets website and give “tookets” to the charity of their choice, and in turn, the associations can exchange the “tookets” for currency directly with the companies or promoting user interaction. It has been used extensively in marketing (Foursquare), education (Khan Academy) and scientific pursuits (WhaleFM, Galaxy Zoo). One of these examples is Foldit, an online puzzle game that allows players to work on proteins that do not have a known structure. By allowing human players to fold proteins in this game environment, it was found that human protein folders can be more effective than computers can be at protein prediction. More importantly, the success of Foldit contributed to leveraging the current appeal of crowd science initiatives worldwide. Gamification involves a whole set of tools for social incentive, and together with Nudging (Thaler & Sustein, 2009), it involves a new and expanding area of social design where subtle cues can be used to prompt collectively desirable outcomes.
8.4.8 Alternative Banking
Another natural consequence of multiplying the spectrum of value categories to be considered in an exchange system is the need for new ways of intermediation that not only are capable of dealing with alternative contents but are also oriented toward the values and interests of the communities being served. One of such alternative means of exchange is bartering . For example, Skillsbarter is an online service that addresses a need to deal in other terms, alternative to traditional currencies. It allows participants to barter skills for free, by getting in touch with people with special skills who can solve a determined problem the user might have. Participants offer a skill and the service sends an e-mail with a list of people who need your help while looking for a match for type of service you need..... P2P bankless lending allows a user to lend money and earn high interest on their savings by dealing directly with other users instead of dealing with big banks. Zopa is a P2P lending online service based in the London. Zopa is able to offer better rates to savers and borrowers due to low transaction costs. Whereas banks have big overhead costs related to maintenance of branches and salaries of thousands of employees, Zopa allows a more efficient system, through a direct dealing between individual savers and borrowers.
Anyone associated with this emerging technology should be asking a question: What is the future for Crypto-Currency Exchanges? The following is our estimations.
The Future of Crypto-Currency Exchanges
Imagine if you could buy and sell a crypto currency without any direct exposure to counter party risk. Imagine if the fees were lower and there were no withdraw limits. Imagine if you could trade against all currencies including gold and silver. Imagine if there was one order book with the best liquidity the market can offer. This is possible today but it is currently one of the best kept secrets in the crypto-currency space. The question remains: What can I (the person reading this) do to use this emerging technology to my advantage and that of my friends and family? Well consider these Facts:
Roles of an Exchange : Posted by Daniel Larimer on January 5, 2015. (http://bytemaster.github.io/article/2015/01/05/The-Future-of-Crypto-Currency-Exchanges.)
Before diving into how crypto currency exchanges will work in the future, lets review the roles that traditional exchanges perform today.
1.) Receive crypto-currency and issue IOU
2.) Receive fiat and issue IOU
3.) Process an order book
4.) Redeem IOUs
Each of these roles has a high degree of trust and direct counter-party risk because at all stages you are transacting with an IOU from the exchange. To get the best liquidity and lowest spreads requires a large and active order book and this means that most people gravitate toward a few core exchanges and everyone is exposed to the same Counterparty Risk. BitStamp is an example of one of the highest volume Bitcoin exchanges and I have thousands of dollars locked up on Bitstamp that are completely inaccessible at the moment because its service has been temporarily (I hope) suspended.
There is a large time delay associated with moving money into or out of an exchange, which means that traders must keep their funds on the exchange. This magnifies the amount of risk to users of the exchange. It also magnifies the risk to all users in the Bitcoin ecosystem. Whenever there is a large security breach it results in significant sell pressure from both the thief looking to cash in their loot and from regular users hoping to sell before the thief.
Centralization Compromises Privacy
Crypto currencies depend upon a public ledger which makes privacy challenging because everyone can see every transaction. Bitcoin gives every user one or more account numbers, and that gives many people a false sense of security. People assume that as long as no one knows your account number and you use a new account number with every transaction that no one can tie all of your Bitcoins to your real life identity. This is where the large centralized exchanges become a problem. In order to comply with government regulations they must know everyone they do business with. Since almost every other Bitcoin transaction flows through an exchange, the exchange learns who everyone is and can start to track who is doing business with whom. Coinbase is already closing accounts based upon who you do business with after withdrawing your Bitcoins.
