Latest News in the World of Complementary Currencies

The Top 5 Reason to Join IRTA and UC!

Next year is IRTA’s 40th Anniversary of advocating for, educating, and protecting the international barter industry. IRTA’s lengthy and impressive achievements over the last four decades are well documented, you can review the full list by clicking HERE. IRTA’s membership continues to grow because trade exchanges recognize these top 5 benefits of IRTA & UC: 1) The industry’s most successful …

The post The Top 5 Reason to Join IRTA and UC! appeared first on IRTA — International Reciprocal Trade Association.

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A glimpse at China’s burgeoning sharing economy

Op-Ed: I travelled to Beijing, China, earlier this year with other members of the Sharing Economy Association of Japan, a business group. We got a rare, inside look at the development of the sharing economy in Beijing and other cities in China. One of our stops in Beijing was at the State Information Center of China, a government policy think tank, where we learned that around 700 million people used sharing platforms in their daily life last year.

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International money reform at a critical point – we need your help!

*|MC_PREVIEW_TEXT   Dear friend, The International Movement for Monetary Reform currently stands at a critical point financially. To continue our work to create a just and stable money and banking system, we need your support. All four of my grandparents lived through the horrors of the second world war. After losing siblings, lovers and friends […]

The post International money reform at a critical point – we need your help! appeared first on International Movement for Money Reform.

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This holiday season, host an event to make something for loved ones

On Black Friday this year, ditch the long lines at big box stores and bring your friends and family together to share skills and create something special from old and reused items. It’s not only a great way to do right by the planet, but it’s also an opportunity to connect with people in your community. You’ll be joining thousands around the world doing the same as part of Greenpeace’s second annual “MAKE SMTHNG” Week. There are currently events planned in the United Kingdom, Germany, Thailand, and the United States.

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Freddie Mac to offer loan support for shared equity home ownership

Analysis: On Nov. 5, the mortgage giant Freddie Mac is launching a new initiative: Community Land Trust Mortgages. Up until now, a major barrier for potential buyers to participate in a community land trust was getting a loan. Historically, financial institutions have been reluctant to lend money to borrowers interested in community land trusts because of the complexity of initiating and foreclosing a loan for a deed-restricted home.

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How to start and participate in a Buy Nothing group

Back in 2014, I read an article about the Buy Nothing Project, a collection of independent Facebook groups across the country where members can give and receive freely in their own neighborhoods. The concept was designed to facilitate local gift economies around the world — communities that take care of their local members while conserving their carbon footprints.

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Free speech on the ropes

If liberty means anything at all, it means the right to tell people what they do not want to hear.     —George  Orwell What the Arab world needs most is free expression.    —Jamal  Khashoggi In his famous dystopian novel, 1984, … Continue reading

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Terrible tokenomics: Yellowcoin

Selling tokens is now an accepted way to raise investment capital for IT projects, at least for speculative blockchain ventures. Tokens are not like shares an a company; they do not pay dividends or confer voting rights. Sometimes they can be used to buy the product or service, on the off-chance the company ever gets it to market. But sometimes it is neither of those, and issuers come up with creative ways to assure investors that success of the venture will somehow translate to demand for the tokens. Welcome to tokenomics!

AI yellow is a global business directory which has enough eyes on it that 1.4 businesses pay to be in it. It uses multi-level marketing (MLM) to get existing members to recruit new members and earn commissions which can add up handsomely. Though many people may feel that MLM is tainted or tacky, AI Yellow seems like a respectable and successful business. I’ve always thought that a business directory is a great context for a complementary currency discount system so I was keen to find out about this one.

Last week they launched an ICO (the process of issuing tokens and selling them into circulation). I read the white paper which is supposed to explain what the tokens do and why it is a good investment.

The paper had the tone of a once-in-lifetime offer, and contained much vague wording and misleading information, such as a chart showing the exponential growth of the cryptocurrency market capitalization 2017-2025; and several assertions like this:

As a result of the massive AiYellow eco-System, YTC has a truly unique expectation of appreciation…Bitcoin started in 2009 at $.003 USD. Today it is between $6,000 / $8,000 USD.

This kind of shilling is so irresponsible that it must have been deemed necessary to include the following paragraph on the final page:

Certain statements, estimates and financial information contained in this white paper constitute forward-looking statements or information. Such forward-looking statements or information involve known and unknown risks and uncertainties, which may cause actual events or results to differ materially from the estimates or the results implied or expressed in such forward-looking statements.

Too much time is spent extolling the virtues of Bitcoin which is irrelevant, and Ethereum, which is merely the accounting engine. A large part of the paper is devoted to explaining the game mechanics they designed to try to maximise the sales revenue. Even that seems tacky and over-complicated, basically there are about ten rounds of sales getting progressively more expensive.

But I want to focus on the tokenomics. On the first 2 readings I couldn’t work out what the token was actually for apart from raising capital of course. Several use cases are given from making private transfers to banking the un-banked which any crypto could be used for, but the key was in these bulletpoints, which seemed to repeat each other despite being in the same set.

  1. Merchants in the eco-System will accept the YTC-Token for $1.00 USD
  2. All merchants in the AiYellow eco-System will accept the YTC Tokens as a form of barter. There is a minimum value ($1 USD) agreed to by contract, with the merchants. This ($1 USD) value places a true floor on the fluctuation of the YTC Token value.

This makes purchasing tokens at between $0.02 and $0.15 a very good deal. Merchants will probably accept the token at $1 without coercion because AI Yellow is promising to buy them back (effectively backing them) for $1. This strikes me as a huge gamble on their part. If tokens fall below $1 on the free market, nobody must be allowed to buy them up and redeem them immediately from AI Yellow. That arbitrage would be parasitic, taking the tokens out of circulation and draining the cash reserve.

If the tokens aren’t continuously used as a medium of exchange or held by speculators but redeemed by merchants, it could mean serious cash outflow from company coffers.

So why would anyone pass these tokens around instead of money? Once the person who purchased the token at a discount has spent it, all the speculative gains have been realised. So there is an incentive system which seems to build in discounts, though its not clear if AI Yellow of the merchants end up funding that.

Merchant incentives for making purchases with YTC tokens also appear.

and there’s no way of knowing if that incentive will be strong enough: $1 cash will always be more useful to a company than $1 in discount vouchers.

There’s no reason for speculators to hold on to these tokens either. If they are backed by $1, then they are unlikely ever to have more than $1 purchasing power.

What the whole tokenomics seems to be ignorant of, is that the best way to make a medium of exchange circulate is to issue it as credit. Then the units are always in demand by the people who spent them into circulation, and no centralised backing is needed.

The AI Yellow token sale looks like a great offer to me, if you are prepared to spend the tokens in participating shops. But in my opinion the tokens will stop circulating fairly quickly, they will not have a lasting impact or create a new economy. And I worry that AI Yellow cannot redeem all the tokens for dollars. At that point the token holders will be left high and dry.

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PDF icon Yellowcoin_white_paper.pdf 6.72 MB
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