martes, 22 de julio de 2014

B2B trading instruments

Restructuring world production, distribution and services

B2B means of trade has to be placed in a future scenario in which economy has suffered deep changes.

Scarcity of petrol has been the driving force towards a localization of economy. Transport is too expensive.
Most energy is electric energy produced by renewables. The production is scattered amongst millions of small producers.
Recycling waste has to be local. Waste cannot be thrown into the third world, transport is too expensive. Recycling becomes expensive. Furnishings, Do it Yourself Robotics, and Repair gain relevance.

The World market for global goods is reduced to the few goods for which the economies of scale can only be reached as world production. Many things now produced global will have the optimal scale at Region level or even City level. The table below may help at visualising the optimal size for each industry.

Unit	City	Region	Country	Continent	World
Distance km	50	300	1.000	4.000	40.000
Population	100.000	2.000.000	50.000.000	500.000.000	7.000.000.000
Production	Urban farm	Vertical farms	Textile	Large Electric Vehicles	Micro-chips
	Building	Construction materials	Small Machinery	Electric Vehicle components	Pharmaceuticals
	Micro Manufacturing	Advanced Manufacturing	Electronic goods	Electronic circuits, embedded systems	Big Airplanes
	Micro Renewables	Solar and Wind Farms	Steel	Small Airplanes	Creativity industry, software
	Clothing and sewing	Food processing	Petrol, gas	Ships, Kyte Vessels	Knowledge Industry
	Infrastructures	Food recycling	Hydraulic Power	Knowledge Industry
		Infrastructures	Civil Engineering	Basic Research
		Media, movies, TV	Infrastructures
			Bikes, simple EV
			Media, movies, TV
Distribution	Fresh food	Packaged Groceries	Bulk products	Petrol, gas	Online shopping
	Daily commodities	Clothing	Industrial machinery	Online shopping
		Books	Books
		Car mounting	Online shopping
		White goods
		Seeds and agricultural products
		Cereals
Services	School	Universidad, Online education	Railways	Air transport	Online services
	General Medical Care	Hospitals	Bridges	Nautical Transport	Online education
	Repair	Public Health, eHealth	Media Distribution	Road Transport	Telecommunications, Internet
	FurnishingsDo it Yourself Robotics	Security	Telecommunications, Broadband, 5G, Internet of Things	Telecommunications, Internet
	Restaurants	InvestmentsCrowd Funding	Transport Electricity Networks	Online services
	Hotels	Legal Services	Road Transport, Assisted Driving	Transport Electricity Networks
	Waste recycling	Industrial Recycling
	Virtual Plants	Distribution Electricity Networks
	Public Transport	Transport Infrastructures

B2B means of trade have to be adapted for these markets.

Social services have City or Region scale

It means that money used as P2B sovereign currency will have a local circulation. The P2P Credit contract used to generate the Commons Sovereigns monetary mass could, in principle, be global. However, transport is too expensive and world tourism will become therefore expensive and slow. With most probability we will assist at the proliferation of different sovereigns at City, Region and Country levels, reflecting each of the taxation levels.

Barter

Barter is a system of exchange by which goods or services are directly exchanged for other goods or services without using generally a chamber of compensation database. It is very suited for companies. On the blockchain such a platform is the same as an exchange platform of B2P type of currencies as a promise of goods.

The natural evolution of such currencies is towards industrial sector common B2P currencies, instead of company by company B2P currencies, in special for SMEs. For example, all restaurants of a City or a Region could issue such a currency for the total sales of one year adding all sales forecasts of all restaurants, and then each restaurant marks its dishes with his own prices. Such associations are more difficult at larger scale, because the production conditions change too much. In fact, most Chambers of Commerce have a Region or Country scale. We can foresee that most B2P currencies will have this distribution.

World trade currencies

World trade will probably have the need of some general purpose, universally valid, not extinguishable type of currency. History has used gold. In order to float on the other currencies with nobody’s control, it has to have a guaranteed stable and fixed monetary mass. On the blockhain, this is Bitcoin or any of the other altercoins.

P2P credit. The role of reputation and solvency

The historical role of the Fractional Reserve Banking System

The Fractional Reserve Banking System has been a very useful financial instrument for the last centuries. It has provided trust. It has provided money abundance where it was most needed. And it has forced growth.

