A Community-Owned Business-To-Business Barter System - Advice and Proposal - Lowimpact - Orglow Impact Living Info, Training, Products & Services

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Why What How
Mutual credit resources

A community-owned business-to-business barter system:
advice and proposal
Introduction
by Matthew Slater
Printable intro (PDF)
This proposal argues that the barter industry is captive to its software providers, and that a
different, community-owned, model of software ownership could free the barter industry
Further info & videos
from the poor practices and over-extraction that now hold it back.
It is argued that a basic open source implementation, managed by its users, would both Books & DVDs
stimulate the industry to more constructive forms of competition and encourage new eco-
minded exchanges to start up. Magazines
At a moment in history when the banking system has taken leave of its responsibilities, the Online course
authors wish to see a revival of barter and nurturing of a post-growth economy.
Discussion
Terminology
An exchange is a member organisation which keeps accounts between businesses who Products & services
agree to honour one another’s credit.
Blog articles
A network is a group of exchanges usually running the same software, who honour each
other’s credit
Links
A network provider is a organisation providing software to exchanges, and typically
taking a fee from the trade that happens between them.
Join the Network
National money, hard money & legal tender are equivalent terms. This is a commodity
which is presently scarcer than usual in the economy
‘Trade’, trade dollars & barter credit are the unit of account used to measure value in
an exchange. The value is the same as the national currency because that makes
accounting and taxation easier. Units of account cannot be scarce, but flow according the
trust between members of the system
Contents
The problem
The barter industry
Networks and free market capitalism
The solution
About free software
Community Owned Software
Long term management
Why doesn’t this already exist?
Benefits of 21st Century Software Frameworks
A proposal
Implementation Partner: Smokey Mountain Hollers Cooperative
Implementation Partner: Apres Geneve & Community Forge
Main goals
Roadmap to version 1.0
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19/10/2020 A community-owned business-to-business barter system: advice and proposal - Lowimpact.orgLow impact living info, training, prod…
Approximate cost
Additional information
About Matthew Slater
About Amy Hamilton
About Drupal
The problem
The barter industry

Wikipedia describes ‘barter’ as:
A trade or barter exchange is a commercial organization that provides a trading platform and
bookkeeping system for its members or clients… Commercial exchanges make money by charging
a commission on each transaction either all on the buy side, all on the sell side, or a combination
of both. Transaction fees typically run between 8 and 15%… It is estimated that over 350,000
businesses in the United States are involved in barter exchange activities. There are
approximately 400 commercial and corporate barter companies serving all parts of the world…
There are two industry groups, the National Association of Trade Exchanges and the IRTA. Both
offer training and promote high ethical standards among their members. Moreover, each has
created its own currency through which its member barter companies can trade. NATE’s currency
is the known as the BANC and IRTA’s currency is called Universal Currency (UC).
The industry is strongest in the USA where many networks operate, offering a wide range
and quality of services, though barter happens all over the world. There are many
providers of barter software who compete to sign up exchanges into their networks but no
two software packages are compatible.
This is a serious structural problem with the industry which is choking its success even as
developed economies enter a depression, cash is drying up, and the need for barter is
greater than ever.
The industry is is segmented into competing trading networks, delineated by software. The
software providers are competing against each other to grow these networks because they
profit not only from the software, but from the trading between exchanges within their
networks.
Networks and free market capitalism

