(open) Money money money.

Stumbled accross an interesting site recently – open money: a wealth acknowledgement information system.

How does open money work?

You treasure what you measure, and you measure what you treasure. Open money provides the tools to implement this maxim. What should we be treasuring in our culture and on our planet that we so far have no way to measure?

Throughout history, wealth acknowledgment evolved by becoming more abstract and less substantial. Open money follows this same pattern by being a meta-currency system, not just a new single kind of money. It enables the creation of many new types of money. It puts currency creation directly in the hands of communities so that they can create wealth-acknowledgment systems for tracking all types of wealth–tradable, measurable, and acknowledgeable–and so that they can tailor the tracking to fit their precise needs.

Open money works by providing a unified platform for the interchange of all these different kinds of wealth acknowledgment, just the same way that the Internet provides a unified platform for the interchange of all kinds of information. Just as the great shift of the Internet was in not specifying what kind of data can flow across it (unlike the phone network), the great shift of open money lies in not dictating which new form of wealth-acknowledgment people should use. Instead it provides the basic building blocks for communities to create new types of wealth-acknowledgment systems themselves.

Right off the bat, communities can use open money for simple things like Local Exchange Trading Systems (LETS), Time Banks, barter networks, carbon-emissions trading programs, baby-sitting co-ops, reputation tracking systems, business loyalty programs, etc. But the interesting stuff will happen when communities apply their creativity to invent new currencies that solve wealth-acknowledgment problems we don’t even have names for yet.

It would seem to me that the potential reach and usefulness of such meta-currencies is even greater in a world where the wiring of the social graph is no longer location specific and consists of an infinite number of overlapping communities. I think anyone that has worked – and certainly anyone who has been a manager – in a medium to large size corporation would instantly recognize the importance of (and inherent difficultly therein) of measuring and rewarding what the open money folks call “acknowledgeable wealth.” And indeed in many instances attemps have been made to create internal ‘meta’-currencies to deal with this. I’m not sure if my experience is typical (I suspect it is) but such attempts in places I have worked have never really succeeded. Thinking about it now – and this is a provisional hypothesis – I suspect this was mainly due to two failings. First, the efforts generally tended to be half-hearted especially with respect to creating a robust and transparent ‘accounting’ system. Often the excuse would be ‘to avoid adding yet more bureaucracy to the system’, however I suspect the real resistance came from fear of what accurate accounting would reveal. Second, these currencies never had negative balances. They were like Lake Wobegon dollars: everybody got paid, but nobody paid. You can see how this would struggle to gain legitimacy.

There is an open money pilot project for a community currency network which I think I’m going to play around with; it would be ideal if they created a Facebook widget that allowed me to create a currency network for each Facebook group – this would save the hassle of having to solicit (potentially multiple times, for different currencies for different groups) my connections to sign up ‘out of context.’ Indeed by writing a widget that could overlay on any type of social group (email address book), departmental or company directory, yahoo group, ning network, etc. you could easily create millions of very context specific meta-currencies. While there is no reason to think that large transactions are proscribed from such a system, the likelyhood is that it would probably have a much greater impact in driving a large number of micro-transactions, greasing the wheels of social reciprocity so to speak. (Although as an aside, such a boom might create all sorts of issues for the existing tax paradigm…) Indeed, one of the seedcamp ’07 finalists (disclosure: I am an investor in seedcamp) – facecontact.com (going live beta next week they say) – is something along these lines:

…is a simple and effective tool for referral tracking and reward administration for referring job candidates, clients, investors and other prospects. Currently in stealth (development)

They are giving us a demo on Thursday and I’ll be interested to see how it is similar/different to the concept I describe above.

Finally, part of the philosophy behind open money seems to exhibit a somewhat socialist or even utopian bent, and while I like their idea of “acknowledgeable wealth”, I firmly disagree with their “Why do we need open money?” reasoning. Basically, we might well ‘need’ open money – or more helpfully, open money might be a great tool, but not for the reasons they articulate. That said, in some specific cases I think there is merit in there first idea:

Modern money is inefficient and unfair. Because communities cannot create their own currencies they are beholden to, and fundamentally controlled by, whoever does, just as users of coins were limited by the amount of precious metal available. When communities can create their own currencies, they don’t have to export their own wealth to get money to use for trade. They can start trading right away and export later if they so choose.

In particular, I am thinking of Africa (which could be generalized to all countries with low per capita monetary wealth, especially where the state/financial system has a history of ineptitude), especially the Unchained Africa as described by George Ayittey:

And I wonder if JP isn’t on to something:

I start wondering whether the developing world’s enterprises will derive value from Enterprise 2.0 and social software much earlier than their developed world counterparts, a legacy effect I hadn’t considered before. I start wondering whether the developing world will leapfrog the developed world in the use of social software in general, as they are appearing to do in the mobile and wireless contexts. I start wondering.

Putting these threads together, I wonder if you could give a community (village or town or region) access (via mobile of course) to a mashup of Facebook, (local language) Wikipedia, Tradenet.biz combined with open money widgets this wouldn’t lead to an enormous leap in wealth (in the broadest sense) and well-being? If anyone out there wants to get together and have a look at having a crack at something like this, let me know. You never know, it just might work. Just have to think of a catchy name…

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