FairShares and the Blockchain

I have no idea what blockchain tech is - so would be interested to learn

I must say my knowledge here is pretty limited. I had a quick look at Ethereum before. Love the principles, but for me at the time and again having a look again seems like a distraction for us @ Mass Mosaic.

Swarm just looked at for the first time. Again seems interesting and has it's DCO's have raised some significant amounts. If think worth a conversation with them to see if FairShares would be compatible with their model. Seems like crowd funding with crypto currency, where a portion goes into a common pool. Potentially the part they are crowd funding could be the Investor stakeholder group. Doing enough leading edge stuff at the moment for Mass Mosaic to go down this path, but would be great to see if Swarm DCO's would be interested in becoming FairShares enterprises.

It's very much an emerging area. The blockchain concept was originally developed to provide for a decentralised ledger - essentially an agreed history of transactions - upon which cryptocurrencies such as Bitcoin, and the pro-cooperative FairCoin, are built.

As the technology has developed there is talk and action about using this same technology to support other things in addition to just financial transactions. So called 'smart contracts', and to enable decentralised governance mechanisms. It's early days, and the Ethereum system isn't live last time I checked, but I believe that it is something that FS needs to be at least aware of if not actively engaged in.

From my perspective - where I am interested in building a globally decentralised community of interest and trust, that implicitly involves financial risk (and reward), the FS model is of great interest, but we also need some mechanisms that can provide for low cost transactions (which the blockchain is great at), trusted decision-making/voting tools, and suchlike. I'm also curious about how a globally distributed cooperative can be established with a sensible legal framework. In Europe there is a legal model, albeit an extremely costly one. The blockchain sits outside of and beyond ideas of nation-state and so could offer a low costs enforceable basis upon which to do business?

Wikipedia: http://en.wikipedia.org/wiki/Bitcoin#Block_chain

I'd be interested in understanding it! So yes, but I'm going to lurk and listen for a while.

Me too - is this similar technology to co-budget (sounds similar, but might go beyond this)? I've had one conversation with Derek Razo (part of the team that developed Loomio) who is also part of the Co-budget development team. Co-budget implements participatory budgetting through OpenSource software - they have a video demo, but not sure how far the software development has got.

I think for it to work effectively, there has to be a mechanism to get the money into co-Budget seamlessly. Imagine PayPal (without the fees) paying subscriptions monthly into co-Budget to fund a coop or association. Once the money is in co-Budget the member can then use ot to contribute to / or propose - coop projects. Other members may / may not support them. LIke other crowd-funding systems, projects go ahead only when a minimum budget is reached, and have scalability or stretch targets (again like crowd-funding). It devolves the budget making powers to members and takes the power away from an executive.

I'll check SWARM etc. out as soon as I can (bit bogged down with writing / marking until the end of the month, and finalising the changes people want on fairshares.coop.

Co-budget certainly sounds interesting. I read a little about it some while back but haven't seen anything concrete as yet.

Blockchain tech is open source, and provides for fast low cost transactions, so might actually complement Co-budget.

The Swarm stuff looks intriguing, but its not as transparent as it could be. Essentially I think they are creating project specific cryptocurrency and selling it as a means to fund start-ups (and presumably taking a cut).

In cryptocurrency terms FairCoin is for me the most interesting as it has gone from almost zero value last autumn to the point where the exchange rate is currently about 50 Fair to the euro (or 2 cents per FairCoin), and the market price continues upwards. Undoubtedly it will settle in due course, probably with something of a bump, but today has a theoretical market capitalisation of about a million dollars US.

But it';s the next phase in the development of blockchain technology that looks really intriguing - lots of talk about "decentrlalised collaborative organisations" (DCOs, and variations on that theme. Of course most talk is coming form a capitalist speculative perspective - lots of right wing libertarian interest in cryptocurrency - but clearly there is potential in there as well for solidarity economy opportunities as well.

My interest stems from trying to answer the question: if the internet is such a naturally cooperative space, and is spawning all of these innovative so-called 'sharing economy' platforms (which in reality are just new forms of exploitative capitalist businesses - they make money by leveraging user's assets - e.g. Uber, Airbnb) why aren't any of them real cooperatives? The answer I think, in large part, is because there are no effective funding mechanisms or innovation/R&D spaces that are cooperative-friendly.

The conventional business model is broadly as follows: geek comes up with great idea, gets funding from VC in Silicon Valley, builds platform, sells out, becomes millionaire, moves on.

True P2P, commons oriented, cooperative models, which could be at least as useful, can't get funded so don't get built.

