It has been over a year and a half since CirclesUBI launched in October 2020. Since then, we have seen how Circles has worked in practice and the different ways in which people have experienced the system. The goal of CirclesUBI has always been to create a truly decentralised basic income system. This is a big promise, and one we can only achieve by critically questioning our own assumptions about what Circles is, what we would want it to be, and it’s real functioning on the ground.
The following proposal emerged out of discussions between different people working on different Circles projects as a way to create synthesis a common ways forward.
Two sided Money and One sided Money: Towards a Dual Money system
On the one hand, what makes Circles unique is that it is a two-sided money system. It is based on a Web of Trust and interconnected personal currencies with a decay/inflation rate, which can be swapped 1:1 in order to settle debt obligations and send/receive payments.
This way of conceiving Circles means that CRCs are essentially promises we make to other people, or IOUs (I-Owe-You). In this view, Circles is more like a mutual credit system, where people have trade balances with one another, and acts more like a mutual insurance or as a way of accessing the socially produced wealth people already create. The power of Circles lays in that, unlike most mutual credit systems, Circles can spread around the world through the different trust relationships people have with each other. In that sense, it is hyper-local and can be federated to the whole planet. Circles is a ‘two-sided money’, debt that does not have to be paid back to a bank or a state, but instead mutually created by peers who trust each other, where people’s balances with others are either + -
However, in practice, one of the issues that may cause confusion for some is the way we currently show Circles on the circles.garden UI. The balances people on the Garden have as a positive number. This leads to confusion as people imagine and experience their CRC balances as constantly going up, which is more how a ‘commodity money’ system would work, or a ‘one-sided money’.
While on the back-end, things currently work as a credit network, we so far show CRC as a commodity token. This leads to confusion in terms of the language people use to understand CRC (does it have a market price? what is the value of a CRC?, why is a CRC worth more here than over there? etc) as well was what people feel they can do in the network. It is a very different behaviour when you are waiting for your tokens to accumulate than when you feel the need to give/take resources from a trusted community, which are two of the polar opposite experiences we have seen all throughout.
One obvious thing to do would be then to show CRC as credit lines/power bars/essentially ways where people can create more local community credit arrangements with the unit of account that is the most familiar to them.
Now, this would only solve part of the problem we are trying to address, which can be formulated in the following question:
How to create a planetary federated money system that acknowledges the different local value systems in the planet? In other words, how to express these differences for a system that is both global and local?
In our experiences running the Berlin pilot, we have seen that doing a mutual credit system is only part of the answer. People claiming the power to issue their own credit in a community is definitely revolutionary in it of itself, as more local economies can be strengthen through the creation of more regional value chains. In practice though, people and merchants alike are ‘locked in’ fiat and still need access to state money and capital in order to pay for rent and other living expenses which cannot be paid with CRC (yet).
In order to address this issue, the proposal is to create a secondary token, one which acts as a commonity money which is equally minted and distributed to all participants in the network on an unconditional basis. This token can have a market price so that it can be counter-traded for fiat money and still be connected and accessible via the Circles trust network. In this way, people and organisations can commit assets and other resources to back this token and ensure it’s price is meaningful for people all over the world and it gives more and more people ‘the power to say no’, as the basic income saying goes.
Circles.Land for example proposes to have this commodity token be based on time and have 24 units a day. Regardless of the frame, the parameters of this commodity money should be based on a similar principle as the current Circles system, that there is no max cap of coins to be minted but the issuance depends on the amount of people in the network, in order to avoid unequal distributions based on who has more wealth.
Thought in parallel with group currencies, many interesting revenue models become possible and would allow for this commodity token to NOT be a pump and dump scheme, but actually create meaningful investment that can strengthen local circular economies in complementarity with the current circles credit network. Managed as a commons, following Elinor Ostrom’s 8 principles, this would allow for communities to pull resources together in order to invest in their own well-being (infrastructure, basic services, expanding their production, etc) and use the credit network to acknowledge their current debt obligations with others.
Instead of trying to resolve the contradiction by having one token to act both as a commodity and a credit, this ‘split’ proposal would allow to separate form from function. Having different monetary structures to perform different functions would create more clarity in how Circles is communicated and used. The credit network would act as what it already does, a community exchange system within defined socio-cultural boundaries, while the commodity money would enable people to have access to capital with which they can ensure to meet more of their basic needs.
This dual monetary system would more clearly express what Circles is, what it is trying to do, and at the same time give people the power to do so.
If this is accepted, what this would mean on a technical layer is another discussion. This post is only meant to express the ideas behind the dual money proposal.