Inttroducing the new generation of financial technology, which takes Blockchain & Coins into new territory.

1. Fintech 2.0
Promises & Protocols
Chris Cook
Barcelona 7th
February 2018

2. “21st
Century problems cannot be solved
with 20th
Century solutions”

3. Credit Instruments
Credit Instrument is a Promise issued in exchange for Value received
which the Promissor will accept in payment for future Value supplied
Credit instrument is not
Debt Instrument – no right to demand money
Forward (Derivative) Instrument – no right to demand delivery
Equity Instrument – no ownership rights eg dividend/rent
Acceptors of Promises/Credits trust the Promissor to reciprocate
Investors & Consumers trust Promissors to supply value – this
requires a “Trust Protocol/Framework”
Credit/Promises underpinned economies for millennia & still does
3

4. Value
What is Value?
It's all relative
Use Value (Utility)
– use value over time
Exchange Value (Price)
– transaction price by reference to a standard unit of
measurement for value (Unit of Account eg €, $,£)

5. Value – sources of Use Value (Utility)
Location (Immaterial)
– 3D Space/Place
Energy (Material)
– embedded in location (eg buildings) and passing
through location (eg solar, wind, water energy)
Intellect (Immaterial)
– Knowledge, Knowhow, Know Who
- Data patterns & representations (IP)

6. Market 1.0 – decentralised, disconnected
transactions & physical market presence

7. Single Entry Accounting - Tally is the Record
Number/Quantity - Notches
Description of value exchanged & Counter-party Identities
Encryption - grain of the wood (Nature's hash)

8. Pre-Fintech - Promises and Proofs
Loan Tally
- Promise of Future Utility (Credit Instrument)
- Acceptance of promise requires trust in promissor
Memorandum Tally
- Proof of Past Value Transfer (Receipt)
- No future Utility

9. Era of Middlemen
Public - Temples, Sovereigns provided goods & services
in exchange for levies (tithes,taxes,rents)
Private – Merchants bought & sold goods for profit

10. UK Sovereign Credit
Tax Promise – credit returnable in payment of taxes/rents
Tax Return – 'stock' part of tally stick returned to Treasury
Rate of Return - rate over time at which stock is returnable
for cancellation
eg Prepay £8 for £10 tax - £2 profit 25% pa rate of return
- not fixed - depends on existence & quantity of flow

11. Double Entry Accounting
Counter-parties record transactions & title
independently
Debit & Credit entries
Fragmentation of record-keeping & need for
reconciliation & audit

12. Market 2.0 - Institutions & Instruments
Property - Western (Anglo) Rule of Law
Absolute (binary) either/or instrument claims over Value
Instruments (Claims over Value)
Equity – ownership eg shares in Joint Stock Company
Debt
Derivatives
Institutions (Framework for Value Creation & Exchange)
Agreements, Protocols & Procedures (Statutory & Judge-made)
Organisations – Banks, Exchanges

13. Market 2.0 - Centralised and Connected

14. Fintech 1.0 - Coins & Blockchain
Blockchain as Protocol
- collective protocol between machines in relation to a hashed &
encrypted database of transactions
- authenticates virtual/electronic instruments
Coins as Instruments
- Proof of past value creation (eg Proof of Work/Stake)
- Transactable object with subjective value but no utility
Scarcity
Some Coins (eg Bitcoin) are limited in supply on the premise that
scarcity is the basis of exchange value

15. Market 3.0 – Triple Entry
Shared Transaction/Title Repositories
Chris Cook (1998) – shared market transaction/title
repositories (OilClear)
Todd Boyle (2001) – WebLedgers
“Triple Entry”
Ian Grigg (2015)
Blockchain Protocol for Shared Transaction Repository

16. Fintech 2.0 – Coins as Credits
"Everyone can create money; the problem is to get it accepted"
Asset-based - credits returnable in payment for use of
productive assets
People-based - credit returnable in payment for goods
& services provided by people

17. Asset-based Credits
"Everyone can create money; the problem is to get it accepted"
Land/Location – credit returnable in payment for land
use – housing/farming as a service
Energy – credit returnable in payment for heat/cooling,
mobility, power as a service
Intellect – credit returnable in payment for use of
intellectual value - software, video as a service

18. Energy as a Service - Platform Co-op
InvestorInvestor
Community
(Consumers)
Community
(Consumers)
€ % in €
or Credits
Dividend
In Credits
ManagerManager
Payment
€ or Credits
GeneratorGenerator
% in €
Credits
Platform Co-opPlatform Co-op

19. Energy Platform Cooperative
Consumer/Community Members
- pay for energy as a service in € or energy credits
- receives any surplus in energy credits (Energy Dividend)
Generator Members (eg solar, wind turbine manufacturer)
- receives %age share of €
Manager Members (Platform Service Provider)
- receives %age share of €
Investor Members
- buys energy credits to fund development (Energy Loan)
- may return energy credits vs use or sell to Consumers

