Summery
In my quest to have a positive impact on a global scale: how to scale up local sustainable development and how to finance it, the Social Bank and Coin are the more recent but most essential building blocks to create a highly effective delivery system.
Short history
I’m a design engineer (TUDelft), with a background in community development and microfinance, since 1990 company director (SriToys export of wooden, handcrafted toys). Nowadays I specialize in Project Design, projects to tackle climate change and poverty as one interconnected issue to be addressed most urgently.
Therefore I started Tree-Credits.org in 2009 with the aim to provide a universal basic income to those who possitively impact the global climate.
It is from here that my interest in banking arises - how to send micro payments to the rural poor for climate care, crossing all borders.
I am not a complete novice to alternative banking. In the 1980s I worked in village enterprise development and was part of a group that also included M. Yunus (pioneer of microfinance) that introduced microfinance in Sri Lanka.
More recently, I have been thoroughly studying the history of local currencies (STRO) and the working of the Cyclos software. This taught me new functions that can be built into the software to ensure that the community and the relatively poor profit. Recently I followed an open university course in Gamification, since we believe that if presented as a meaningful game, the “crowd” could be motivated to manage the full system in a playful, educational setting. Lately I delved in many of the new Fintech developments, see links at the end of for some relevant articles.
Outline Social Banking
We need a new banking system, an open financial protocol for digital value transfer, that is pro-poor and pro-climate; sustainable, transparent and democratic.
An alternative system to complement the actual, rather reckless, financial system to help to stop the depletion of the Earth’s natural resources.
The prevalent system of money creation through loans with interest, necessitates unsustainable growth. Also the system is biased - pro-rich and anti-poor.
The free “Good” Bank Software will create a platform that could help any innovative (#SocEnt #Fintech) company to function in a more sustainable way. To achieve this each sector (educational, development and land use related. etc.) should develop an app to run it on this platform, which is hard wired to the benefit of the poor and to cool the global climate.
We need a platform on which many shades of exchange units could be run, several kinds of currency in between the commercially valued systems and free gifts, voluntary work, like caring for family, to complement these two existing exchange systems. We need all kinds of “social money” from a currency with a social function to gifts with some compensation. These alternatives might also serve to deflate the pressures to build into the existing system and cushion the effects for the poor of next crash (see Prof. Bernard Lietaer).
Besides we propose a unifying Coin and we will work hard to build a circular economy around it, trading online as well as locally by mobile banking, with the main aim to strengthen rural communities, women and girls.
The Need for the Social Bank and Coin:
We plan to design truly social, sustainable and democratic banking software, based on a distributed platform.
Having spent most of the last 3 decades in Sri Lanka, I have encountered numerous scenarios where a strong need was felt to have an innovative bank.
Tree Credits; for our TC projects we have to send monthly micropayments to a large number of children and women in India and Kenya. Payments for growing trees and other climate services. We have to register all participants of the scheme and issue micro loans and insurance and set up a village investment fund. The right software will enable us to half the overhead costs, compared with the most successful development schemes, and if staffed by volunteers (+ gamified), OH costs could be halved again.
A group of artists and craftsmen of the Good Market, Colombo, wanted to sell their produce through Etsy.com, and to share the profit based on the time spend, but they even could not open bank account to receive money, let alone administer this scheme.
Same goes for a group of educated youth who wanted earn some cash through affiliate marketing on their computers, but they lost 50% to middlemen, because no foreign currency bank account could be opened.
There are numerous other examples where the poor lose out because of lack of access to banking facilities or other services. We want to provide all with access to mobile phone/ internet with banking facilities and the potential to earn an income with meaningful work. We will try to go around all existing systems, including most NGOs and go direct to the base.
The latest trends point to the demise of the middlemen. Travel agents, taxis, hotels even banks and universities are forced to reinvent themselves as their services are now getting organized online. All gets fluid as we get empowered as individuals to deal directly with service provider (but within strict protocols) even if she or he is abroad. We plan to follow this trend in the community development field.
Local or community currencies are in use since ancient times and now getting back in fashion (UK, Spain, Italy); your own currency can be very beneficial for the local economy, but few realize it’s legal to create your own money or point system.
Needs in short:
Need 1: Pro-poor Fintech and community currencies are needed to stimulate global equality
Need 2: Pro-Climate money creation is needed to safeguard the environment
Need 3: The public is demanding change. Public opinion is strongly in favor of alternatives to the existing banking system, it became an issue to win elections on!