Predictably, when networks compete with one another to gain more exchanges as
members, the result is segmentation which is bad for all members, who want to be in the
biggest network possible. The same applies when Myspace, Friendster, and others compete
with Facebook to become the dominant social network. End users suffer either the
inconvenience of being in several networks, or the limitation of only connecting to a subset
of their friends. When the game ends, the winner, selected by the ‘market’ is the best
funded, most marketed, most profitable, and least ethical provider, and the prize is a
monopoly which cannot be challenged for years.
This is not how free markets were supposed to work. Widget makers in the industrial
revolution would compete on quality, price and cost to produce, and the most money-
efficient would best serve the market while the others found niches if they were lucky. But
translate this to infrastructure networks and the customer no longer benefits. We should be
learning from networks like the Internet, which was built on open standards. This fostered
a much healthier kind of competition about who could build the best services for the
Internet, not who could build the best internet, (which is what AOL tried to do).
Reagan and Thatcher started a wave of privatising critical infrastructure provision from
telco, energy, roads, prisons, post, even according to some accounts, the money system.
Many agree that the pendulum has swung too far and that running critical infrastructure for
maximum profit easily leads to monopolistic abuses. This is also the ideology that led to an
epidemic of competing phone networks and competing rail companies, with all the
intangible benefits to the end users that that entails.
Governments and banks are absolutely unsupportive of local trading networks, and tax all
trade in national currency as if the sales took place in dollars. If this wasn’t bad enough,
none of the network providers seems to value the credit of their own networks; they accept
only legal tender for their services. Similarly, managers of barter exchanges have bills to
pay, and extract hard money from their businesses by levying transaction charges and
membership fees. These local economies which are so critical in an era of scarce money,
are being drained of national money at every opportunity.
Even without this parasitism the practice of barter is suffering from the wrong kind of
competition, profiteering, rampant seigniorage, collapses, and a poor general reputation,
and this means that businesses feel they cannot turn to barter even when they need it
most.
The solution
A healthy digital network is built on open data standard which allow any provider to make
software compatible with the rest. This allows competition without segmenting the market.
IRTA has pushed for such standards, and has had some success implementing Universal
Currency. No commercial software vendor wants to be the first to embrace open standards
because some of their customers would take the opportunity to leave. The deadlock can
only be broken with a new, open source implementation. Once the software is free,
providers would be forced to work to retain their users by providing value, rather than
simply locking them in.
About Free Software

A new approach to software could break this deadlock and divert attention and resources
away from harmful competition and hopefully towards the spreading of good practice,
standards and support.
Free software can revolutionise a market in the face of commercial software aiming for a
monopoly. Internet Explorer was forced to become free and has been inferior to the open
source alternatives and losing market share for 15 years. Similarly Microsoft’s web server
could never compete with Apache, which was open source. And Linux, while many users
are completely unaware of it challenges Microsoft and Apple, and beats them in all kinds of
markets.
In software ‘free’ does not mean it costs nothing to own and to run; it means anyone can
download the code, read it, alter it, and use it. Free means it is not captive or controlled.
Instead of passive customers paying for use of the code, it means users are empowered to
tailor the software to their own needs, and/or improve the software for the benefit of all
the other users.
The developer effectively waives ownership by releasing it open source, seeking only make
a living by being the preferred developer. Many open source projects are developed and
maintained by clusters of enthusiasts and users who gain professional kudos for their
contributions.
Community Owned Software

If many people get involved in a free software project, coordination is needed to manage
features, programmers, bug reports, and releases.
The most obvious and democratic way to manage open source community software is
when the users themselves pool resources to manage the software they all use. In the
barter industry this would obviate a whole of self-interested tier and return power to the
exchanges currently held by software companies. It would also lower the chance of being
held hostage by an existing software provider using a proprietary system where the data
can not easily be recovered in the event of dispute, technical fault or provider collapse.
Such events have taken place in recent history with the likes of the infamous Bentley
Commerce System collapse (a dispute between the software provider and shareholders,
resulting in a cascading collapse of many small exchanges) and BarterNet (an attempt to
consolidate exchanges through outright purchase which resulted in eventual collapse of
many of those involved).
Instead of paying a fixed fee to many profit making software companies to develop the
same features many times, exchanges might collectively fund specific features and
upgrades according to their priorities and budgets. Of course users could still act
unilaterally. The details should be worked out later.
This approach resolves the problems inherent in the idealised monopoly end-state. Instead
of one of the players expanding to fill and control the whole software sector, the users of
the software club together to ensure their software is serving them and the businesses
they serve.
A collective approach to barter software offers other benefits:
Monitoring and regulation could be standardised through a single reporting format

Standard data formats would allow exchanges to switch software much more easily.
Exchanges could more easily plug-in to a global marketplace.
Instead of exchanges competing for territory, brokers should compete within much
larger networks their skill at matchmaking.
As users take on nonprofit responsibility for the efficiency of both exchanges and
networks, the money-cost of maintaining the network would decrease and the trade
volume increase.
Rapid development and roll out of features
Competing exchanges that cooperate on innovations to the software would grow,

improve and refine the quality of the software jointly and much more quickly, since the
artificial objective of comparative advantage of software features would be replaced by
the real objectives of clear communication, ease of use, and optimum efficiency.
As a rough guide, properly funded software should be maintained at around 20% of the
build cost per year, in order to keep it fully up to date and incrementally improving. Then
every five years or so it should be completely rebuilt, probably on a newer platform.
Long term management

