Comment on Liquidity Networks: local trading systems using a debt-free electronic currency by Graham Barnes

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Geoff – As the article says and Bruno re-explains in his point 5, Quid are designed to be spent, not saved. So your points 3,4 and 5, which assume that Quid should also act as a store of value are not relevant. Savings are accomplished via another currency or asset.

Your points 1 and 6, however need consideration. Our current thinking is that the currency may well give an advantage to some users over others – our view, though is that the advantaged users will be those who are already most active in the local economy. But this is true in any case for the euro or sterling economy. However, if the currency is to succeed in its aim of boosting local trade, we have to look out for inadvertent creation of barriers to competition for new or growing (locally) members.

The Quid probably will devalue with reference to sterling or the euro, but since it is not directly exchangeable with them, and is effectively a closed economy, this becomes primarily an issue for the scheme governance – to make sure that the amount of currency in circulation matches the amount of economic activity.

Incidentally removing Quid, as long as it is based on rules well understood at the outset by all scheme members, is not theft. The currency is initially spent or given into circulation on the express understanding that it is for spending.

Bruno – there seem to be some misuderstandings in your post too. There is no credit within an LQN. Currency is spent or given (with ‘strings’) into circulation and if insufficient currency exists to make a transaction it isnt made. Thus there is no need for credit insurance or legal/ debt issues.

Your point about not needing to wait for 30-90 days for settlement is a good one. Indeed if debt-circuits exist in the euro economy prior to scheme launch, it is quite possible that these could be cleared as a series of linked back-to-back transactions. Understanding the nature of local economic circuits is an important critical success factor for an LQN.

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