Need 4: Top economics plead for additional money system to safe the global economy in peril.
Elements of Social banking software
The form of the proposed software is an open platform where also 3rd parties will be invited to build their app on it. A platform suitable for all kinds of (cross-border, sustainable) activities, which involving people and exchange of money.
There are 6 basic bank functions, I use them to list the innovations needed:
Payments
Deposit & lending
Capital raising
Market analyses
Investment management
Insurance
Payments
1.1 The software should be suitable for online banking and mobile phone banking.
1.2 All banking and identification functions should be based on blockchain distributed ledger.
1.3 The platform should facilitate various kinds (newly created) cryptocurrencies incl. a location (GIS) based currency (Tree Coins)
1.4 Community currencies to strengthen local economies; see also Cyclos social banking software
1.5 An internal currency or point system is needed to be used as intermediary between hard currencies and local used ones.
1.6 Volunteers (or players if gamified) should get points for all positive activities. Having a sustained impact might result in earning shares in the cooperative.
1.7 Facilitate sharing of income and payments.
- Deposit & lending
2.1 Enable local currencies with no interest loans (only costs will be charged) to further sustainability. Also make rewards for the use of the currency and penalties for prolonged non-use possible.
2.2 Enable loans to be underwritten by peer groups.
2.3 All loans should be rated by PPP (people, planet, profit) criteria
2.4 All lenders and others involved will be rated for reputation (such as: integrity/ track record, seniority, skills & knowledge)
2.5 Enable blockchain based debit cards
3 Capital raising
3.1 Crowdfunding in all its variations will be central, several templates are needed.
3.2 Provide protocols to enable various kinds of fundraising by the crowd, crowd acquisition, crowd marketing, crowdraising.
3.3 Provide protocols how to do crowd public relations and other promotional activities.
4 Market analyses
4.1 Enable PPP analyses of sectors, countries, processes and companies
4.2 Enable setting up (bio/organic, ppp, safety) certification systems and (5 levels of) control.
4.3 Provide for protocols how to improve PPP performance of ventures
4.4 Provide for protocols for startups how to organize and incorporate
4.5 Enable location (GPS) based climate (or PPP) ratings to pinpoint carbon positive interventions.
5 Investment management
5.1 Provide for protocols for project design by the community with help of the crowd.
5.2 Enable GPS based information collection (village Wiki) and blockchain based land registry.
5.3 Provide for protocols for long term investment in timber trees, land, eco tourism, water supply and improved cooking devices.
5.4 Enable social/ climate investment schemes like Tree-Credits.org
5.5 Make crowd investment management possible, not only like with crowdfunding: vote with your wallet, but provide the protocols how to self manage the whole process.
5.6 Provide for protocols how to check PPP scores and reputation by the crowd.
6 Insurance
6.1 Enable insurance in a variety of valuta and point systems.
6.2 Enable GPS based landscape insurance for climate services like growing trees.
7 Security is paramount in a complex banking system and will have many levels:
7.1 Employ all the inherent safe properties of the blockchain for basic system security.
7.2 Employ all the standard bank safety features as far is needed
7.3 Allow for peer control at a local as well as global level to further security
7.4 Provide for protocols for geo-specialists to explore and check geodata against the latest satellite images.
7.5 Invite IT specialists with high reputation scores (Good hackers) to probe weak point and propose repairs.
7.6 Invite top specialists/ generalists with highest reputation (Good wizards) to take a helicopter view on the general functioning to spot unusual activity.
Summery
Blockchain technology allows for banking without banks. There are no regulators yet.
To steer it into sustainable & social & democratic direction, our platform should have an array of unique features, like its own currencies and rewards systems, a host of exchanges between various shades of currencies and points, in-house eco- and PPP-certification to make the platform “social”; in-house crowd management, crowd-monitoring and crowd-design, all game compatible will help to keep all this manageable at low costs. Its flexibility and independence will facilitate cross-border exchanges, to reach all who are somehow connected online, even those without ID, directly and without any middlemen. Local governments and NGOs will be welcomed into ad-hoc coalitions.
Social Platform, the Good Game:
To run such a complex platform cost effectively, we like to attract volunteers. To manage these volunteers and to make it more attractive to join and spend time on the platform, we plan to run it as an educational and real life action Game with various point systems, levels and challenges.