If we want to have even the slightest bit of privacy we need to divide the exchange functionality among hundreds of parties who are unlikely to collude to compromise identity. This is not economically practical today because the exchange order book creates market incentives that naturally tend toward centralization in just a few exchanges with the vast majority of market share.
If privacy concerns you then I recomend my article on “How to maintain Privacy with BitShares”.
Separation of Powers
There is no reason why the same entity needs to be responsible for issuing IOUs and for processing the order book. It is only because these two roles are combined that we have a tendency toward centralization in the Bitcoin exchange space. If we want to create a decentralized exchange then the first step is to move the order book on to the blockchain where everyone can see it.
Exchanges should become mere gateways that receive USD and issue GatewayUSD on the blockchain. Later they receive GatewayUSD and then execute a wire transfer. They will make their money entirely on transaction fees and not from a percentage of market fees. Check out my earlier blog post about the benefits of becoming a BitShares gateway.
The blockchain will allow users to trade BitstampUSD against BitfinexUSD in order to easily move funds from one gateway to another. Users can even trade BitstampUSD against BitstampBTC or BitstampUSD vs BitfinexBTC.
Unfortunately, simply moving the order book to the block-chain is not enough because the market will naturally centralize around a few gateway IOUs and the markets for them. BitstampUSD is not fungible with BitfinexUSD because they have different trust profiles and regulatory considerations. Any of these IOUs are subject to default just like the IOUs that currently exist on the exchanges’ internal databases. What we need to do is move the trust from individual issuers to the block-chain.
Collateralized Blockchain IOUs
The heart of BitShares is the BitAsset system which enables the creation of 300% collateralized IOUs from the BitShares network. A BitUSD has all of the properties of Bitcoin combined with the price stability of the US dollar. At any point in time you can sell a BitUSD for about 1 dollar worth of BTS. If at any time the value of the collateral falls below a certain point the blockchain will automatically buy back the BitUSD with a dollars worth of BTS.
When you hold BitUSD the value of your holdings will remain pegged to the dollar so long as BitShares itself has reasonable volatility. When I say reasonable, I mean it can handle greater volatility than Bitcoin has ever seen in its life time. The price of BitShares would have to fall to less than 1/3 its starting price in less than 24 hours and then stay there. No legitimate, widely adopted crypto-currency has ever seen that kind of price movement. This means that BitUSD is secure against just about everything but an unfixable software bug in the BitShares protocol itself. By the time BitShares matures to the level Bitcoin is at today you could expect the probability of that kind of bug to be similar to Bitcoin having that kind of bug.
If you want know more about how our market pegged BitAsset system works then checkout my detailed article on the subject.
Global Unified Order Book
Once the market adopts BitUSD and BitBTC as more reliable and decentralized alternatives to BitstampUSD and BitfinexBTC you will see the majority of trading volume move toward BitUSD vs BitBTC. The only time someone would want to move from BitUSD to BitstampUSD is when they are in the process of withdrawing to the traditional banking system.
The impact of a global unified order book is to end all arbitrage opportunities, minimize spreads, and maximize liquidity. By having the trades executed on the BitShares network you also eliminate high-frequency trading and front running. High frequency trading and front running depend upon centralized exchanges with high volume and deep markets. If the vast majority of trading activity were to move to a decentralized, trust-free exchange then the remaining centralized exchanges would be much less appealing to high frequency traders.
Lower Market Fees
BitShares charges per-transaction fees, just like Bitcoin. Currently these fees are less than $0.01 which means that you could place an order to convert $1000 to 3 BTC for just $0.01. If you were to do the same thing on Bitstamp then they would charge you 0.5% or a total of $5. For this single trade BitShares is 500x more cost effective. It also means that traditional exchanges have wider spreads because the exchange fee becomes built into the spread. For all practical purposes the fees saved here should cancel out any extra fees associated with the BitUSD / GatewayUSD spread.
