Sorry about the confusion. It is understandable because the phrase actually refers to multiple things.

When I use the phrase "targeted currency" I am referring to a special purpose currency that is targeted to a specific community (which may or may not be geographically defined) which is designed to address a need or solve a problem within that community.

Examples include Omidyar Network feedback ratings, eBay feedback ratings, frequent flier miles, food stamps, time-dollars, etc.

In addition, I think of the word "currency" as being of the same root as "current," as in flow. So I think of currencies as systems designed to create or facilitate particular "flows." Food stamps buy food. Frequent flier miles incent loyal buying habits. Time-Dollars release latent skills in a community and incent members to exchange those skills. eBay ratings incent honest behavior, prompt payment & shipping.

There are people use terms like alternative currencies, local currencies, or complementary currencies to refer to some of these, but we coined this term to try to eliminate confusion that occurs from these other names.

• Alternative Currencies - I think this is a fairly viable name, but has been rejected by much of the currency community as it seems to threaten established interests. Currency practitioners are not trying to incite problems with central banks so they have been steering away from this term.
• Complementary Currencies - This is the non-threatening term in vogue with most burgeoning currency practitioners at this time. However, it seems that most Americans don't fully appreciate the spelling difference between "compl-e-mentary" and "compl-i-mentary" so they hear "free money." Also, I think it supports a pattern of thinking that much of the movement has fallen into of creating a new one-size-fits-all solution where they try to take one currency implementation and apply to ALL communities instead of appreciating the disparate needs of different communities.
• Local Currencies - Many communities in an information age are non-local. This term misses how vital currencies can be in local and global ways. For example, eBay ratings serve a community not well defined by locale, but they are still a valid currency of the type we mean.

So that is why I've coined the term targeted currencies. I hope it communicates as non-threatening, non-local, and special-purpose rather than general-purpose.

I (with a handful of other founding partners) have started a company called Targeted Currencies Network. We are building this as an open system, a "business without walls," and inviting widespread participation in developing the infrastructure to support communities in having these kinds of currency tools as easily and reliably as businesses have access to doing transactions on the Visa network.

I think someone cut and pasted some content from our web site which may explain the use of "we." "We" will try to weed out anything 'salesy,' and keep the conversation focused on how "the bigger we" can work on these things together. :)

Again... sorry about any confusion. I hope this has clarified the term.

Tom, I think that’s a great question. Unfortunately I don’t know if I understand the goals of the Omidyar Network well enough to answer it fully. Let me take some steps towards an answer and add some more questions

First, the Omidyar Network is ahead of many communities because it is already using currencies in its reputation rankings. Being able to give feedback about people, ideas and postings is a great way to increase the signal to noise ratio in an online space as well as creating accountability for people’s actions. But in this one domain there still may be significant refinement available.

However, although I’m sure there are patterns to this reputation currency, much of it doesn’t make a lot of sense to me. Take the reputation of this Targeted Currencies group, for example (currently at 161). This must be a function of the people who join the group because there is no way to rate groups. But when I join a group, its number doesn’t go up a consistent amount and when I leave a group the number doesn’t go down. So what does the number truly reflect?

The same thing applies in other places these scores show up. Should positive feedback to my posts be reflected in my personal score in some way? I’m not claiming to understand all the underlying intentions in how the feedback system is designed, but it makes feedback scores less useful to me if I can’t understand what they mean.

One of the things we’ve been building into some of our systems is multiple (sometimes interacting or interdependent currencies). For example, in our design for a Currency Commons, we have three distinct reputation currencies. One acknowledges input of new & original ideas (Stones), another represents level of activity & participation (Tumbles) and the third rewards successful implementation of ideas into real world currencies (Gems).

Each one gives you a clearer sense of the strength of people’s contributions. If you’re looking for someone to come up with new ideas needed to solve a unique problem in your community you may be looking for people with a lot of Stones. If you’re looking for somebody who is an avid community builder who can help you build the critical mass of participation in something like an online community, you’re looking for somebody with a lot of Tumbles. If you seek support in implementation of a currency, look to Gems.

Sometimes collapsing different types of currencies into a single one doesn’t make sense (think balls, strikes & outs in baseball). Other times it works out fine (think time penalties for hurdles not cleared). [Note: Thanks to Aaron Silverstein for the analogies.]

I don’t know that I know enough about the “donation jars” or “Better World Scouts” to say yet, but I suspect they would involve their own currencies independent of the Omidyar reputation system.

What are the key needs you are trying to address or problems are you trying to solve with them?

Who do you want to attract to the community?

What kinds of participation do you want to reward?

Answers to those questions shape the kind of targeted currencies that we’d design to address those needs.

Hi Ted!

Mickki here...I am also a founder of Targeted Currencies Network (the company). The model Arthur is sharing is from our design for a "Currency Commons," a participation based organization to support the development and implementation of targeted currencies.

