Tagged: money

the math of p2p economics

Using a relative-value algorithm, SEA (similar to Google Page Rank), social accounting is simply a matter of tracking subjective enumeration. Value is enumerated by each person, and it is not ‘abstracted’ or ‘shared’ or ‘transacted’. Reading this article, for example, you evaluate it as 3 out of 10. This is just one evaluation out of all the evaluations the reader comes up with during a day’s living, whether it is enumerating the contribution of colleagues, foodstuffs, even the weather if they want. Thus, the reader accumulates a ratio of subjective enumerations. By applying the relative-value algorithm, a ‘priority list’ of evaluations is derived — without any external bias. In a pure p2p network, there is no ‘objective’ or ‘externalised’ enumeration, and thus no currency. It really is as simple as this; it worked for google, and made the internet navigable.

how do you go about evaluating?

Let us look more closely at how a person evaluates. In the example above, the reader gives the article a value of 3 out of 10. What are they estimating to have a value of 3?

  • the reader is rating the article
  • the reader is rating the article’s author
  • the reader is rating their reading of the article

These three interpretations derive the quality of economics. In the first, the reader is evaluating a thing, in the second a person, in the third, their own experience. The first interpretation encourages the thinking that all subjective enumerations of the article can be totalled up and an average value derived, much like the totals for eg Amazon seller. The second interpretation is the operating interpretation of ecosquared, which emphasises the importance of a pure p2p evaluation system; things like articles and foodstuffs and so on conform to a resource economy primary based on sharing. The third interpretation essentially tracks gratitude.

All three are valid, and books will be written to share how one goes about evaluating one’s subjective enumeration. After all, some evaluations will lead us to saving this planet from environmental disaster, and other evaluations will continue the degradation. As a pure value-game, it is left up to each and every individual, as it should be for a p2p system.

where does money fit in?

To shift from our current system of an externalised unidimensional accounting system, that is money, to a multi-dimensional social accounting in a pure p2p system, we need to examine the parameters of our current economics. Money has evolved from a basic coupling of number-thing, and yet it is only functional in time, eg using the £10 I received yesterday to pay for something today. Because the basic application of number to social accountancy in money does not contain ‘time’, various ‘add-ons’ have evolved such as interest and compound interest, and with the application of negative number, our current economics is unstable. MTTP, or Money-Time-Trust-Protocol, decouples money-thing and replaces it with money-time, eg £10 is roughly equivalent to an hour. Money thus becomes “well behaved” in a mathematical sense.

Thus, we can invite people to co-create value using the MTTP social contract whether £10 for an hour or £100 for a day or £1000 for a week and so on. It performs the same function as ’employment’: participants have a guaranteed source of income. Notice, there is no bounded entity, no company or government or organisation; MTTP is a purely p2p protocol. The relationships of dyadic p2p contracts constitutes the economic structure of the network. Once the value is produced, and if this attracts money (ie is ‘sold’ using traditional economic parlance), the money attracted is distributed by the ratio of subjective enumeration of each participant member, via the Subjective-Enumeration-Algorithm described above.

the subjective-enumeration-algorithm

The actual algorithm for tracking subjective enumeration looks something like this:

(where V is the value of any person i, d is the “damping factor”, N the total number of people, M the set of people who evaluate person i, the value of Pj at time t)

Check out the math in this document, for both MTTP and SEA.

current p2p foundation engagement

These two protocols/algorithms establish a pure p2p economics, social accountancy with no organisational boundary, no centralised or abstracted authority, and it works for small groups or an entire planet of co-creation. Inherent in this system is the subtlety to educate people to evaluate ‘correctly’ if we wish to engender a sustainable global situation.

Having engaged Tiberius Brastaviceanu of Sensorica, the solutions presented here undercut the level of complexity his community is dealing with. Tiberius is employing a characteristically engineering methodology to the problem of social accounting, attempting to specify all the factors to evaluate an objectively fair % distribution of ‘value exchange’. Who determines the right factors and their evaluations? If there is any ‘externalised’ or ‘authoritative group’, then it is not a pure p2p system and politics rears its ugly head, which is why Sensorica are still struggling with deriving their accounting system that everyone is happy with. Imagine this expanded to the global level. No, the accounting system must be a pure p2p system, as efficient — and perhaps more so — than our current p2p system that is purely based on the unidimensional currency that is money.

stocks and flows

Something intelligible from this article by dymitri:

Joan Robinson frequently recounts that the great Michal Kalecki once exclaimed to her “I have found out what economics is; it is the science of confusing stocks with flows!” The trouble with the flat earth economists, is that they confuse the dynamic flows of production and consumption that make up an economy with static piles of stuff. Robinson further reasoned that “it is this confusion that has kept the Quantity Theory of Money alive until today.”

With ecosquared, we separate money from things, ie a quantisation of things. The closest we get to this is the cumulative relative values from SEA. That is, Gary may be highly valued this month, and so he gets more money flow. In the current ecosquared system, there is no numerical application of subjective value to things. Will this evolve sometime?

A parallel system will evolve to keep track of things, much like books in a library, so we know who has what at any moment, and there will be a relationship between the value we produce for one another and the sharing of things. Can this should be conducted through our personal relationships, simply sharing with one another, like food around a table?

Not sure about the equation in the article. Seems too simple by half. Nor the political biases. The interesting bit remains in separating flow from stock.


This is a classic economists understanding of stock and flow. This diagram indicates that business or economics is the flow of things. So, the number of things that enter the shop through the back door, the inflow, the number of things that leave the front door, the outflow sales, and the stuff that remains on the shop shelves, the stock. This could also apply to the movement of people, and not just in the sense of slavery. Over time, companies are ‘stock’, where the ratio of inflow and outflow of people delineate whether the company is growing or shrinking.

Ecosquared has a slightly different interpretation of flow and stock. Simply, the flow is to do with the application of number to time and people, ie MTTP. The stock is the real world stuff we share. How is the stuff we share regulated? How can we distribute the stuff in our shops without ‘money’ as an intermediary?

At this point in ecosquared, money is attracted to the value participants produce and distributed according to SEA. This money can be used in the traditional way, buying stuff. As the ecosquared entity grows, and entire communities are running with MTTP and SEA, where there is no ‘external’ attractor of money, how do the distribution of goods get divided?

No answer to this yet.


four delusions of money

The “money-can-be-saved” delusion. The notion of saving money in a bank is absurd, although it is a particularly resilient illusion.

The “we-pay-for-things” delusion. We are trapped in the delusion, we are imprisoned by our work.

The “let’s-make-some-money” delusion. But of course, the only people who make money are banks, ratified by governments or kings. It is a collective illusion that serves a very useful purpose: without which we’d still be bartering.

The “negative-money” delusion. Before negative numbers, owing had a precise face, who I owed the oranges to; now it is faceless. One of Ghandi’s working principles was to never work in credit; this application of negative numbers to money deserves more attention.