If the game points can be monetized, participating will be even more attractive, but we think most important will be the real and positive impact an individual players can have, thus giving meaning to one's life.
Inviting the crowd to run the whole “bank” should make the platform democratic, like crowdfunding makes investment funding democratic.
Alternative for Banks, INGO’s, Certifications
A main goal of the platform is to create an effective alternative structure to some existing transnational financial, development aid and certification institution. These kind of cross border activities often attract the corrupt and organized crime and are therefore in need of many layers of bureaucracy, causing an arms race of crime and control.
We propose a less time consuming and more positive way, a more flexible platform, tailor made for good willing social enterprises and private initiatives, with multiple layers of control, using the latest apps. We count on openness, on peer control, on crowd control, on satellite mapping and on the blockchain technology to build a sustainable global community of trust.
Financing of this software making project:
Nowadays financing for large Fintech platform projects like this is plentiful, the question is more: who will have the power and who will steer it in the right pro-poor way? We better come well prepared to the negotiations and see only those with clear sustainable intentions.
Our software makers have convinced us that working open source and offering the results for free is the way of the future and the way to go ahead.
Then how to earn an income from the platform and how to interest investors to take part?
The growth potential of the platform promises to be impressive, especially with an own coin, if used platform wide with a steadily growing economy, which will mean growing income. Also gamification will help to generate a lot of traffic.
Tree Credits needs this platform to manage its operations and to operate with a minimum overheads. Therefore TC and similar NGOs might be willing to pay part of their project funds for these services.
Once the platform gets operational, those who build it could find enough consultancy work to and help 3rd parties design apps for the distributed platform.
Parties from various fields, those ready for a new beginning in the new economy might be interested to invest in the software development if we offer them some kind of exclusivity such as:
Retail banking, Investment bank/ crowdfunding, Insurance company/ Outsourcing and Affiliate Marketing/ art & craft trade, eco tourism (investment), solar PV investment bank, timber growing, land bank and registry, certification, global education.
Enterprises might be interested to use the platform and the same cross-border points/ currencies facilities to build a strong parallel economy together.
To stay independent, we prefer non-American (FINTECH) partners, since we are wary of the US government, who routinely blocks all perceived competition to the dollar as the world’s reserve currency.
For now we will operate under Tree Credits Foundation, a tax deductible charity aiming to impact poverty and climate change. We are looking for Patrons and Trustees to help us with our search to find the right executives and finances.
Outline of proposed Social (Good or Tree) Coin,
Nowadays, creating a Social Coin appears to be a popular undertaking. Our software venture should start with some urgency, to claim a name (still to be decided), to start building a following and to test the concept, as outlined below.
A social Coin might be needed for:
To stimulate local economies, to the benefit of the poorest producers
To be able to reward (debt free, cross border) those who help to reach a sustainable world
To enable issuing of debt free loans and insurances and simplify procedures
To enable international project cooperation and trade
By grading and certifying all projects against sustainable ppp criteria, is good for the climate
Empowering all marginal groups by opening new venues of income and cooperation.
As an intermedium, a currency facilitating exchange from game points to hard cash.
Coin 1: Concept
The Coin could be based on the value of “carbon positive” location, the social and “climate” value of an location; is the place beneficial to the global as well as local climate, like food forests or eco-farms are?
The Coin could serve 2 functions: 1) as a social currency to pay volunteers and climate carers for their positive impact, cross border 2) as ready to use local currency.
It could function in parallel with existing currencies, to fill holes in the financial system, wherever needed.
The Coin could have 3 forms: as mobile phone credit (national), as cryptocurrency (international) or as local paper money. Agreements with phone companies will be necessary.
Coin 2: Intrinsic value: location and carbon positive land use.
Each Coin could be underwritten by a GIS location where carbon positive climate measures are being taken, such as trees growing/ food forests/ organic agr./ parks/ cycle paths/ green roofs/ urban gardens/ solar panels.
The location only gives its number (GIS) to the coin, so can always be traced back. However the coin can be freely circulated and the value is not related to the original location.
Land use can be carbon positive or carbon negative. If land use projects are excellent, more than average, other schemes might chip and offer more benefits.
Plot out all these in one meter by one meter blocks, their GIS reading = 1 Coin; GPS location is label of coin (or cent of coin). So 1 km of restored land or agroforestry might underwrite 1 Mn Coins.