BitUSD to USD Gateways
Many gateways will prefer the low risk approach of one-for-one redemption and will simply allow the GatewayUSD to float against BitUSD with a small, but variable, spread in the market. Users would end up paying a small variable conversion cost as they exit from BitUSD to fiat USD through GatewayUSD. On the other hand, many users will want a direct conversion from BitUSD to fiat USD. In this mode of operation the gateway takes care of providing all of the liquidity within a fixed percentage transaction fee. The gateways will then compete on offering the lowest possible spread. Once this happens then BitUSD is effectively as good as USD with a small fixed conversion fee. This fee will likely be no more than the withdraw and deposit fees that current exchanges charge. BitShares will be a fully operational exchange with many banking partners and no limits. At no point in time will user deposits ever be subject to default or confiscation by an exchange or gateway. A truly decentralized exchange will have been realized and the original vision of BitShares complete.
2015: The Year of the Decentralized Bitcoin Exchange
So now we turn our focus to the issues at hand. How does this apply to Agriculture and the future of the enterprise? How does all of this apply to my situation and help my life? I think we have an answer:
From the Book entitled: "Knowledge and the City, Concepts, Applications and Trends of Knowledge-Based Urban Development – Francisco Javier Carrillo, Tan Yigitcanlar, Blanca García, Antti Lönnqvist - Author, Co-Authors we offer the following information from excerpts in the book, full credit to the author and co-authors identified.
1.4 Constraints and Alternatives in Current Economics: The following is a excerpt from Constraints and Alternatives in Current Economics. In this section, a contrast between the increasingly apparent constraints of the received culture versus the rapidly emerging alternatives is carried out. Such contrast is iterated through seven categories: values, concepts, models, measures, practices, institutions, and roles. We have skipped the section on "values"
Roles of an Exchange : Posted by Daniel Larimer on January 5, 2015. (http://bytemaster.github.io/article/2015/01/05/The-Future-of-Crypto-Currency-Exchanges/)
1.4.2. CONCEPTS: The wide incapacity of the economic establishment to predict and adequately respond to the current economic crisis—already spanning 7 years and with no end in sight—has catalyzed concerns over the soundness of neoclassical economic tenets. Exposures of General Economic Theory failures are now common (Fox, 2011; Guesnerie, 2012; Kay, 2011; Keen, 2011; Kirman, 1989; Soros, 2012; Stiglitz, 2010). “How did economists get it so wrong?” is a question few people would disqualify Paul Krugman (2009), a Nobel laureate in economics, from asking. “There are Idiots: Look around” was a related assertion attributed to Larry Summers, another prominent economist (Klein, 2009). In doing so, Summers might not have been thinking particularly of his fellow economists. He was simply stating a simple matter of fact that was systematically neglected from economic thinking: human economic behavior is prone to mistakes, sometimes big, long, unquestioned mistakes (Johnson & Kwak, 2011; McLean & Nocera, 2011). Nowadays, behavioral economics has set the record straight by exposing the empirical (and rather intuitive) evidence about human economic performance: most of us do not make precise calculations on the expected utility of every alternative action, most of us cannot store all the necessary information to weight potential outcomes, and most of us do not have the will to consistently pursue even what we may believe is in our best interest (McFadden, 2013; Thaler, 2000; Thaler & Sunstein, 2009). “How did economists get it so wrong?” is a question that resonated not only all over Main Street but also in Wall Street and mainstream media such as Business Week: “What Good Are Economists Anyway?” (Coy, 2009); The Economist (2009): “What Went Wrong With Economics?”; The Atlantic: “Will Economists Escape a Whipping?” (Posner, 2009a, 2009b); The Financial Times: “Sweep Economists off Their Throne” (Rachman, 2010); Newsweek: “Blame The Economists” (Hirsh, 2010); Knowledge@Wharton (2009): “Why Economists Failed to Predict the Financial Crisis”; Time Magazine: “Economists: A Profession at Sea” (R. Johnson, 2012b). It is a similar question to one asked candidly by Queen Elizabeth II at the London School of Economics in November, 2008, after the crisis surprised almost everyone and cost 25 million pounds of her personal fortune: “Why did nobody notice it?” (Pierce, 2008, p. 1). This is also a question addressed directly by Michael Reiss when he examined the assumptions underlying the current financial crisis (Reiss, 2011). Similarly, Justin Fox (2011) traced the genealogy of the economic debacle of 2007 onward to the basic acknowledgment by Summers mentioned earlier: we can all be idiots. Yet, the economic profession is selective in terms of analytic intelligence if only for the amount of calculus students must master for graduating. How could economists, otherwise clever people with above average intelligence, have collectively failed to foresee the impending perfect