1. Barter 3.0
Back to the Future
Chris Cook
IRTA Convention Ocho Rios
14 September 2012

2. Market 2.0 - Exchanges
Title Title
Seller's Clearing Buyer's
Broker House Broker
$ $
Title
Title
Seller Buyer

3. Financing and Funding
 Financing
People-based credit
Short/medium term, medium/high risk
Finances circulation of goods & services and creation of new
productive assets
 Funding
Asset-based credit
Medium/long term, medium/low risk
Funds completed productive assets

4. Banking 2.0 – Financing (eg trade credit)
Value Value
Seller Bank Buyer
$ $

5. Banking 2.0 – Funding
Value Value
Depositor Bank Borrower
$ $

6. Banking 2.0
 Accounting system – transactions (obligations) and title (rights)
 Unit of account eg $
 Guarantee ('framework of trust') through pool of capital
 Settlement mechanism – payment system
 Risk management/ platform provider/system administration

7. Barter 2.0
Value
Seller Buyer
Operator
Trade Trade
Credit Credit

8. Let's look back to Market 1.0

9. Settlement 1.0
Merchant A Seller B
IOU
IOU IOU
Seller E
Seller C
Seller D
IOU IOU

10. Guarantee 1.0 – Risk Pooling eg Tontines
Member Member
Value Value
Pool
Guarantee Guarantee
Member
Member
Member

11. Credit 1.0 - Stock

12. Market 1.0 never went away.....
 Settlement 1.0
Brent/BFOE forward market in North Sea Oil
Web applications – Ripple and Circular Multilateral Barter
 Guarantee 1.0
P & I Clubs have mutually insured big risks (eg shipping) for 150
years; for 135 years the same broker
 Stock 1.0
reinvented by Enron (who else?) as 'Prepay' and used to defraud
investors and creditors
being used by oil producers eg Saudis to support price and
manipulate the oil market

13. NewClear - Seller accepts Buyer's IOU
Value
Seller Buyer
IOU

14. IOU is registered with Transaction Registry
Value
Seller Buyer
IOU
Data Data
Registry

15. NewClear – Transaction Registry
 Database held by a custodian of all open bilateral 'peer to peer'
credit obligations
 Positions held gross but the risk may be net: eg +$8000 and -
$6000 gives a net position of +$2000
 Only members may use the registry
 Use of registry is subject to NewClear 'club rules' and
standards
 Regulatory sanction of suspension or termination of
membership and hence registration
 Registry maintained and operated by Manager

16. IOU is guaranteed by Clearing Union of Sellers &
Buyers collectively
Value
Seller Buyer
IOU
Guarantee Guarantee
Pool

17. Seller & Buyer pay guarantee charge into Pool held
by Custodian
Value
Seller Buyer
IOU
Fee Fee
Guarantee Pool Guarantee

18. Settlement 1/ - Buyer settles open credits in money
or 'money's worth' eg energy stock
Value
Seller Buyer
Fee Fee
Guarantee Pool Guarantee

19. Settlement 2/- System identifies a 'chain' of IOUs
A<B<C<D<E<A and 'nets' them out
IOU
Seller A Seller B
Fee Fee
IOU IOU
Pool
Guarantee Guarantee
Seller E
Seller C
Seller D
IOU IOU

20. Settlement 3/ - Buyer defaults: system pays sellers
and collects from buyer if possible
Seller A Buyer
Default
Collects
Pays Default
Pool
Seller B
Pays

21. Service provider sets guarantee limits, handles
defaults & manages system
Value
Seller Buyer
IOU
Fee Fee
Guarantee Pool Guarantee
Service Fee
Service
Provider

22. Outcome – the community is the currency
 Communities have a 'common bond' eg geographical or
functional
 Community-based credit provided 'at cost' with shared
operating and default costs
 Service provider's interests are aligned with system users
 No 'interest' (money for the use of money) means system will
out-compete conventional 'for profit' credit
 Sharing of risk and reward
 B2B credit may be extended to B2C