So let's create an 'Innovation cooperative', which could be a bit like Co-budget, with some Swarm-ish cryptocrowdfunding. A cooperative innovation hub that brings together people with ideas, together with people with resources and skills, and a large values-driven crowd with their cyberwallets full of cryptocurrency that they can invest. And the whole thing is a FairShares organisation, with one of its main outputs being lots of little Fairshares organisations.

Yes - that just about matches my vision too. What is interesting about this Loomio group is the permeable boundary between the Commmunity Forum and the Labour / Founder members. I see the Community Forum as the beginning of the 'crowd' that may fund FairShares startups - clearly this crowd would also reach out to other crowds (perhaps in other crowd-funding communities). However, some crowdfunding will be philanthropic (for FairShares Association), some based on community shares (for FairShares Cooperatives), and some based on ordinary shares (for FairShares Companies). In the latter two cases, the third party investors share power with Labour and Users, but could - theoretically - be opened to members of the social economy. It we can build / support the bridges between the new currency systems, co-budget and Loomio (or an intergrated alternative), then you have the investment, financial management and cooperative governance systems to deliver networks of FairShares organisations (with constitutions pre-configured to permit partnerships with ESOP, Charities, Charitable Trust other Coops, CIC, Community Benefit Societies, Associations and Mutual Societies to collaborate in enterprise creation).

3 - 5 year time horizon for this to all become a reality?

Timing is dependent upon gaining access to the initial chunk of funding needed to flesh out the concept and build out the first iteration of the platform The initial thinking behind the Innovation Cooperative was done about ten years ago by myself and Shaun Fensom when we did a piece of work that started by looking at how we could scale up adoption of the .coop top level domain. This quickly led us to the concept of the Innovation Cooperative, and at that point we had interest form a major cooperative society. Sadly, they chose not to fund further development work at that point. A lot has changed in the intervening years - largely in support of the concept in my view, and although Shaun and I have maintained our interest in taking the thing forward, the opportunity and a source for the required startup funding has not materialised. Perhaps working with FairShares might bring the opportunity closer. Perhaps Horizon 2020 could be a source? Shaun and I are aiming to get our original piece of work updated in the next few months. If you see what I've outlined above as a way/the way forward for the FairShares Association, that will certainly spur me on.

Even though it has its problems, I do think Crowdfunding / investing will pay dividends over the longer term. Part of the rationale for opening up the Community Forum (for me at least) is to actively build support for the FairShares concept amongst well networked people, with the intention to building a successful crowdfunded investment fund. At that point, you start working with people on FairShares enterprises.

However, I have a radical idea for the way it might fund FairShares enterprises - instead of investing in the business itself, you capitalise the business by lending directly to the group of individudals who seek to capitalise their business. For example, instead of lending £50k to five people to start-up a business by lending it to the business, you lend £10k to five individuals who each take a £10k stake in a FairShares company or coop - the business starts with £50k of equity from its founders, and not £50k of debt to a financier. This way, they could probably borrow a further £50k from a 'normal' source at low rates of interest.

If a FairShares Company, the investment fund can take equity too (which transfers to the members gradually based on the surpluses generated, while the investment fund benefits from a rising share price over time).

The last element of the model is a mutual guarantee - if one founder misses a payment, the others in the group have to cover it while they sort out how to help the defaulting member. In Indonesia, such schemes keep defaults (by the group as a whole) below 1%, so interest rates are kept very low (to the advantage of the business, and ultimately the investor too).

I probably need to set this out in a paper so people can critique it - and an accountant needs to work out its financial viability, how risks are managed (insurance?). I've seen all the elements work in isolation. The question is what happens when you put them all together.

I am very interested in this topic and the potential link between the FairShares model and technologies such as Blockchains was one of the main attractions to the model originally.

I would like to direct your attention to the following white paper https://www.dropbox.com/s/tu7bsdati64d0h2/Peer%20to%20Peer%20Insurance%20white%20paper.pdf?dl=0

This discusses the use of Ethereum contracts for p2p insurance schemes but also touches on p2p lending clubs which is relevant to the discussion above.

Blockchains also offers great potential beyond financial systems including a decentralised reputation system, p2p hypermedia platforms and the very interesting future prediction markets (see http://www.augur.net/). As Graham mentions much of the talk with these technologies is from a capitalist perspective but the all of these can equally be adapted and utilised by a FairShares enterprise.

These topics will form the basis of a college research project I am undertaking over the next year or so and I am happy to share my findings as my research progresses, it's an exciting area.