The development process serves, and hence is paid for, by the exchanges who use it. Votes
might be weighted accorded to dollars invested or some similar metric, of course weighted
in favour of members who took the up-front risk.
The money for all of this should to be raised from the exchanges using some kind of
membership fee; the more exchanges participate, the cheaper it gets, in direct proportion.
Instead of software developers resting on their laurels, and creaming off the profit from
their inter-exchange trades, costs should go down as usage goes up.
And since profit is not the objective, barter credit itself can be much better leveraged to
meet the running costs of the system.
As with all the other software providers, there should be a paid employee / networker,
perhaps part time, who should have a deep knowledge of the industry and would fulfil a
number of functions:
Work with users to secure a solid subscription base
Manage the negotiations between users about which features get built
Sales & marketing
Supervise the building of a body of collective knowledge about running barter

exchanges
Liaise with IRTA and other professional bodies.
Ensure the exchanges meet certain accounting standards, especially if their currency is
to be used outside the exchange
The employee would be a servant of the users who, in their turn, would decide strategic
issues periodically according to their level of involvement.
It would be interesting to explore the possibility of the IRTA providing or supervising the
networker role. It would be a great complement to their already successful UC (Universal
Currency). In fact any existing nonprofit software provider could be well qualified to
manage the whole project.
Why doesn’t this already exist?

It is hard for any new software to get a toe-hold because of the way that existing packages
leverage and close their networks. New applications cannot offer their users trading
networks, except for the Universal Currency, so exchanges have very little incentive either
to experience the trauma of migration, or to move to smaller networks. The start-up cost
of making new software which can match the features of established software, and the risk
of not getting enough paying customers soon enough, and developing a value proposition
powerful enough to get people to migrate, makes it all pretty unlikely that new software,
and new ways of thinking can break in. By aiming to create new exchanges in the
emerging sustainability movement, it should be possible to break through.
Serious attempts to upgrade the barter industry in the last decade and dot com boom
yielded disappointing results, especially considering the a great deal of money invested.
Investors felt and probably still feel burned by B2B. While community currency software is
typically open source, only Cyclos has attained a professional reputation.
Cyclos is the strongest multi-user open source accounting package available It is well
established and contains marketplace features, yet does not provide the kind of flexibility
needed to actually run an exchange as a business. Cyclos characterises itself as ‘banking’
software, and takes little account of brokerage or membership management. Its
applications are often large projects with special needs and on-hand expertise. As a
monolithic application, very little development is possible outside of the main branch, and
development proceeds slowly in whatever direction STRO deems most strategic. Their
strategy is strongly influenced by availability of public funds for (and sometimes of)
developing countries. Ominously, they reserve the right to close the source of future
releases.
The closest thing which already exists is TradeAuthority, a member-owned network of

exchanges with its own software.
“TradeAuthority’s mission is two-fold. First, to help develop other member-owned

exchanges across the country modeled after the PartnersOne model. TradeAuthority is a
service company providing the startup knowledge, assistance, and policies of that
PartnersOne model and also providing the QuikTrade system. The second mission was to
also provide our software to current existing exchanges who desired to utilize the software
and participate in the larger TradeAuthority network of exchanges.”
This project will not start until sufficient partners and resources are pledged. A strong
similarity can be found with Thomas Greco’s Mutual Credit Clearing Union Proposal
Benefits of 21st century software frameworks

There is no industry software built with a modern framework, to the best of our knowledge.
The evolution of software development is always moving to higher levels of abstraction,

which allow more complicated applications to be written with less code. web frameworks
started to emerge around 2005. A framework provides an empty but working software
application and a set of coding standards to build compliant plug-ins. A popular framework
will have tens of thousands of developers, who take responsibility for constant framework
upgrades and vast libraries of re-usable configurable discrete plug-ins.
Frameworks make heavy use of standards and conventions because that makes it easier to
customise, override some parts of the application while swapping or upgrading other parts.
This componentization makes expensive code units much cheaper and easier to write,
maintain and share.
With a popular framework, it is much easier to recruit local developers (i.e. paid in trade
dollars) to customise, host and maintain a localized versions.
A proposal
Implementation Partner: Smokey Mountain Hollers Cooperative (SMHC)
After 2.5 years of research and development, SMHC is currently enrolling its first business
cooperative members on the exchange. Once the exchange has a minimum of 50 trade
cooperative members (estimated for February/March 2012), it will officially launch for
trading.
Since its inception, SMHC has been committed to truly ethical practices and design
frameworks. It is a community-owned cooperative and has done extensive research and
consulting on how to make governing processes as democratic and egalitarian as possible.
With the understanding that, if the SMHC system is successfully mounted, it will likely grow
to a substantial portion of the local economy, and serve as a model for other communities,
it has been important to take the time to research best practices, appropriate safeguards,
and frameworks that are most likely to result in true democracy and the re-commoning of
society. For more information, and to see our Guiding Principles, please visit
www.smokeymountainhollers.com
Currently serving on the advisory board of SMHC are
Thomas Greco, esteemed economist and author of The End of Civilization and the Future
of Money
Annette Riggs, who has 20 years’ experience in trade, distribution and fulfillment
businesses, with a particular expertise in non-cash execution models.
Bob LeRoy, longtime accountant for Ithaca HOURS and accounting expert on local
currency, also serves on the Coordinating Committee of SMHC.
Thomas A. Beckett, A cooperative lawyer, local to Asheville, has done extensive research
to help us prepare our bylaws and decide upon the best legal framework in which to
successfully operate within the state of North Carolina.
All SMHC documents, including Bylaws (still in final stages of development), Articles of
Incorporation and more, are available by request.
Implementation Partner: Apres Geneve & Community Forge
La Chambre de l’économie sociale et solidaire, (APRÈS-GE) has expressed strong interest