The ACCESS Foundation, led by Bernard Lietaer, Jackie Dunn, and others, is a non-profit trying to accomplish similar goals. We're working in partnership with them on the Currency Commons, but as of yet, it is in the design and planning phase and hasn't been built yet.

We've recently launched our open business model to provide opportunities for others (such as yourself) to work with us on these projects and be rewarded for that participation. If you're interested in learning more about this, see the Targeted Currencies workspace page about Open Business Models.

Interesting stuff... let me throw in another "currency" that we played with in the now-defunct Uplift Academy web site which we just moved into omidyar.net: the concept of an Aha!.

This is a lightbulb icon that a user can give to an object (person, web page, idea, etc) that triggered an Aha! reaction. This would allow folks to track other's epiphanies as they wandered through the space. John Graham came up with the idea in the first place, mentioning that it could lead to a Global Aha! as the network percolated enough personal ahas.

When I mention this idea to folks, they usually respond with an unconscious Aha!.

<signing off for the weekend>

Tom,

I like that! I think that's a great example of having a currency well targeted so that people understand what it means.

I'm picturing discussion threads here on the Omidyar Network with a line of light bulbs for each Aha! marked anywhere in the thread. Then light bulbs by each comment that people have rated with Ahas!

Arthur,

I have a question about the stones/tumbles/gems system.

It seems to me that the title of the last category is telling. Gems are precious and rare. Is this implication implicit in the system?

Personally I value gems more highly than stones, because I'm great with ideas, but poor with follow through, and admire those who can "close" as it were.

If you have implemented this form of ranking elsewhere, what kind of distribution have you found between those who earn high stone rankings, those who earn high tumbler rankings, and those who earn the gem label.

Thanks in advance.

-Ian

I really enjoy this thread, thanks to everyone who helped me understand it.

It would appear that ranking and points or currency will become more and more a part of our web and society until it becomes taxable.

In a different manner, http://www.upromise.com

Reputation currencies that are not used for exchange shouldn't be taxable, because there isn't an exchange taking place. Exchangable currenices, even those considered 'alternative,' etc., are taxable under IRS barter tax laws. (See the IRS site for more info)

The taxation of barter (and the currencies that facilitate it) is a bit backwards from what we're used to - you are not taxed for receiving the barter "credits," like when you receive cash. On the contrary, you are taxed when you receive the value of those credits in bartered goods or services (like when you spend cash). In other words, you may receive DenverDollars in exchange for a product or service you provide, but you don't get taxed on the DenverDollars until you spend them.

The only real exception I know of is "Time Dollars," which have been deemed by the IRS as non-taxable, one reason being, "They are backed only by a moral obligation and are not legally binding." More information about this can be found on their site, http://www.timedollar.org

Is an off-shore, electronic currency taxable?

The taxation is about the excahnge, not the currency. So an American citizen who gets paid in an off-shore currency (be it national or otherwise) is still responsible to report that pay and pay income taxes to the IRS.

Mickki is right about reputation currencies. There is no trade going on, only the accumulation and recognition of reputation. We use these reputation currencies in an interdependent way with other complementary currencies to provide communities a way to access the 'natural nested hierarchies' that Ken Wilbur talks about in his work on Spiral Dynamics etal.

I think the Omidyar system is actually a good reputation currency, although the rules governing it are not 100% clear to me -- I can only observe their results. If there were a second currency -- one optimized for trading -- then the reputation might (emphasize might, there are many ways to use interdependence) create some different trading rules or opportunities based on threshold reputation measurement.

This takes the concept of reputation one step beyond the eBay or Amazon model, and actually makes it manifest somewhere.

Greg,

Did somebody hit you with the "literal" stick today?

I suspect Mickki's question was intended to spur some further conversation and inquiry. What're you trying to do? Kill the thread? ;)

See you bright and early at the coffeehouse.

-art

Ian Danforth said:

I have a question about the stones/tumbles/gems system.

It seems to me that the title of the last category is telling. Gems are precious and rare. Is this implication implicit in the system?

Personally I value gems more highly than stones, because I'm great with ideas, but poor with follow through, and admire those who can "close" as it were.

If you have implemented this form of ranking elsewhere, what kind of distribution have you found between those who earn high stone rankings, those who earn high tumbler rankings, and those who earn the gem label.

Sorry for the terribly delayed response!

This is the kind of currency system that we have designed for a "Community of Practice." (Emphasize the word "Practice.") In other words, they value the practice or gems highly as you do, so we named the currencies to reflect these values (and liked the metaphor).

I don't know that we have quite enough experience to know about the distribution of points yet. Tumbles are the easiest to earn, so would be most common, just like people on O.net earn points in their feedback bank.

Our hope is to have many people leveraging the ideas of the "Stoney folk" to earn lots of Gems for translating those ideas into practice.

This discussion has been quiet for a little while, but I've just stumbled across it, so perhaps my comments here can further things along a little bit.