Banks provided a trusted registry service of all assets and money transfers. In the 18 hundreds banks were doing this bookkeeping in paper books of accounts and everybody trusted them. Modern banks were born having as competitive advantage the trust. Now this is done in worldwide interconnected and secured databases. Banks main asset is that we continue to trust them at doing the bookkeeping, and there seems not to be any reason not to do. I don’t know a single case worldwide of news about a breach of this trust.
Banks provided a service of giving loans, by creating money out of the nothing. The Fractional Reserve Banking System loan mechanism means that they are authorised to increase the total monetary mass (Money creation in the modern economy, by Michael McLeay, Amar Radia and Ryland Thomas of the Bank’s Monetary Analysis Directorate, Quarterly Bulletin 2014 Q1, BANK OF ENGLAND), and thus to generate a small inflation with each credit. The banks social added value is to analyse the solvency of the borrower. Banks give credit but also guarantee that the overall monetary mass goes back one day to the original level, so that money does not inflate forever.
Banks forced the economy to grow, and expand worldwide, because the obligation to pay back the capital plus an interest forced each business using loans to increase constantly the business, by selling more products in the market, or fail.

The end of the life cycle of the Fractional Reserve Banking System

The Fractional Reserve Banking System life cycle is at its end. The negative effects on the economy are now bigger than any beneficial effect. In fact, continuing with the Fractional Reserve Banking System may mean the death of the planet and with it the mankind.

As trusted registry, banks will become history. They have done this function with high quality. Unfortunately for banks, the blockchain can do the same, much better, more user friendly, faster, more effective and cheaper.
At giving credits, banks have been a fiasco when analysing the creditworthiness, the solvency, of the creditors. Instead, the bank speculators have been demonstrated as compulsive gamblers playing bingo and baccarat with real world. The profit of the financial market of derivatives of high risk credits given with no solvency was too tempting. We experienced the last world financial crisis in 2008. The next can be worst. The question is in the air is who will replace banks in this function. The essence of the discussion of monetary reform is the discussion about who analyses the creditworthiness of the creditor in any credit system, clearinghouse, or currency invention.
With regards growth, we do not want any more growth in products. Instead, we need to stop urgently any growth that consumes more natural resources. We need sustainable economies that grow only in wellbeing and equality. Credit with interest, if it was sometime justified, is now suicidal. Profit of risky investment is justified; interest on money created out of the nothing is not justified.

The service of analysing the solvency is tricky. You may create automated reputation systems, but this will never replace a human analysis of all factors that may influence the solvency of a borrower. Analysis linked to solvency will stay human. We can provide indicators and some limits preventing major disasters, but that is all.

Radical democratisation of the solvency analysis

We propose to radically democratise the analysis of the solvency, and that is the main reason to propose an exclusive sovereignty of giving credit to the citizens, the P2P credit, as the only means to generate money out of the nothing when needed.

Additionally, enterprises can generate self-credit in form of B2P type of currencies as a promise of goods. The solvency is analysed by their customers and the collateral is the enterprise goods.

The individual form of credit, the P2P credit, can be escalated to forms of crowd funding. It can be further escalated very carefully when individuals associate into DAOs to give credits. We can try out different degrees by which individuals delegate the analysis of a given credit to these DAOs, but the individuals will always keep the power of signing or not. By that, we hope to avoid the worst of the financial gambling we have experienced in the past.

Nevertheless, the question remains: How is the solvency analysed and how we prevent fraud and, worst, collective fraud?

We propose two mechanisms:

There is an index, reputation, which limits the amount of money a citizen is entitled to create as P2P credit. It’s the reputation of that citizen as honest moneylender. We have put already a penalising mechanism into the P2P credit smart contract. If the borrower does not pay back, you take all the available money from the moneylender. The limitation provided by the reputation limit is a previous safeguard.
There is another index, the solvency, a public index of the borrower automatically generated by the system, which helps the moneylender to estimate the risk of the credit. In this case, it does not limit anything. Analysis linked to solvency has to stay human.

Elementary Reputations

Reputation as moneylender

There is no big deal at discussing the exact formula calculating the reputation, that is, the limit of credit each citizen is authorised to give at a certain moment in time. In the end, it will be a mathematical formula inside the P2P credit smart contract that each democratic association of citizens can change. It will take into account the historical success or failure of this citizen of giving credits that have been paid back. The formula below is proposed as a draft for the purposes of demonstration in the first implementations of P2P credit smart contracts.

The baseline reputation today measures the intensity of successful credits you have given in the past. It is calculated by the area of (amounts x time of the credits)/(time as citizen). In one word, if you gave a small credit long time ago, your reputation is low. If you accumulate a long experience of successful credits, your reputation is high.
At each period of time, the baseline reputation decreases with time.
At giving a credit, the amount of the loan is deducted from the baseline reputation. This deducted amount does not decrease, while the baseline reputation continues decreasing.
At payback, the deducted amount is deleted; the baseline reputation is increased by the amount of the successful loan.
Whatever quantity the moneylender had to put from his pocket is deducted from the baseline reputation.

Solvency as money borrower

There is more than sufficient literature about how banks should analyse solvency. Again, the formula below is proposed as a draft for the purposes of demonstration in the first implementations of P2P credit smart contracts.