in a new Drupal based barter system to be implemented by Community Forge. It already
commissioned a new module to do predictive barter but the project is awaiting funding,
probably from the city government. APRÈS-GE has around 250 local member organisations
signed up to an ethical code and envisages a community far broader in scope and purpose
than a conventional B2B. Please see http://apres-ge.ch (in French).
Main goals
To provide adequate, free software for anyone to set up a B2B barter exchange.
To create software and monetary standards to allow exchanges to trade in an open

network.
To work with the industry in creating migration software standards to allow exchanges to
move between providers.
To pilot a new model of ‘low-friction’ barter in which less legal tender is drawn from the
exchange and the infrastructure is funded through trade currencies.
To create an association, foundation or trust to sustain and develop the software, the
community of users, and the knowledge and experience they collectively hold.
Roadmap to v1.0
Based on the work already done in Drupal, monthly releases could be made from the start
with trading in SMHC, happening by the second month.
0.1 Set up a basic working money system with dollars and trade dollars currencies and
simple marketplace and publish it for free download.
0.2 With configurable fee charging.
0.3 With improved trading workflow for goods, culminating in a transaction
0.4 With the most essential brokering tools
0.5 With ‘Universal Currency’ compliance
0.6 With 1099B Compliance for US Exchanges & GRT for Australia
0.7 With installer package
1.0 New exchanges are invited to launch
The new software would not attempt to compete on features with established software.
This is the moment the long-term management kicks in, as described above.
Numbers to consider
This proposal does not yet include costing, but here is an indication of the cost of
outsourcing this work to reputable businesses. However with trade currencies, participation
from the users, and the engagement of passionate individuals, much fewer dollars will
actually be needed.
6 programmer months: @$15,000 p. m.
including packaging which is so important for open source, wire-framing, graphic design
6 months marketing: @$10,000 p. m. (part time, including travel)
Educating the green business networks about money systems.
3 months for liaison @$5,000 p. m.
including testing, requirements gathering, documentation, developing the business model,

and handover to the long-term manager
Implementation partners would also contribute
considering requirements, testing, collecting user feedback, issue tracking etc
Typical cost of software to run one barter exchange for one year: $2000 – $5000
Annual turnover of IRTA member companies (trade dollars): $12 billion
Additional information
About Matthew Slater

I have been writing software for 13 years, and working with Drupal for the last 4. In 2009 I
co-founded Community Forge with Tim Anderson of SEL du Lac to build and host LETS
software. My mutual_credit module has been deployed for scores of LETS groups, and
more recently by hundreds of communities in Timebanks USA which migrated its
Community Weaver software to Drupal.
As a full time activist I have a deep understanding of money systems and why they fail,
and I try to share this knowledge. In a world literally governed and managed by money I
work for the most impact, not the most personal profit.
I believe that what is most needed in the world right now is local alternatives to scarce
national and supranational currencies, and that the barter industry is failing to provide
that. I believe I have a lot to offer the industry; this proposal is not the only possible
solution, and I will be supportive in principle of any initiative which would restore
confidence in the practice of barter.
About Amy Hamilton