As I was surfing on Blog Explosion today, I read an article on why Micropayments have failed. It seems as if there is an important relationship between Micropayments and Targeted Currencies.

I've written a fairly long blog post about this on my blog.

I would be interested in any thoughts or comments on this.

Aldon

?ldon, I'm sorry....I loved reading your blog but could not find the post you reference here. Could you post the text in a workspace or comment here?

Glad to finally run across this thread -- I'm processing a new currency/exchange dilemna for a network that wants to bring in targeted currencies and other forms of resourcesharing and your input is greatly appreciated!

Aldon Hynes said:

As I was surfing on Blog Explosion today, I read an article on why Micropayments have failed. It seems as if there is an important relationship between Micropayments and Targeted Currencies. I would be interested in any thoughts or comments on this.

I think there is a relationship. Personally, I think micropayments, as typically structured, are another silly example of us trying to force our national currency to solve problems that it just doesn't do very well. You know the adage, "If your only tool is a hammer, then all problems look like nails."

Almost every micropayment application that I've looked at would be better addressed with a targeted currency. Rather than trying to track payments of fractions of a cent or a handful of pennies, some kind of "point system" could be used track the transactions, then the points can be redeemed for cash in a larger bulk which doesn't create the overhead of transaction fees for each micro-transaction.

Example: You could run a subscription-based research service where you charge 2 cents for each carefully selected article which fulfills somebody's research requirements. Hundreds of 2 cent transactions are extremely impractical, but it is easy to say each article costs 2 points and you can buy points in minimum blocks of 1000 (for $10.00). Now you have a simple point tracking system, combined with affordable financial transactions.

Jennifer,

Can you tell us more about the resource sharing network that you're referring to?

-art

Art, for years I've been looking for ways to overcome the hurdles to giving (i.e. ease of finding robust giving matches, facilitation of non-monetary gifts, lack of connection between donors and recipients) while creating a network where EVERYONE is giving and receiving longterm. My goal has been to open up the giving process, make it both transparent and magnetic and engage people on all sides to promote lifelong bridgebuilding partnerships that provide stability and security for everyone involved.

This evolved into the proposal for the Global Gifts Network first introduced here in the winter, now undergoing some tweaking before we test it out with International Humanities Center. I started with the simplicity angle, in this case being able to find small grassroots efforts around the world in one click -- so we devised a database structure where smaller organizations, those currently without a web presence, could enter cyberspace and be easily found based on their needs and project goals. Using the easy-to-use google model complimented with tagging technology similar to del.ic.ious we hope to make it much easier to find projects on the ground in every corner of the world.

Giving money is then easy, but what about inkind gifts, resources, volunteering, donations of land or frequent flier miles? This is where YOU come in! I'd like to find a way for all users (individuals, corporations and nonprofit projects) to build reputations not only on the gifts given and received, but also based on their feedback in forums and other forms of participation.

Answer to the following question from Ted Ernst in the Targeted Currencies and Sustainability Discussion:

Question:

"...thinking about the automatic inflation issue [with targeted currencies that are pegged to the US Dollar], seems that's carried over to the community currency as well, isn't it? I'm just confused about the intersection between this fiat world we live in and the targeted world being created by these alternatives."

Answer:

With a currency like DenverDollars, where one DenverDollar is equal in value to one US Dollar, basically what is going on is that the members of the DenverDollar network are agreeing to use the US dollar as a measure of value. This does not mean that one Denverdollar can be exhanged for a US dollar. It does mean, though, that when someone goes to buy a cup of coffee using DenverDollars that the person behind the counter doesn't have to look up what the exchange rate is between DenverDollars and US dollars that day. And that the coffee house can agree to accept, for instance, 30% DenverDollars and 70% US dollars for anything purchased in their store without making it so that you have to have a PhD in mathematics to work out the transaction.

In the short term, if there is relatively low inflation in US dollars, that probably works. Its conceivable that participants in a targeted currency would be able to make incremental adjustments in prices and credit limits over time without causing any disruption.

In the long run, or if US dollars become increasingly unstable, it will probably be preferable for well established currencies to adopt a more stable and reliable measure of value, such as a trade reference currency (for one such proposal, see http://www.terratrc.org)

I've wondered what a targetted currency for the arts would do. distribute art dollars to everyone, redeemable only at art activities vetted in some way.

It would be an interesting kind of philanthropy and might have some positive outcomes...

Rory,

I had thought of something similar that might be adaptable for what your purpose. Say that a local business group was going to provide food and music one weekend to attract customers. They could issue "festival dollars" to local youth to clean up graffetti, pick up trash, etc. and then let the youth spend those dollars to attend the festival.

Reviewing my server logs, I saw that someone tried to find my old blog entry about micropayments today. I see that the link doesn't take you to the article and other people have had problems finding it, so here is a direct link to the page. The post is over two years old, but I think it is still applicable.