storm that was forming before their eyes? We have already referenced to functional stupidity earlier in the chapter the paradox by which otherwise very talented people can engage into quite irrational behaviors. Besides the culture of control and “don’t ask, don’t tell” ethos pervading the financial establishment as discussed earlier, Keen (2011), provides a detailed account of the process by which critical judgment on the rather unintuitive assumptions of neoclassical economics is systematically defused through the professional economics curriculum. In yet another critical account of the economic crisis, Michael Lewis concludes the obvious after a thorough technical account of the subprime mortgages collapse: “There were idiots. And no one was looking around” (Klein, 2010). Resourcing to a precursor of functional stupidity, Lewis quotes Tolstoy: “the simplest thing cannot be explained to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of doubt, what is laid before him” (Lewis, 2010, p. 31). There are a number of tenants that economists, particularly from the neoclassical tradition, have long held as self-evident and, hence, are treated with dogmatic reverence. The whole issue of seriously considering a scientific re-foundation of economic science has come in force after the subprime crisis (Buchanan, 2009; Corning, 2011; Schultze & Newlon, 2011; Swensen, 2012). That might not be a less taxing undertaking as is a unified theory in physics. But some steps in that direction might be advanced by consolidating a number of criticisms over some fundamental economic concepts that have been raised over the last few decades but have, however, been systematically neglected by the establishment. It is difficult even to select, organize and present a convincing set of such concepts under revision. Certainly, there is no academic consensus on the target and purpose of such review. But for the sake of the current argument (that we seem to be experiencing a transition from a material-based to a knowledge-based economics), there are some suitable candidates. We have grouped them as follows: (a) homo economicus assumption and rational expectation hypothesis (REH), (b) efficient market hypothesis (EMH) and market failures, and (c) indefinite growth and environmental sustainability. Since the third group is discussed within the Measures subsection, let us briefly comment on the first two. With regard to the homo economicus assumption, it is traceable to Jeremy Bentham rather than to Adam Smith or John Stuart Mill, as usually thought (Keen, 2011) and has seen many variations. It involves a sense of rationality insofar the agent optimizes the utilities of perceived opportunities as a consumer or of economic profit as a producer. In its modern form as rational choice theory, it has had an enormous influence not only on economics but also on social sciences, politics and culture at large. Recently, the prominent German thinker Frank Schirrmacher (2013) has undertaken a critical analysis of the cultural costs associated to this paradigm. The REH, in turn, basically implies that the decisions by individual economic agents, even if potentially wrong, are in average statistically correct. This is akin a proverb attributed to Abraham Lincoln: “You can fool some of the people all of the time, and all of the people some of the time, but you cannot fool all of the people all of the time.” Both ideas converge in assuming that, in principle, the behavior of economic agents is rational and aggregate action self-corrective. The problem with this appealing idea is not what it conveys, but what it conceals. People are frequently biased by a number of factors, people often act more emotionally than rationally and people respond gregariously to group behavior (Dow, 2011; Frydman & Goldber, 2012; Sen, 1977; M. Woodford, 2012). After Bacon introduced the Theory of Idols to prevent biases in scientific practice and the whole philosophical and sociological traditions of the analysis of ideologies have done (Blattberg, 2010), the phenomenon by which human beings are subject to irrational assumptions and behaviors is now studied in systematic experimental research and has been summarized by Thaler (2000) as follows: (a) optimism and wishful thinking, (b) overconfidence, (c) false consensus effect and (d) the curse of knowledge (Thaler, 2000, p. 133). What is inevitable is that the ideas of homo economicus and the rational expectations hypothesis are contrasted with empirical evidence from behavioral science (Kahneman, 2013; Thaler, 2000; Thaler & Sunstein, 2009). By the time this chapter was finalized, Robert Shiller, arguably the economist who most clearly anticipated the sub-prime crisis and who warned on the stock market bubble, was awarded the Nobel Prize in Economics. He has been regarded as a champion of bounded rationality in financial markets and has recently advanced guidelines for a banking system that actually serves social improvement (Shiller, 2013). With regard to the EMH, it draws on the previous concepts and has many versions. Basically, it says that in the stock markets the house always wins, suggesting that it is impossible for individual investors to consistently beat a self-adjusting market under publicly shared information.
