Barter 3.0Back to the Future       Chris CookIRTA Convention     Ocho Rios   14 September 2012
Market 2.0 - Exchanges                       Title              Title        Sellers               Clearing               ...
Financing and Funding FinancingPeople-based creditShort/medium term, medium/high riskFinances circulation of goods & serv...
Banking 2.0 – Financing (eg trade credit)           Value           Value  Seller           Bank            Buyer         ...
Banking 2.0 – Funding             Value           ValueDepositor            Bank            Borrower              $       ...
Banking 2.0 Accounting system – transactions (obligations) and title (rights) Unit of account eg $ Guarantee (framework...
Barter 2.0                     ValueSeller                                  Buyer                    Operator         Trad...
Lets look back to Market 1.0
Settlement 1.0      Merchant A                       Seller B                      IOUIOU                                 ...
Guarantee 1.0 – Risk Pooling eg Tontines    Member                                        Member                     Value...
Credit 1.0 - Stock
Market 1.0 never went away..... Settlement 1.0Brent/BFOE forward market in North Sea OilWeb applications – Ripple and Cir...
NewClear - Seller accepts Buyers IOU              Value  Seller                   Buyer               IOU
IOU is registered with Transaction Registry                Value  Seller                        Buyer                 IOU ...
NewClear – Transaction Registry Database held by a custodian of all open bilateral peer to peer  credit obligations Posi...
IOU is guaranteed by Clearing Union of Sellers &              Buyers collectively                  Value     Seller       ...
Seller & Buyer pay guarantee charge into Pool held                   by Custodian                       Value        Selle...
Settlement 1/ - Buyer settles open credits in money       or moneys worth eg energy stock                       Value     ...
Settlement 2/- System identifies a chain of IOUs       A<B<C<D<E<A and nets them out                                 IOU  ...
Settlement 3/ - Buyer defaults: system pays sellers        and collects from buyer if possible       Seller A             ...
Service provider sets guarantee limits, handles          defaults & manages system                        Value     Seller...
Outcome – the community is the currency Communities have a common bond eg geographical or  functional Community-based cr...
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IRTA Conference - Barter 3.0 transition

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IRTA Conference - Barter 3.0 transition

  1. 1. Barter 3.0Back to the Future Chris CookIRTA Convention Ocho Rios 14 September 2012
  2. 2. Market 2.0 - Exchanges Title Title Sellers Clearing Buyers Broker House Broker $ $ TitleTitle Seller Buyer
  3. 3. Financing and Funding FinancingPeople-based creditShort/medium term, medium/high riskFinances circulation of goods & services and creation of new productive assets FundingAsset-based creditMedium/long term, medium/low riskFunds completed productive assets
  4. 4. Banking 2.0 – Financing (eg trade credit) Value Value Seller Bank Buyer $ $
  5. 5. Banking 2.0 – Funding Value ValueDepositor Bank Borrower $ $
  6. 6. Banking 2.0 Accounting system – transactions (obligations) and title (rights) Unit of account eg $ Guarantee (framework of trust) through pool of capital Settlement mechanism – payment system Risk management/ platform provider/system administration
  7. 7. Barter 2.0 ValueSeller Buyer Operator Trade Trade Credit Credit
  8. 8. Lets look back to Market 1.0
  9. 9. Settlement 1.0 Merchant A Seller B IOUIOU IOUSeller E Seller C Seller D IOU IOU
  10. 10. Guarantee 1.0 – Risk Pooling eg Tontines Member Member Value Value Pool Guarantee GuaranteeMember Member Member
  11. 11. Credit 1.0 - Stock
  12. 12. Market 1.0 never went away..... Settlement 1.0Brent/BFOE forward market in North Sea OilWeb applications – Ripple and Circular Multilateral Barter Guarantee 1.0P & I Clubs have mutually insured big risks (eg shipping) for 150 years; for 135 years the same broker Stock 1.0reinvented by Enron (who else?) as Prepay and used to defraud investors and creditorsbeing used by oil producers eg Saudis to support price and manipulate the oil market
  13. 13. NewClear - Seller accepts Buyers IOU Value Seller Buyer IOU
  14. 14. IOU is registered with Transaction Registry Value Seller Buyer IOU Data Data Registry
  15. 15. NewClear – Transaction Registry Database held by a custodian of all open bilateral peer to peer credit obligations Positions held gross but the risk may be net: eg +$8000 and - $6000 gives a net position of +$2000 Only members may use the registry Use of registry is subject to NewClear club rules and standards Regulatory sanction of suspension or termination of membership and hence registration Registry maintained and operated by Manager
  16. 16. IOU is guaranteed by Clearing Union of Sellers & Buyers collectively Value Seller Buyer IOU Guarantee Guarantee Pool
  17. 17. Seller & Buyer pay guarantee charge into Pool held by Custodian Value Seller Buyer IOU Fee Fee Guarantee Pool Guarantee
  18. 18. Settlement 1/ - Buyer settles open credits in money or moneys worth eg energy stock Value Seller Buyer Fee Fee Guarantee Pool Guarantee
  19. 19. Settlement 2/- System identifies a chain of IOUs A<B<C<D<E<A and nets them out IOU Seller A Seller B Fee Fee IOU IOU Pool Guarantee Guarantee Seller E Seller C Seller D IOU IOU
  20. 20. Settlement 3/ - Buyer defaults: system pays sellers and collects from buyer if possible Seller A Buyer Default Collects Pays Default Pool Seller B Pays
  21. 21. Service provider sets guarantee limits, handles defaults & manages system Value Seller Buyer IOU Fee Fee Guarantee Pool Guarantee Service Fee Service Provider
  22. 22. Outcome – the community is the currency Communities have a common bond eg geographical or functional Community-based credit provided at cost with shared operating and default costs Service providers interests are aligned with system users No interest (money for the use of money) means system will out-compete conventional for profit credit Sharing of risk and reward B2B credit may be extended to B2C

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