IRTA Conference - Barter 3.0 transition
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Transcript of IRTA Conference - Barter 3.0 transition
Barter 3.0
Back to the Future
Chris Cook
IRTA Convention Ocho Rios
14 September 2012
Market 2.0 - Exchanges
Seller
$
Buyer'sBroker
Clearing House
$
Title Title
Seller'sBroker
Buyer
TitleTitle
Financing and Funding Financing People-based creditShort/medium term, medium/high riskFinances circulation of goods & services and
creation of new productive assetsFundingAsset-based creditMedium/long term, medium/low riskFunds completed productive assets
Banking 2.0 – Financing (eg trade credit)
Seller
$
BuyerBank
$
Value Value
Banking 2.0 – Funding
Depositor
$
BorrowerBank
$
Value Value
Banking 2.0 Accounting system – transactions (obligations) and
title (rights)Unit of account eg $Guarantee ('framework of trust') through pool of
capitalSettlement mechanism – payment systemRisk management/ platform provider/system
administration
Barter 2.0
Seller
Trade Credit
Buyer
Operator
Value
TradeCredit
Let's look back to Market 1.0
Settlement 1.0
Merchant A Seller B
Seller C
Seller D
Seller E
IOU
IOU
IOU IOU
IOU
Guarantee 1.0 – Risk Pooling eg Tontines
Member Member
PoolGuaranteeGuarantee
Value Value
Member
Member
Member
Credit 1.0 - Stock
Market 1.0 never went away..... Settlement 1.0Brent/BFOE forward market in North Sea Oil Web applications – Ripple and Circular Multilateral
BarterGuarantee 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
NewClear - Seller accepts Buyer's IOU
Seller Buyer
IOU
Value
IOU is registered with Transaction Registry
Seller Buyer
IOU
Value
Registry
DataData
NewClear – Transaction Registry Database held by a custodian of all open bilateral
'peer to peer' credit obligationsPositions held gross but the risk may be net: eg +
$8000 and - $6000 gives a net position of +$2000Only members may use the registryUse of registry is subject to NewClear 'club rules'
and standardsRegulatory sanction of suspension or termination
of membership and hence registration Registry maintained and operated by Manager
IOU is guaranteed by Clearing Union of Sellers & Buyers collectively
Seller Buyer
IOU
Value
Pool
GuaranteeGuarantee
Seller & Buyer pay guarantee charge into Pool held by Custodian
Seller Buyer
IOU
Value
Pool GuaranteeGuarantee
Fee Fee
Settlement 1/ - Buyer settles open credits in money or 'money's worth' eg energy stock
Seller Buyer
Value
Pool GuaranteeGuarantee
Fee Fee
Settlement 2/- System identifies a 'chain' of IOUs A<B<C<D<E<A and 'nets' them out
Seller A Seller B
PoolGuaranteeGuarantee
Fee Fee
Seller C
Seller D
Seller E
IOU
IOU
IOU IOU
IOU
Settlement 3/ - Buyer defaults: system pays sellers and collects from buyer if possible
Seller A BuyerDefault
Pool
Collects
Pays
Seller B
Default
Pays
Service provider sets guarantee limits, handles defaults & manages system
Seller Buyer
IOU
Value
Pool GuaranteeGuarantee
Fee Fee
ServiceProvider
FeeService
Outcome – the community is the currency Communities have a 'common bond' eg
geographical or functionalCommunity-based credit provided 'at cost' with
shared operating and default costsService provider's 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 rewardB2B credit may be extended to B2C