Although a mitigated or “semi-strong” version gained influence at the end of the 20th century, the current economic crisis and the empirical results from behavioral economics have irreversibly eroded this concept. Guesnerie (2011) clearly locates EMH at the root of both the economic crisis and the conceptual foundations of economics. The Economist (2009) picked up the pieces after the financial crash regarding its impact and the counter-evidence from behavioral economics, suggesting how the concept might evolve in further renewed versions. More recently, the same source gives credit to Nobel laureate in economics Daniel McFadden by acknowledging that “evidence from other disciplines does not just explain those bits of behavior that do not fit the standard models. Rather, what economists consider anomalous is the norm. Homo economicus, not his fallible counterpart, is the oddity” ( The Economist , 2013a, p. 1). Market failures constitute a major battleground between received neoclassical economics and emerging paradigms. Intended as a mere collection of oddities and exceptions to the rule, market failure has become a major theoretical liability. Market failure is another term for inconsistencies in the outcome efficiency of pursuing self-interest. Among its most recognizable expressions are the following: Information asymmetries (one market party is better informed than another). This is certainly of interest to KBD and knowledge markets (see Chapter 8 ). Noncompetitive market structure (where monopolies and several other market distortion emerge). Such structures are disrupted in knowledge-based markets. Principal–agent problem (a tension between the interest of one party that represents and another party being represented). Received views on transaction terms are being disrupted by Internet. Externalities (positive or negative consequences of transactions upon unintended parties). The industrial economy is looking increasingly loaded with negative externalities, such as the exhaustion of nonrenewable natural resources, global warming and further sociopolitical consequences (Alperovitz & Daly, 2008; Parenti, 2012), while the knowledge economy offers unprecedented positive externalities, such as transparency, knowledge spillovers and public accountability; Public goods (non-excludable and non-rivalry goods) such as clean air and open-source knowledge are by definition, intangible assets. From the perspective of KBD, the following series of widely held assumptions seem to be in need of major revision: (a) “individuals are consistent utility maximizes”, leading to (b) “market prices self-regulate through the aggregation of (a)”, which leads in turn to (c) “demand and production can grow indefinitely as a consequence of (b)”, which sustains the use of (d) “GDP as the leading indicator of the state of a nation”. Alternatively, a number of institutions are embracing new economic thinking. Behavioral economics (Cartwright, 2011; Dow, 2011) has been mentioned. George Soros’s (2012) reflections on fallibilism point to a new integration of reason and emotion in economic behavior (Allard et al., 2008; Dow, 2011) and build on the contributions by EAB, evolutionary psychology and heuristics (Gigerenzer, and money have shaped the unsound consumer practices of today has been reconstructed with substantial empirical evidence and analytic criticism (Coggan, 2011; Graeber, 2011; Hudson, 2009; Hudson & Bezemer, 2012; Korten, 2010; Segall, 2012; P. Smith & Max-Neef, 2011; Soddy, 1983). One line of analysis digs into the basic mechanisms of economic behavior in human groups, as tackled by economic anthropology and sociology (Gudeman, 1986; Braudel, 1992; Harris, 1974; M. Harris, 2011). Evolutionary economics, in turn, sheds light on social economic processes from a bounded rationality, nonequilibrium and complex systems evolutionary perspective (Frank, 2011; Higgins, 2013; Nelson & Winter, 1982, 1985). Also, political economy is a scientific tradition being revitalized by the advent of postindustrialism and pointing out contradictions in current economic systems such as the extent to which bond labor (such as debt bondage, debt peonage and slavery) prevails as opposed to free and voluntary contractual job relations (Brass, 1999, 2011; Graeber, 2011) characterized by temporal autonomy.