20. Energy as a Service - Outcomes
Neutral Governance ('Nondominium')
– no stakeholder member dominant but community
member has right of ultimate veto
Collaborative
– services relationship not transaction-based - costs
become risk/production/revenue shares
Sustainable
- interests aligned in minimising energy costs
- higher carbon fuel € cost, more € profit in saving it

21. A Catalan EnergyCoin ?
Catalan carbon fuel levy creates Energy Pool € fund
Energy Dividend of EnergyCoins to all Catalans returnable
in payment for energy/transport utility services
Energy Pool € fund invests via energy loans eg Catalan
solar/wind power; cooling; energy efficiency
Technology provided by manufacturers as a service
Energy loans repaid via energy bills at market price

22. Housing as a Service - Platform Co-op
InvestorInvestor
Community
(Occupiers)
Community
(Occupiers)
€ % in €
or Credits
Dividend
In Credits
ManagerManager
Payment in
€ or Credits
Credits
Platform Co-opPlatform Co-op

23. Housing Platform Cooperative
Occupier/Community Members
- pay for housing as a service in € or € denominated credits
- receives any surplus credits (Care/Culture Dividend)
Manager Members (Platform Service Provider)
- receives %age share of €
Investor Members
- sale of discounted € land use (rental) credits funds housing
- € credits may be used to pay rent or sold to other occupiers
- Capital & surplus from discount realised as € credits are
returned against rent - “Rate of Return”

24. Housing as a Service - Outcomes
Neutral Governance ('Nondominium')
– no stakeholder member dominant but community
member has right of ultimate veto
Collaborative
– services relationship not transaction-based
Sustainable
- interests aligned to maximise benefit & minimise cost
Peer2Here
Land Use Credits enable Coin/Currency local by definition

25. A BARÇACoin ?
Barcelona Care/Culture levy creates BARÇA Pool € fund
Care/Culture Dividend of BARÇACoins to all qualifying
Barcelona residents returnable in payment for Levy
Owner/occupiers may use to pay own Levy
Tenants use to pay rent as Landlord will use to pay Levy
Outcome
- net transfer from above to below average landowners
- BARÇA Pool investment in Barcelona Care/Culture Coops

26. A Traveller's Tale – People Credits
Hotel A
Lady D
Butcher B
Baker C
€20
€20 €20
€20
Traveller€20
Open/Unsettled
Promises/Credits
A €20 to B
B €20 to C
C €20 to D
D €20 to A

27. People Credit - Chain Settlement A>B>C>D>A
Hotel A
Lady D
Butcher B
Baker C
€20
€20 €20
€20
Shared
Transaction
Repository
STR Settlement Bot
identifies €20 Chain
Settlement Pathway
A< B<C<D<A

28. Mutual Assurance – P&I Club Risk Sharing
For 150 years, Protection & Indemnity (P&I) Clubs have
mutually guaranteed shipping risk Lloyds won't cover
For 130 years P&I Clubs have been managed by
Thomas Miller as platform service provider

29. Clearing Union – Shared Data
Seller A
Member
Credit
Value
Platform Service
Provider
Shared
Transaction
Repository
Buyer B
Member
Data
Data
Data

30. Clearing Union – Shared Risk
Seller A
Member
Credit
Value
Platform Service
Provider
Shared
Risk
Buyer B
Member
Guarantee Guarantee

31. Clearing Union – Shared Cost
Seller A
Member
Credit
Value
Platform Service
Provider
Shared
Cost
Buyer B
Member
Platform &
Performance
Costs
Platform &
Performance
Costs
Operating Cost &
Performance Share

32. Clearing Union – Chain or Currency Settlement
Seller A
Member
Value
Platform Service
Provider
Shared
Data
Buyer B
Member
Data Data
Data

33. Service Provider sets Guarantee limits, handles
disputes/non-performance & manages system
Seller A
Member
Credit
Value
Platform Service
Provider
Shared
Transaction
Repository
Buyer B
Member
Data
Data
Data

34. Barcelona Credit Clearing Union
Barcelona Guarantee Society
- mutual assurance of consumer credit
Barcelona Merchants and Consumers share system
costs and non-performance
Manager allocates guarantee limits, manages platform,
ensures transparency, handles non-performance
€ denominated Credit may be settled
- € denominated BARÇACoin or EnergyCoin
- conventionally settled in Euros
- chain settled

35. Fintech 2.0 – Promises & Protocols
Promise as Credit instrument
- Asset-based on energy,location, IP use as a service
- People-based on capacity to provide goods & services
Protocol as Association/Club
- data sharing, market domain user club (Dot Market)
- risk sharing, mutual assurance club (Clearing Union)
- surplus sharing (Platform Coops)

36. Fintech 2.0 – People-Centric
Credits issued by Smartphones, not Miners
- encrypted at source
- issued in exchange for Value
- assigned in exchange for Value
- chained
- returned to promissor in exchange for Value
- cancelled (Chain or Currency Settlement)

37. 21st
Century problems cannot be solved with 20th
century solutions.........

38. …....21st
century solutions pre-date modern finance