Collaborative Credit

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Jem Bendell:

"Instead of a central authority issuing units of "money" into circulation according to a policy or algorithm, with collaborative credit, peers extend credit to each other. This includes systems such as time banks, where members of a system lend support among themselves, using a ledger to balance the units of credit, measured in hours. There are many other collaborative credit projects worldwide, which we study in our course on sustainable exchange, like Banco Palmas in Brazil, Zumbara in Turkey, or BanglaPesa in Kenya, or the Cooperativa Integral Catalana in Spain. Online business barter (B2B) exchanges such as Recipco help companies trade their spare capacity without money changing hands.

These initiatives are collaborative, as both issuance and redemption of the currency relies on freely collaborating citizens or firms, and enable economic collaboration when there isn't sufficient national money in circulation to complete a transaction or reward an activity. Outside agencies cannot limit the amount of credit available, as collaborative credit simply requires members of a network to trust each other rather than a bank. Collaborative credit isn't scarce like conventional currencies, and doesn't come with interest demands. The credit is as abundant as the pervasiveness of trust in a community or business network, as it is created in the very act of sharing, caring or trading.

Two of the most interesting collaborative credit systems are Ripple and Community Exchange Systems. The former is known to the payment innovation field, as it has attracted private investment. The latter is an entirely non-profit community affair. Their software developer, Matthew Slater, reports they have 50,000 (more or less active) users, in 600 LETS and time bank projects worldwide. Each group has its own currency and manages its own credit limits – which means local sovereignty, yet the shared infrastructure means transactions are possible between the communities. These initiatives shows how collaborative credit systems will increasingly use innovations made famous by cryptocurrencies, such as distributed ledgers." (