The Global Agricultural Development Business Trust (GADBT0 has included the previous excerpt of the referenced material simply as a pre-cursor to lay the groundwork for our demonstrated solution in an attempt to revert the customary understanding of the tool we use to relieve the pains of our democratic catastrophe, and open the flexible mind on the concept surrpounding the new application of a centuries old ideal - The Co-Operative. Or to continue in the words of the preceding authors as found in Section 8.4.4. of the book: Cooperative Dealing The global surge of collaborative movements is indicated by the UN declaration of 2012 as International Year of Cooperatives. The economic, behavioral, technological and cultural aspects of social interdependence are now being better understood and managed, as documented in the website [Co-Operation.org]Co-Operation.org . Building on collectivist production traditions and making creative use of ICT, this ancient movement is experiencing a renewal, opening new spaces to innovation and entrepreneurship. Thus our recognition of emerging crypto-currency exchange(s) and the role such technologies could play in "righting the ship". Our quote continues:
A community that practices cooperativism and mutualism is best defined as a community that is organized democratically, allocates rights and duties to its members and works for the sole interest of the community. Members offer services for other members, so they are considered simultaneous clients and owners of the cooperative. An example of a cooperative is the Co-operative Group, a group of people and businesses acting together for their common good as one big business and in economic consumption, from value on ownership, to value on access (Botsman & Rogers, 2012; Gansky, 2010). By setting up a network, communities can now share, rent, swap, barter and give goods and services. A few examples for collaborative consumption are Zipcar (a service that creates a community of people who are able to share their cars) and Taskrabbit (an online community that allow users to do everyday tasks for others in exchange for a fee). Collaborative-consumption.com is an online network that aggregates information, from news and seminars to events and other resources, that further elaborates on the economic and social impact of this new consumption model. Therein, a distinction is drawn between Product Service Systems, Redistribution Markets and Collaborative Lifestyes as types of collaborative consumption. Co-housing is a type of building development designed and maintained by the people living in it. It is characterized by having common areas and by having a neighborhood layout that encourages social interaction between the habitants. Although maintenance is done by individuals in the community, these acts are not to be considered a source of income, as these tasks are part of being within the co-housing development. Cohousing.org is an online aggregator of news, information, classified ads, legal advice and helpful procedures that help new applicants to co-housing.
Co-sharing is a peer-to-peer exchange of goods or services. It is facilitated by an online portal, where a user can offer their goods or services directly to other users. Although co-sharing is mainly about exchanging goods or services for other goods or services, currency can also be requested or offered for them. An example is Refashioner, an online service providing a platform where users can sell, buy and share retail owned by other users. Retail includes apparel, accessories, shoes, bags and collections. In order to sell an item, you take photographs and provide a backstory (you can also add emotion tags). If the user is not sure on what the selling price should be, the site’s “Fashion Police” can provide one for the item. Commissions for sold items are at 22% and PayPal can be used for completing the same physical place. These spaces offer conference rooms, kitchens and the opportunity to interact with new people and obtain creative input on the projects being worked on. To better explain coworking as a concept, as well as provide resources and networking opportunities, the Co-working Wiki was formed. It is an online platform that bridges gaps between space owners and operators and coworkers looking for them. It also serves as a directory for many coworking organizations around the world. There are several establishments where people come together to cowork, Citizen Space in San Francisco is considered one of the pioneers.
8.4.5 Non-monetary Dealing: Social learning in developing countries and the post-2008 global economic stagnation have given a fresh impulse to a number of ideas and working models for local economies that are not defined by, although they may include, a monetary exchange. On the whole, these re-position financial capital as a means, not as an end, to value balance and to redefine the role of currencies in society. The Frugal and Lean movements look at ways of diminishing production inputs and costs by doing more with less. Frugal innovation is about cost-effective innovation, and the ability to innovate under severe constraints. One example of this practice increasingly popular approach is Frugal engineering. The objective of frugal engineering is too create products that ditch over-engineering, simplify processes and foster competition among research and development teams around the world (Radjou, Prabhu & Ahuja, 2012). This practice promotes perceiving situations of constraint as opportunities for growth. A product example is the Mitti Cool Fridge. Developed by Mansukhbhai Prajapati in India after an earthquake shook his home state, this fridge is a low-cost alternative that does not need electricity and can keep vegetables, fruits and milk fresh for several days. In places where access to electricity