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Challenging the Business Barter industry

About four years ago I realised that my work with local exchange systems could be much more impactful if I concentrated on commercial business barter rather than on LETS and time banks.

I joined the LinkedIn group, Think Barter and voiced some ideas about reducing costs and increasing interoperability with open source software. The response was disappointing to say the least. I heard a lot of parroted and wrong prejudices against open source and was treated mostly with indifference. hanging around for so long with people who want to change the world for the better, I wasn't expecting to face such retarded and defensive views. So I continued working where there was almost no competition because there was no money, and where making a difference wouldn't involve competing for money with people who value little else.

I'm still deeply entrenched on that path, spending about half of my working life simply maintaining a body of software that allows any group of people to keep accounts amongst themselves. I don't have time or the range of skills to 'bring a product to market', nor do I have a business model nor investors. But the lost potential in that sector is agonising me.

You see, the whole industry seems to be shaped by the software providers, and for the software providers. A money system is a network, and thus is most efficient when it is entire i.e. a monopoly. The software providers all dream of being that monopoly. Each company has created a walled garden and seeks to entrap its member exchanges - and their members - within it, so as to feed off the fees generated. If the industry was run in the interests of paying members those systems would be interoperable, but no, paying members are income generating assets more than customers.

The industry has long been plagued by high failure rates. Barter systems, as well as some LETS and time banks, sometimes 'freeze up'. The loss of liquidity has a very obvious cause to people who understand the first thing about exchange accounting. If everyone understands that taking and giving are in equilibrium, but some accounts (i.e. the management) are taking very much more than they are giving, then the rest of the members are all giving more than they are taking, and when they realise this, they drop out, often puzzled. Meanwhile the law usually fails to acknowledge or understand that a theft has taken place, albeit obfuscated by the multilateral nature of the exchange.

The most expensive network Bartercard which has a disappointing track record of national franchises failing and rebooting. However by raising investment capital from the stock market, it has now become the largest in the industry. Aint it always so! Disruption of this industry is needed now more than ever. Barter is one the tools we need to get through the next decade when the scarcity of dollars and Euros will inhibit trade and cause widespread poverty. Corporate leviathans like Bartercard will become the new banks, mediating all transactions, blocking for political reasons, reporting everything to government, and raking in a share of everything.

As far as I am aware, not a single barter network has introduced blockchain accounting. This is because most of them do not want interoperability, and many do not want transparency. Similarly to banks who own the fiat money payments infrastructure, they fear a technology which brings the real cost of transactions to zero. Interoperability and zero operating costs are disasters waiting to happen, and the barter industry has neither the wit nor the legal clout to fend off blockchains as the bank/state did with Bitcoin.

What makes a trade exchange thrive is the quality of the brokering. More than trades being initiated between members, exchange owners usually spend most of their time phoning and visiting members to make trades happen. In a more open network with a fair commission system, anyone with talent and connections could derive income from brokering; and those who brokered their own trades would save on fees.

I'm working on a white paper proposing the 'credit commons', a protocol that would support this kind of activity and replace the whole rotten industry with a voluntary market free of government and currency manipulation. The credit commons would be peer-to-peer infrastructure which would not yield a return itself, but would allow members to avoid global deflationary recession by clumping into nested trading networks that help each other with liquidity. Its no larger project than any silicon valley startup, but there's no rewards for venture capitalists.

So how can we get this built?


Publish this - excellent!

About four years ago I realised that my work with local exchange systems could be much more impactful if I concentrated on commercial business barter rather than on LETS and time banks... So how can we get this built?
Jct: If the Barter Bucks Boys operated their networks on a LETS "yearly service charge" rather than an ongoing expensive-to-collect percentage on trades and adopted the UNILETS Time Standard of Money for intertrading between databases, gee, it's already built.

i always enjoy reading your postings, Matthew

FYI, this other blogger from Samoa seems to be on the same wavelength as you:

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