A Federated Model for a New Economy Authors: Forcolin, Mauro Hermans, Jeroen Meurer, Micheal

Snuif, Floris Current trends in the housing markets in the US and elsewhere have exposed the weaknesses in the fiat monetary system in place since the collapse of the Bretton-Woods system. Investors are increasingly looking at other alternatives to currencies, such as precious metals. As trends continue, the current economic system will collapse. This will result in mistrust among the general public for what they perceive to be currencies with an arbitrary dictated value, as well as a mistrust of the overarching establishments which govern those currencies. There will be a need for a universal currency, which is directly aligned to society who will use it and can evolve with the society as well. Precious metals, although having some practical applications, have a value based on physical scarcity which is less and less relevant in an increasingly virtual and data-driven world. Water on the other hand is predicted to become increasingly scarce and is also necessary for human survival, but it is not easily portable. The new currency will become the skills and knowledge people possess. Skills and knowledge can be acquired and services based on them can be provided to others. People sharing the same skill sets will have an understanding of the quality, or value of the skills an individual possesses. But people not involved in that area, will not have such a clear understanding of this. In order for them to grasp it without having to delve into that particular industry or field, they will have to rely on the opinion of someone they trust to validate it. This is no different to the way transactions occur in the world today. Organic societies of people with similar skill sets will be formed. These people can vouch for the other members of the society and thereby develop reputations and trust in the value the claim to have. Interaction with other societies to trade from other services will happen through a so-called trusted “weak link”, which is the basis for social networks such as LinkedIn or Facebook. Although such a system works well in small numbers, it is difficult to expand it over a global economy as there are limitations to the amount of relations a single person can maintain and there would be an excessive time delay when hopping across weak links to get to the desired society. The ability for technology to manage such relations would allow for the development of a Federated Model for a New Economy.

Rather than having to rely on specific weak links, societies can agree on terms for establishing a common baseline to gauge the values for their different skill sets. This way someone in one society can have a trusted rating of the quality of those skills. With such an integrated baseline, a common system of credits can be established with which to “pay” for services. As these credits are not backed by a physical standard, someone could “invent” credits they don’t have to pay for services. But this kind of fraud would have a detrimental affect on the society someone belongs to, and their own ratings would suffer as their reputation did. For this reason, it would be in their best interests to find the culprit and remove them from their society, essentially placing them in an economic exile. To mitigate this, the same technology that maintains the credit system would also ensure completely transparent transactions across societies and people. People would of course belong to any number of societies, as value creators, consumers and residents, with each society being federated across others (Fig 1). It would be extremely difficult for a single individual to be able to keep on top of the various interactions and societies. They might take on the services of a professional to manage their “investments”, that is the societies they choose to belong to and the associated costs for remaining there.

Figure 1: Federated Model for a New Economy

Such a federated system is extremely democratic, and the same technology used for maintaining the credit and transactions system would make referendums feasible. Such referendums would allow individuals to have a direct say in negotiating the terms, maintaining and policing the interactions their society has with other societies through the federated model. It would be useful in managing how individuals manage or remain part of a particular society.

As the management of such interactions become increasingly complex, people might not want the burden of having to participate in all the referendums which may apply to them. To manage this, representatives can be elected at all the various societal levels where such a representation makes sense. This removes the need for “nations” based on physical locations; every individual would be sovereign and be able to choose which societal associations to make. As people would also belong to a society of consumers, the brand will grow to target all aspects of a consumer society. Producers would no longer exist alone, but would partner with others to complete the brand landscape for a consumer society. As consumer societies can grow, merge and evolve, so too would the brands that relate to them. The complete flexibility created in the consumer and producer societies would be somewhat limited in the resident societies since individuals have to physically live somewhere. Movement is virtual in the consumer and producer societies, whereas physical movement in resident societies has an additional cost which may be limiting. Nevertheless, the ability for a particular resident society itself to grow, evolve and relate with others would be based on true communal similarities and benefit, not archaic national divisions. In the future, as now, skills and knowledge will be of ultimate value. The collapse of the existing economy will introduce a lack of trust in the current currency system and its governing bodies. This will give rise to skills and knowledge being the new global currency. With the application of technology and the newly defined currency, traditional localised trust-based economies can be extended to a global federated model. Such a model would allow for a truly democratic representation of the individual and the freedom to belong and associate with a society of their choice. Consumer societies will define the target that producers wish relate to and in turn producers will align together to provide an entire brand landscape or them. And finally, resident societies will form relate with one another for true communal benefit.