What is Commerce and Trust (⿻ money)?

Phone payments and cryptocurrencies have made paying as easy as handing over cash. But the book *Plurality* says this merely recreates cash in digital form. Its vision is to record trust between people, favors owed and contributions to a community as they are, and make them the basis of exchange.

When a neighbor shares some vegetables with you, you do not pay. Instead, you remember to return the favor some day. Long before money existed, people cooperated through favors and trust like this. The chapter "Commerce and Trust" in the book ⿻ Plurality asks whether digital technology could make this web of trust itself the basis of exchange.

In short

Phone payments and cryptocurrencies (digital money such as Bitcoin) have made paying as easy as using cash. But the book says this is merely recreating cash in digital form [1].

The book's vision is to record relationships that cannot be fully converted into money, such as trust between people, favors owed and contributions to a local community, as they are, and make them the basis of exchange. The book's chapter summary puts it this way: "Commerce in a ⿻ is grounded in protocols that capture a diversity of formalized social trust rather than primarily in a global fungible currency" [2].

For example

Instant payments around the world. The book describes a series of public instant payment systems: Singapore's FAST (2014), India's Unified Payments Interface (UPI, 2016), Brazil's Pix (2020) and, in the United States, FedNow (2023). Together with private services such as PayPal and Line Pay, the book writes, "there is an increasing consensus that the immediate gap in making instant payments online and in person through digital channels has been met." Digital money issued by central banks (CBDCs) has also been launched or piloted in dozens of countries, especially in Africa and Asia [3].

The community currency that made this book. A "community currency", used only among the book's contributors, was used in writing the book. It served to measure who contributed how much, and to let contributors decide together which changes to the text to prioritize and approve [4]. Vitalik Buterin, the creator of Ethereum, describes this as a non-monetary implementation of Quadratic Funding [5].

The story of the outdoor cinema night. In the fictional story that opens the chapter, Zvi, a teacher new to town, has helped a local child. At the town's outdoor cinema night, the thank-you messages he has received from residents let him suggest a film for the evening. The story shows contributions to a community, not money, acting as a kind of "currency" [6].

In more detail

A quick success is a sign of what is missing

Chapter 4-3 of the book admits that none of the protocols in Part 4 have received nearly as much attention as payments. Even so, it says, "Cash is perhaps one of the 'dumbest' technologies of the pre-digital era: it is a single, homogeneous substance transmitted between roughly anonymous, abstracted accounts." Recreating that has been hard, but it is not a revolutionary step in the way that hypertext improved on earlier writing, the book writes [1].

A mistake about privacy

According to the book, the privacy benefits of Bitcoin "have largely proven illusory" in the face of well-resourced analysts. Meanwhile, technologies for hiding transactions have stirred controversy over privacy and legal accountability, and forceful government action [7].

The book sees this as a misunderstanding of privacy. Every financial transaction involves at least two parties, so it can never be fully secret. The goal should be contextual integrity: keeping the information within the community involved, unless it has major effects on other communities [7].

Money as a simplified record of credit

Drawing on the anthropologist David Graeber and other scholars, the book writes that long before money, people cooperated under norms of reciprocity, that is, promises to return favors. "'Credit' thus was more primary than 'cash'" [8].

According to the book, currency arose as a simplification to deal with the limits of older record-keeping. Now that the details of transactions can be recorded, "Reducing all this to a transfer of money is no longer a necessary simplification, it is a projection of an antiquated historical ritual" [8].

The book adds that money tracks value well only in limited cases. Where people making something together produce more than the sum of the parts (supermodularity), as in open-source software, decisions need a logic "closer to that of voting than commerce" [9].

Two forms of ⿻ money

The book sets out two forms [4][10].

1. Polycentric. Instead of one world currency, there are many community currencies, each used in a limited domain: "vouchers for housing or schooling, scrip for rides at a fair, or credit at a university for buying food at various vendors." Some can be exchanged for one another, but they cannot be sold for broader currency without the community's consent.

2. Distributed. Currency itself is replaced by direct records of debts and trust between people. Instead of paying, you "call in a favor". With someone who owes you nothing, you use the network of favors owed, tracing a friend of a friend of a friend. The amount of credit you can get is computed as the most that can flow through the network (the "maximum flow").

A worked example (made-up numbers for illustration). B owes you nothing. But your friend C owes you 5, and B owes C 3. Along this one path (B to C, C to you), the most you can get from B is 3, the narrower of the two links. If there are other paths, their amounts can be added.

