Credit Commons Protocol

Description

"The Credit Commons Protocol defines a shared ledger through which participants can perform mutual credit accounting for exchange in any agreed unit (such as national fiat currency, hours, or kWh of electricity). It can be applied recursively, meaning that ledger groups can voluntarily federate into a nested structure that can be visualised as a fractal-like ‘tree’.

This fractal structure mirrors that of sociocracy, suggesting a natural fit between the resulting economic and participative governance structures. Trade and decision-making is supported across and between networks, enabling scale and diversity of economic activity without the requirement for centralisation. Groups can therefore remain small, trust-based, and self-governing within a larger, decentralised, yet complex economy of similarly autonomous actors that is referred to as the ‘Credit Commons’.

The requirement for exchange rates between groups also means that ledgers can support different but interchangeable monetary instruments within the same community. The Protocol therefore provides a key part of the technical and collaborative finance infrastructure necessary to rebuild the commons economy.

At the macroscopic level, the resultant scaling properties of the fractal structure may also have profound implications for the trajectory of economic growth, with substantial empirical and theoretical work suggesting that both natural and human systems with such network geometries eventually reach a steady state (rather than following open-ended growth)."

(https://www.mutualcredit.services/credit-commons-protocol)

History

White paper was written by Matthew Slater and founder of Community Exchange Systems Tim Jenkin in 2016. REST protocol and reference implementation built by Matthew Slater in 2020. 2 deployments in the next two years for small exchange groups. In 2024, Clearing Central upgraded from Jenkin's first implementation to a Credit Commons node.

As financial Permaculture

“The credit commons can be understood as a permaculture landscape of diverse local models interacting with each other, analogous to a natural ecosystem. A variety of locally attuned credit modules interacting in dynamic non-equilibrium is a more resilient structure than the metaphorical monoculture of today’s prevailing monetary system.”

— Jamie Brown-Hansen [1]

Katalin Hausel and Matthew Slater:

"The credit commons is proposed as a meta-level mutual credit system in which any type of currency could participate. All that is required of a candidate member is an account for import/export, and implicit trust from existing members that the candidate honour commitments while only deviating from zero within a previously defined limit. To use a metaphor from biology, this limit functions like a cell membrane protecting the organism while remaining permeable tovital exchange with its environment. Just as each cell has a unique way to balance its integration into its environment, the maximum extent of these limits for each member in the network can differ from each other according to the health of its economy. Each unit in a mutual credit system can monitor its economic health through immediate insight into its balance of trade. This allows a more flexible, more localised, adjustment of microeconomic needs and health, compared to the system of national currencies. Limits are set by local economy and by the higher order system, respecting the lowest limits, which gives local economies a level of protection against strong inflows or outflows of credit which would cause inflation/deflation and distort the value of their currency. Truly grassroot, and resilient due to their diversity, credit commons is consistent with many biological design patterns: it is bottom-up, locally attuned and adapted, diverse, decentralised, iterative, modular, and premised on quantitative stability over time."

— deleted google doc.

More information

Further reading

• The Credit Commons: A Money for the Solidarity Economy, Matthew Slater and Tim Jenkin, 2016 whitepaper

• About the Credit Commons, Credit Commons Society, [2]

• Credit commons accounting, Matthew Slater, [3]