With a background in writing, teaching, the arts, community organizing, non-profit
development and grassroots economics, in both New York and North Carolina, I am well-
qualified as the primary coordinator of Smokey Mountain Hollers Cooperative. Since June
2009, I have been organizing with other local, national, and international local currency
advocates in order to create a local exchange system that is truly human-scale, yet
potentially international in scope.
I wish to promote a commons-oriented vision in my community and the world and to assist
in creating solutions that allow people and communities to act autonomously to realize our
best potential.
About Drupal
Drupal is an open source content management platform powering millions of websites and
applications. It’s built, used, and supported by an active and diverse community of people around
5
the world.
Drupal websites are not so much ‘coded’, but ‘assembled’ and ‘wired’ using a mixture of
configurable components, mostly publicly available. There are several ways to package
sites or optional features, to share hosting & management resources. The framework
strongly supports various forms of community interaction, so beyond the expected features
of barter software, it is comparatively simple to encourage deeper or more subtle social
ties, by creating features such as personal blogs, a ‘buddy’ system, trader of the month,
and installing them optionally.
In addition, much of the site is configured through the web browser, without code, which
makes it easy to hand over certain powers to the exchange manager, as appropriate. So
instead of just editing pages and managing users and trades, exchange managers might
also be able to specify rich trading rules, create new user-profile fields, construct their own
reports, pick up local news via RSS – whatever is required.
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Dave Darby October 18, 2020 at 7:44 pm on Do Username
energy-saving measures actually increase
overall energy use?
Daniel - yes, I guess that particular energy-
saving measure wouldn't necessarily increase Subscribe
mileage driven because it would take more time. Password
It's an unusual energy-saving measure....
Dave Darby October 18, 2020 at 7:37 pm on Do

energy-saving measures actually increase
overall energy use? Remember Me
Anthony "If ice cream was cheaper I’d almost
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certainly buy more of it." - Me too. "But I’m still
not clear where the money comes...
Anthony Hay October 18, 2020 at 7:01 pm on

Comments & questions
Do energy-saving measures actually increase You can now post comments and queries at the
overall energy use? bottom of all of our topic introductions - we'll
Dave, If ice cream was cheaper I’d almost find a specialist to answer your queries
certainly buy more of it. If the cost of energy
were to shrink to nothing I think...
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19/10/2020 A community-owned business-to-business barter system: advice and proposal - Lowimpact.

orgLow impact living info, training, prod…

home topics blog network shop about

Why What How

Mutual credit resources

The barter industry

Networks and free market capitalism

About free software

Community Owned Software

Long term management

Why doesn’t this already exist?

Benefits of 21st Century Software Frameworks

Implementation Partner: Smokey Mountain Hollers Cooperative

Implementation Partner: Apres Geneve & Community Forge

Roadmap to version 1.0

About Matthew Slater

About Amy Hamilton

The barter industry

Networks and free market capitalism

About Free Software

Community Owned Software

A collective approach to barter software offers other benefits:

Monitoring and regulation could be standardised through a single reporting format

Competing exchanges that cooperate on innovations to the software would grow,

Long term management

Work with users to secure a solid subscription base

Sales & marketing

Supervise the building of a body of collective knowledge about running barter

Liaise with IRTA and other professional bodies.

Why doesn’t this already exist?

The closest thing which already exists is TradeAuthority, a member-owned network of

“TradeAuthority’s mission is two-fold. First, to help develop other member-owned

Benefits of 21st century software frameworks

The evolution of software development is always moving to higher levels of abstraction,

Implementation Partner: Smokey Mountain Hollers Cooperative (SMHC)

Currently serving on the advisory board of SMHC are

Implementation Partner: Apres Geneve & Community Forge

La Chambre de l’économie sociale et solidaire, (APRÈS-GE) has expressed strong interest

To create software and monetary standards to allow exchanges to trade in an open

0.2 With configurable fee charging.

0.3 With improved trading workflow for goods, culminating in a transaction

0.4 With the most essential brokering tools

0.5 With ‘Universal Currency’ compliance

0.7 With installer package

1.0 New exchanges are invited to launch

6 programmer months: @$15,000 p. m.

6 months marketing: @$10,000 p. m. (part time, including travel)

Educating the green business networks about money systems.

3 months for liaison @$5,000 p. m.

including testing, requirements gathering, documentation, developing the business model,

Implementation partners would also contribute

considering requirements, testing, collecting user feedback, issue tracking etc

Annual turnover of IRTA member companies (trade dollars): $12 billion

About Matthew Slater

About Amy Hamilton

Latest Comments Login Sign up to our newsletter

Dave Darby October 18, 2020 at 7:37 pm on Do

Anthony Hay October 18, 2020 at 7:01 pm on

Lowimpact.org is a workers' co-operative. Registered in England. Company No: 4205021.

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