The book says that any currency aspiring to universality is inherently highly centralized, in the sense that everyone ascribes value to the same thing [4].

Identity and association come first

Experiments with community currencies have hit a wall. Without secure identity (verification of who someone is), a whole account can be sold, which becomes a way around the rule that the currency must not be sold [4].

Conversely, identity systems are a matter of how far to trust claims about a third party, and that trust is quantitative. In this way the book presents Identity and Personhood, ⿻ publics and commerce as supporting one another. They are also the premise of the next chapter, Property and Contract. The book closes by saying these ideas should be of particular interest to African communities, which invented mobile money on their own [11].

What is debated

Buterin's reading (2024). In a review, Buterin describes community currencies as a new element since the authors' earlier book Radical Markets. He sums up the aim as a combination of mechanisms kept deliberately local and global mechanisms for cooperation on a very large scale [5].
Hiding technologies and law enforcement. The book points out that conflicts over technologies for hiding transactions have made it harder to connect payment systems across countries, as countries fight over who can surveil and regulate what. The book's answer is the idea of "the community's responsibility" and of oversight in which the communities involved take part [7].

Common misunderstandings

⿻ promotes cryptocurrency. The book describes the excitement about cryptocurrencies, yet criticizes any currency that aims to be universal as centralized [4]. It also writes that what a blockchain creates is a common record among machines, which does not directly mean a community among the people who run it [12].

Where it fits in Plurality

This is the third chapter of Part 4 of the book, "Freedom", which is framed by the rights operating system [2]. Its ideas are carried forward to chapter 5-7, Social Markets, where local currencies and systems of social esteem, such as badges and points, are also discussed [13].

In a note, the book also touches on the lineage of community currencies: Local Exchange Trading Systems (LETS), started by Michael Linton in 1983, and Linton's later visit to Kojin Karatani's home, which sparked Karatani's New Associationist Movement (NAM) [14]. The book also writes that the proliferation of such currency experiments inspired Buterin, then a writer for Bitcoin Magazine, to conceive Ethereum [4].

Nearby is "Plural Money" (2022) by Matthew Prewitt and Glen Weyl. Handing out cash for things society provides, such as education and roads, is inefficient; distributing them equally misses differences in need; and letting the government decide invites mistakes and concentrated power. From this dilemma, the essay considers money whose uses are limited [15].

Sources

Plurality, 4-3 "Commerce and Trust", introduction after the opening story — https://www.plurality.net/v/chapters/4-3/eng/ ［CC0］
Plurality, chapter summaries (Chapter 4-3) — https://github.com/pluralitybook/plurality/blob/86158859464aee75633acd854c656928121a7fd8/contents/english/8-blurb.md ［CC0］
Plurality, 4-3, section "Digital money and privacy", first half — https://www.plurality.net/v/chapters/4-3/eng/ ［CC0］
Plurality, 4-3, section "⿻ money", paragraphs 1–4 — https://www.plurality.net/v/chapters/4-3/eng/ ［CC0］
Vitalik Buterin, "Plurality philosophy in an incredibly oversized nutshell" (2024-08-21) — https://vitalik.eth.limo/general/2024/08/21/plurality.html
Plurality, 4-3, opening story — https://www.plurality.net/v/chapters/4-3/eng/ ［CC0］
Plurality, 4-3, section "Digital money and privacy", second half — https://www.plurality.net/v/chapters/4-3/eng/ ［CC0］
Plurality, 4-3, section "History and limits of currency", first half — https://www.plurality.net/v/chapters/4-3/eng/ ［CC0］
Same, second half — https://www.plurality.net/v/chapters/4-3/eng/ ［CC0］
Plurality, 4-3, section "⿻ money", paragraphs 5–6 — https://www.plurality.net/v/chapters/4-3/eng/ ［CC0］
Plurality, 4-3, section "Commerce in a ⿻ society" — https://www.plurality.net/v/chapters/4-3/eng/ ［CC0］
Plurality, 4-2, section "Establishing context" — https://www.plurality.net/v/chapters/4-2/eng/ ［CC0］
Plurality, 5-7, section "Social markets tomorrow" — https://www.plurality.net/v/chapters/5-7/eng/ ［CC0］
Plurality, 4-3, note on LETS — https://www.plurality.net/v/chapters/4-3/eng/ ［CC0］
Prewitt and Weyl, "Plural Money, Socially-Provided Goods, and the Principal-Agent Problem" (2022) — https://www.radicalxchange.org/updates/blog/plural-money-socially-provided-goods-and-the-principal-agent-problem/

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