is scarce due terrain or natural self-management (Drucker, 2005) and the capitalization of actual resources available to the individual, notably intangible ones. In a way, self-sufficiency is a personal approach to knowledge markets. As an example, Studenomics.com tries to inspire self-sufficiency as an economic model for students going through financial setbacks, including the most important problem they face: student debt. A variation of this approach is the whole do-it-yourself (DIY) tradition, which is now being rediscovered as way to mitigating consumerism. Besides doing repair, maintenance and all manageable home projects, this approach looks at innovative ways to reutilize otherwise wasted resources at home and within the community. The DIY network is an online community of practice providing substantial shared resources. DoItYourself.com is another site providing DIY resources, from ancient passive heating and cooling techniques to how-to videos for home repairs. The Moneyless movement is a deliberate attempt to reduce dependency on monetary and material assets (Boyle, 2012), converging closely with the knowledge markets approach. Related to this trend are some of the alternative economic mind-sets mentioned in Chapter 1 : un-paid work, forward pay, gift economies and cognitive surplus (Elgin, 1998; Jay, 2010; Levie, 2012; Last-ovicka et al., 1999; Wann, 2007). These are distinctive not only as a transaction model but also as underlying values. Some of these ideas are embedded in supports services from loyalty programs, to voluntary work, to blood banks. The extent to which this subeconomies support the continuity and endurance of society, particularly in times of crisis, is becoming more evident. Pay it forward is a movement based on everyone having an option to paying a debt to either the creditor or to a third party. The nature of the debt is irrelevant, and currency is not necessary for the movement to function. Pifexperience.com is a website that serves as an official platform for the Pay it Forward movement. Entrepreneurship sites such as MiBiz carry a whole section on Pay if Forward initiatives. An innovative education funding initiative in Oregon is based on a creative Heuvel, 2013). Cognitive Surplus. According to Shirky (2010), the amount of time we pour into watching TV had soared since its invention, but now, for the first time, it has decreased. Instead, we now pour more time into “online activities and interactive media”. Also, the cost of collaboration has decreased thanks to social networking. Huge collaborative undertakings such as Wikipedia are possible due to this convergence of free time and easier cooperation, called cognitive surplus. Not all projects can reach that scope, and detractors might claim that cognitive surplus fuelled by social networks face real-world problems. Still, the opportunity for all of our collective brainpower to be harnessed is there. Cognitive surplus is another scheme resonant with the essentials of knowledge markets in mobilizing idle intellectual capital dimensions and producing collective wealth out of it. Voluntarism is an activity that any person can perform at their will, for their community or other persons, without expecting anything in return (Beito, Gordon, & Tabarok 2010). Nowadays, there are a great number of organizations on- and off-line in which one can enroll and volunteer. The Eurofound has documented the substantial amount of time vested into voluntary work in Europe (see European Quality of Life Survey). Some results shed light on whom and at what age people volunteer. For example, higher-educated as well as higher-paid people pour more hours into volunteering. Men volunteer slightly more than do women, and people aged between 35 and 64 are more likely to volunteer (Eurofound, 2011). Overall, all knowledge markets involve by definition the leveraging of idle non-monetary assets. Hence, Capital Systems Mobilization is a more deliberate and conscious strategy to leverage any form of social value, thus widening the space of possibilities (Carrillo, 2002). As explained earlier in the chapter, the combinatory of capitals in knowledge markets is far richer than the traditional combination of material and financial capital (Flores, 2013). Knowledge cities are just beginning to grasp the huge potential of this new combinatory. End of Quote
On a Larger more constructive and personal note, these are good points considering the current democratic mess we find ourselves in, but more importantly, it is the necessary components the GADBT Plan for Crypto-Currency Exchange and the process we implore which will put our users over the top. In short, let us describe the possibilities in this fashion. Let us say for the sake of argument that the Certificate of Birth is actually a registration of a business in the name of the person it was created for, but does not actually work the way it is described or presented, speaking hypothetically of-course. Now, if the person for which the Birth Certificate was to wake up one day and realize that he or she has been hood-winked or tricked (bamboozled), they might want to take their property back from those that had misused or misrepresented the situation, again, Hypothetically, and use it in a way that will benefit them regardless of what is was truly created for. In this way, the person would be able to use the Certificate of Birth as a platform from the private to the public and use their own energy as a kind of money if they were to document their activities through their own crypto-currency. In this way the World-Wide Web could act as a platform for the monetary exchange of the person's true identity "their energy" and use the crypto-currency exchange as a way to exchange that energy for goods and services they need to survive, to function. Let us look back into our administrative guide for this application of such energy in exchange and see what they experts have said about this exchange:
8.4.7 Alternative Currencies and Incentive Regimes
A natural consequence of opening up value exchange possibilities in knowledge-based markets is the direct access to available forms of capital as well as the local and purpose-specific forms of capital representation and exchange. Not only are functional currencies created, but also new transaction dynamics and new ways of effectively engaging agents are being discovered, as in Gamification. Digital currency is money exchanged electronically through a computer network and can be used as an alternative currency. The most prominent example is Bitcoin , a decentralized electronic cash system, that uses peer-to-peer (P2P) networking along with digital signatures and cryptographics to generate currency. As a user, you generate 25 bitcoins if your computer system can solve a complicated algorithm (the solution being a 64-digit number). The bitcoin network adjusts itself to make the algorithm more difficult or easier, depending on how many bitcoins are being created. The goal of the network is to create 25 bitcoins approximately every 10 minutes. This process is called mining, since there is a limited number of bitcoins. While central banks around the world print more Bit-coins can be exchanged for cash in other currencies such as the U.S. dollar or the euro. Since Bitcoin is not backed by a central bank, its main weakness is stability. But the concept behind this currency is having an effect on mainstream banks, such as the Royal Canadian Mint, which launched MintChip, an electronic currency backed by the Canadian government. Local or complementary currencies are used by a small community secluded by geographical location, or bound by a common bond. These currencies address problems such as unemployment or high-interest rates. Local currencies branch off into other creative ventures, not necessarily meaning legal tender. For example, Fureai Kippu in Japan is a currency that lets a user earn credits for taking care of elders in the user’s local vicinity. In turn, the credits can be transferred to the user’s parents (who live in another town, city or state) and can be exchanged for elderly care (Hayashi, 2012). To better understand implementation of local currencies, the Feasta Currency Group was founded, mainly to share experiences online regarding the use of local currencies. Feasta is an online portal, focusing on economic, environmental and cultural characteristics of a “truly sustainable” society that does not necessarily need constant growth. Complementary currencies are exploding worldwide (see the Afterword), and dedicated conferences, journals and repositories are now available. Token economies became fashionable in the 1970s with the rise of the experimental analysis of behavior. Particularly effective in closed institutional settings such as heath care facilities, where they remain popular, these are now being reassessed as community development tools. As an example, Tookets is an online platform in which an alternative currency is created and distributed by its users and allows for a more democratic and dynamic form of charitable donations. It works by allowing enterprises to applying to the website and distributing “tookets” to its individual employees, instead of directly giving money to charitable associations. Employees can then log on to the Tookets website and give “tookets” to the charity of their choice, and in turn, the associations can exchange the “tookets” for currency directly with the companies or promoting user interaction. It has been used extensively in marketing (Foursquare), education (Khan Academy) and scientific pursuits (WhaleFM, Galaxy Zoo). One of these examples is Foldit, an online puzzle game that allows players to work on proteins that do not have a known structure. By allowing human players to fold proteins in this game environment, it was found that human protein folders can be more effective than computers can be at protein prediction. More importantly, the success of Foldit contributed to leveraging the current appeal of crowd science initiatives worldwide. Gamification involves a whole set of tools for social incentive, and together with Nudging (Thaler & Sustein, 2009), it involves a new and expanding area of social design where subtle cues can be used to prompt collectively desirable outcomes.
8.4.8 Alternative Banking
Another natural consequence of multiplying the spectrum of value categories to be considered in an exchange system is the need for new ways of intermediation that not only are capable of dealing with alternative contents but are also oriented toward the values and interests of the communities being served. One of such alternative means of exchange is bartering . For example, Skillsbarter is an online service that addresses a need to deal in other terms, alternative to traditional currencies. It allows participants to barter skills for free, by getting in touch with people with special skills who can solve a determined problem the user might have. Participants offer a skill and the service sends an e-mail with a list of people who need your help while looking for a match for type of service you need..... P2P bankless lending allows a user to lend money and earn high interest on their savings by dealing directly with other users instead of dealing with big banks. Zopa is a P2P lending online service based in the London. Zopa is able to offer better rates to savers and borrowers due to low transaction costs. Whereas banks have big overhead costs related to maintenance of branches and salaries of thousands of employees, Zopa allows a more efficient system, through a direct dealing between individual savers and borrowers.