The starting calculated factor is about the capacity of the borrower to pay back. We may calculate the proportion of regular savings to regular income the borrower has to put aside during the loan duration to pay the loan. To calculate the regular income we can look back at his history a period equal to the loan duration. This measures the effort the borrower has to do.
The second factor is to estimate the priority the borrower is going to assign to the payment of the loan, amongst other payment needs. To do so, we can use a similar formula as the baseline reputation, this time applied, not to the loans given, but the loans received.

A primitive solvency estimator, to be published at his profile, could well be the two factors multiplied.

Complex reputations

Social Reputations

There are many posibilities to enrich these indicators with subjective social validations.

Taking into account the challenge

But the factors above can be improved by a more sophisticated calculation. For example, successfully lending money to a borrower that has a poor solvency record should be rewarded with a reputation reward higher than average. Failing to get the money back from a borrower with high solvency should be penalised more than average.

	high solvency borrower	low solvency borrower
sucessful loan	average reputation reward	high reputation reward
unsuccesfull loan	high reputation penalty	average reputation penaly

ethereum ĐEV plan https://www.ethereum.org/pdfs/Ethereum-Dev-Plan-preview.pdf
Reputation system - In order for e-commerce to be successful, in many situations one must be able to know whom to trust. In some cases, you want to tell honest people apart from scammers. In other cases, you want to tell skilled people apart from the unskilled. Still other times, it matters not just what someone's current reputation is but also how highly they're leveraging it, so you can be sure that they cannot profit from scamming everyone all at once. Even in the modern world today, both online and offline, these problems are hard, but in the context of decentralized autonomous organizations they become even harder. Figuring out what can be done, and what should be done, in terms of effective reputation infrastructure will be a crucial concern even with regard to enabling different forms of trust between Đapps themselves.
Trust through an escrow service

TrustDavis on Youtube: Reputation on Ethereum
http://youtu.be/UXjIl0LZNOY
TrustDavis on Ethereum slides
http://www.slideshare.net/aatkin1971/...
TrustDavis: A Non-Exploitable Online Reputation System
http://www.cs.ucdavis.edu/~defigued/i...

jueves, 17 de julio de 2014

B2P currency contract versus B2P property mortgage contract

Investors in capital goods acquire their property by a monthly payment of a B2P property mortgage.

To do so, they get in the market the necessary B2P currency of the manufacturer of the capital good.
The buyer gives the constructor an amount in B2P currency and in return the buyer gets an amount of share of the B2P property mortgage.

The B2P currency smart contract should include an XML text, human readable through an XSL transform, containing the data of the promise of goods. Equally, a B2P property mortgage smart contract should include an XML text containing the data of the given property.

The two smart contracts are almost the same. The main difference is :

the B2P currency circulates in the open multi-currency market and refers to any construction works of the builders company within a period, say a year
the B2P property mortgage circulates only between the builder and the buyer that has acquired the property, and the interchange happens trough all the payment period, say 15 years

The B2P currency contract

Is issued for the total value of the production of a manufacturer for a period
Is valid as means of payment around that period
The holder can be anybody
Can buy any product of the manufacturer produced anytime

The XML

<?xml version="1.0" encoding="UTF-8"?>

<Title>BUILDERS CO Property 2314</Title>

<contractURL>https://www.buildersCo.com/construcionsPlanned2013</contractURL>

<currencyName>BUILD</currencyName>

<currencyLongName>BUILDERS CO Currency</currencyLongName>

<currencyLogo>https://www.buildersCo.com/files/BUILDLogo.jpg</currencyLogo>

</Currency>

</ValidPeriod>

<Definitions name="producer">... legalIssuer ... is the producer of ... Merchandise ...</Definitions>

<Definitions name="authorization">... legalIssuer ... is the authorised institution by the EQUALITARIAN PEOPLES ASSOCIATION to issue money in the denominations indicated in ... Currency ...</Definitions>

<Definitions name="affiliation">... Collector ... are affiliated companies to the ... legalIssuer ... commercialising and selling its ... Merchandise ...</Definitions>

<Definitions name="holder">... holder ... of this voucher is any Citizen in possession of ... Currency ... money</Definitions>

<Conditions name="amounts">... legalIssuer ... will issue money in ... Currency ... for a total amount equivalent of all the ... Merchandise ... to be available for trade with ... Currency ... during the ValidPeriod</Conditions>

<Conditions name="prices">... Collector ... will indicate the prices of the ... Merchandise ...included in this contract in ... Currency ... on top of legal tender prices</Conditions>

<Conditions name="price guarantee">... Collector ... will not change the prices of the ... Merchandise ... in ... Currency ... from the date of the issue, until the end of the ... ValidPeriod ...</Conditions>

<Conditions name="redemption">... Collector ... commit to redeem the money in ... Currency ... of any ... holder ... for ... Merchandise ...worth the price in ... Currency ...</Conditions>