So the total of Coins will be limited to the amount of land restored or still in tact; together good for about 2 x 10*13 Coins.
Virgin forests, preferable if controlled by the indigenous people themselves, qualify for coins issue, also for a reserve fund for future issue and remittances can be put in location specific fund to help defend its conservation.
All kind of climate positive projects may apply and we may start with all Tree Credits related projects: JP, Roeland, Paul, Willie Smit, Shanthe, Baka etc.
These parties or individuals might receive part of the allocated Coins, a percentage depending on the situation and phase of the project.
Coin 3: Creation and bringing into Circulation,
Coin creating is done by register carbon positive locations (with photo!) through special app. We reward climate-&-community-smart land-use.
This way of Coin creation is meant to limit the total quantity of the Coin available for circulation .
Once the Coin are created by identifying a location as being carbon positive the coin can be brought in circulation. There will be a reserve fund.
Parts of these newly created coins will be shared by the carer (of the climate positive landscape) and all those who helped to organize it; or they might be kept in reserve.
Ways to bring Coins into circulation include: 1) monthly payments to land carers (see TreeCredits), 2) signup bonuses for new members, 3) all real transactions, paid for by Coins 4) other climate positive actions with real impact, think publicity, fund raising, management, education, etc. (see theGoodGame)
Coin 4: Local economy
Besides creating an cross border tool, a major goal of the coin is to provide a ready made template to create a local currency and if it get widely circulated, might greatly stimulate the local economy to the benefit of poor, women, children.
Living in a remote village there should be possibilities to get Coins, like: 1) sign up to Coin- or Tree Credits scheme; 2) bonus for registration of a carbon positive location; 3) as monthly reward for landcare 4) as small loans; 5) as insurance pay 6) for volunteering online; 7) for organising local projects etc.
Sectors suitable to pay with local Coins include schools, local produce and products, eating houses and bakeries, hotels, services and some national products.
Shops should be stimulated to accept the Coin by offering them bonuses and small interest free loans, if they advertise a “Coin accepted” sign.
Small objects should be available online like smart phones, solar panels and seeds.
To safeguard the circulation of a “local” coin all parties involved should balance income and expenses. Especially if used crossborder we should be sure the Coin doesn’t get stuck at one side, location or sector.
Coin 5: Transaction Fees, how to stimulate local economy
Each transaction might carry two small fees, one half is for the computer costs, the other half goes toward the land carer.
To stimulate its use each transaction of the coin will result in the creation of new coins to compensate for transaction fees + bonus.
Hoarding the coin will be discouraged by charging monthly negative interest.
In all there might be 3 mechanisms to stimulate circulation and thus the local economy and income: 1) conditions for exchange 2) negative monthly interest 3) bonus new shares, given for transaction for goods and services.
Coin 6: Exchange into other currency, a pro-income scenario:
There will be a coin exchange and the coins can be changed under specific conditions. There are 2 major conditions: 1) how often used in a transaction 2) time passed since last transaction or issuing time. For instance the rule might apply that the coin can be exchange for local cash only a week after it is used once. This to guarantee the teacher or shopkeepers the value of the coin but still stimulate its frequent use.
If time and/ or usage restrictions for exchange apply, there will be 2 kinds of (digital) Coins: Coins which can be exchanged and Coins that can not. Accordingly your Coin account might show 2 separate amounts.
Starting communities might have a circulation restrictions of only one usage, but in mature setting, where most shops and even local officials except the Coin this could rise to seven times using.
In this case, after 7 transactions your account will show the amount of the smallest transaction as exchangeable and with every new transaction the next lowest amount will be added.
The international Exchange Rates (including conditions) could be set by a Coin’s Board against a basket of World Currencies; considering longer term market development projections as well. This to keep the value stable.
Local circumstances will call for tailor made rules of exchange for which we might provide protocols, how to design and start a village exchange.
Coin 7: Some History: A common currency that works (unlike the Euro)
During the second world war Keynes developed a system of international money issued by a global bank, the ICU (international clearing union) to conduct international trade. If a country exported some it's ICU saldo went up, if the country imported some, it went down. To balance the system he proposed each country had a limit how much it could go in the red, where after it had to devalue its currency to make their exports more attractive. And they had to pay interest; but also the surplus countries had to pay 5-10% interest on their surplus to stimulate them into importing. So everybody would be interested to balance its trade.
We will use these principles to run any local currency.