Update on open money

Some time ago at linuxwochenende I’ve outlined my current state of reading on alternative money projects and implementations. Slides (mostly english) are online http://runtux.com/events.html and there is even a video of the talk (in german, see linuxwochenende link above for torrent or html download). The funny money in the title refers to a paper by Ted Lewis, “Why Funny Money Will Have the Last Laugh”, Computer, vol. 33, no. 5, pp. 112,110-111, May, 2000 (all citations on the web seem to disagree on the page numbers I’ll have to dig out my copy and see what the page numbers really are) which is probably not very exciting today but got me interested in the subject.

Now I’ve discovered some more interesting bits I want to document here.

I’ve recently discovered OpenCoin via the peer to peer foundations feed. OpenCoin seem to be among the first who tackle money with a scientific approach to money protocols *and* release their code as open source. They’ve started by formulating requirements which are referenced in two preliminary papers on existing crypto protocols:

• Preliminary Report on Chaum’s Online E-Cash Architecture
• Extensions to Chaum’s Blind Signature Scheme and OpenCoin Requirements

In these papers they outline the cryptography to use for their implementation and check these against their requirements. These reports are very preliminary (still contain serious typos for example I’m missing a “not” in section “2.2 Anonymity” in the report on Chaum’s Architecture that distorts the meaning of the whole sentence).

More serious may be that the don’t consider newer approaches to money protocols — this may be due to patent and security considerations: Chaums work is older than 20 years. Protocols that have withstood some time of not being broken might have a higher chance of not developing a serious failure in practice… but it may also be an indication that the field is very wide.

And another sad fact: The web-page of the project is not very lively — the last entries on the wiki are from march this year. Seems that they applied for funding from LGA (London Development Agency) and received that (as indicated on the main page) but never published anything after that. Or maybe they anticipated to receive a funding which never came.

Another interesting project — which actually produced software that is used in practice is Cyclos by the Dutch Social Trade Organisation STRO (used to be called Strohalm).

This is a more traditional approach to a system where a trusted organisation manages a local currency like LETS or barter systems. Also microcredit systems are managed with this system according to their web site.

I’ve recently discussed about money alternatives with Clifford — one thing we couldn’t agree on was if one needs the state as the central authority for issuing money. I argued that there are already many projects (some of the mentioned in the linuxwochenende talk above) doing this today. Cliffords answer was that they’re all backed by the existing money system. I’m undecided on this issue but tend to believe that a local community can agree on a currency without a state. It may even be possible to do something like Terra (a good intro to Terra is on p2pfoundation ). At least we can start now that the existing money system still works (Sort of. Or not. Maybe.).