<Conditions name="optional redemption">Optionally, ... Collector ... may redeem ... Currency ... of non EQUALITARIAN PEOPLES ASSOCIATION ... holder ... the same way</Conditions>

<name>BUILDERS CO</name>

<long_name>BUILDERS BUILDINGS FOR EVERYONE COMPANY</long_name>

<address>C/Patronato Obrero, 67, 07006 Palma</address>

<email>builders@builders.com</email>

<url>https://www.buildersCo.com/</url>

<logo>https://www.buildersCo.com/files/buildersCoLogo.jpg</logo>

</holder>

<share>

</share>

</holder>

<share>

</share>

<name>BUILDERS CO</name>

<long_name>BUILDERS BUILDINGS FOR EVERYONE COMPANY</long_name>

<address>C/Patronato Obrero, 67, 07006 Palma</address>

<email>builders@builders.com</email>

<url>https://www.buildersCo.com/</url>

<logo>https://www.buildersCo.com/files/buildersCoLogo.jpg</logo>

</holder>

<share>

</share>

</participation>

</legalIssuer>

<name>Immosales</name>

<long_name>MallorcaWeb, SL</long_name>

<address>S'Estanyera 15 - 07150 ANDRATX (Illes Balears)</address>

<email>name@email.com</email>

<url>http://www.immosales.com/</url>

<logo>http://www.immosales/files/logo.gif</logo>

</Collector>

Any construction produced by BUILDERS CO anytime

</Merchandise>

</contract>

The B2P property mortgage contract

Is issued for the total value of the price of a concrete property
Is valid as means of payment for the mortgage time
The holder can be the builder and the buyer, nobody else
Can buy only one particulal capital good

The XML

<?xml version="1.0" encoding="UTF-8"?>

<Title>BUILDERS CO Property 2314</Title>

<contractURL>https://www.buildersCo.com/property2314</contractURL>

<currencyName>BUILD</currencyName>

<currencyLongName>BUILDERS CO Currency</currencyLongName>

<currencyLogo>https://www.buildersCo.com/files/BUILDLogo.jpg</currencyLogo>

</Currency>

</ValidPeriod>

<Definitions name="producer">... legalIssuer ... is the producer of ... Merchandise ...</Definitions>

<Definitions name="affiliation">... Collector ... are affiliated companies to the ... legalIssuer ... commercialising and selling its ... Merchandise ...</Definitions>

<Definitions name="holder">... holder ... of this voucher is any Citizen in possession of ... Currency ... money</Definitions>

<Conditions name="prices">... Collector ... will indicate the prices of the ... Merchandise ...included in this contract in ... Currency ... on top of legal tender prices</Conditions>

<Conditions name="redemption">... Collector ... commit to redeem the money in ... Currency ... of any ... holder ... for ... Merchandise ...worth the price in ... Currency ...</Conditions>

<Conditions name="optional redemption">Optionally, ... Collector ... may redeem ... Currency ... of non EQUALITARIAN PEOPLES ASSOCIATION ... holder ... the same way</Conditions>

<name>BUILDERS CO</name>

<long_name>BUILDERS BUILDINGS FOR EVERYONE COMPANY</long_name>

<address>C/Patronato Obrero, 67, 07006 Palma</address>

<email>builders@builders.com</email>

<url>https://www.buildersCo.com/</url>

<logo>https://www.buildersCo.com/files/buildersCoLogo.jpg</logo>

</holder>

<share>

</share>

<name>Jesus ANTOLIN</name>

</holder>

<share>

</share>

<name>BUILDERS CO</name>

<long_name>BUILDERS BUILDINGS FOR EVERYONE COMPANY</long_name>

<address>C/Patronato Obrero, 67, 07006 Palma</address>

<email>builders@builders.com</email>

<url>https://www.buildersCo.com/</url>

<logo>https://www.buildersCo.com/files/buildersCoLogo.jpg</logo>

</holder>

<share>

</share>

</participation>

</legalIssuer>

<name>Mallorca Mi Web</name>

<long_name>MallorcaWeb, SL</long_name>

<address>S'Estanyera 15 - 07150 ANDRATX (Illes Balears)</address>

<email>name@email.com</email>

<url>http://www.mallorcamiweb.com/</url>

<logo>https://sites.google.com/site/desperadostheory/files/mallorcaweb.gif</logo>

</Collector>

<Merchandise pictureURL="https://www.buildersCo.com/property2314/pitcures">Duplex apartment located on the 2nd floor of a 2 storey building. Area of 05m2 with 2 bedrooms + office (or bedroom for children).Lounge, dining room, bathroom with toilet, semi-fitted kitchen, double glazing, individual gas boiler. Without basement and attic. 32-33 Mortimer Street, 1st Floor,London W1W 7RE, UNITED KINGDOM

</Merchandise>

</contract>