From: iang at systemics dot com (Ian Grigg)
Subject: [Webfunds-chat] How we raised capital at 0%, saved our
         creditors from an accounting nightmare, gave our suppliers
         a discount and got to bed before midnight. 
Date: Mon, 7 Jul 2003 15:56:02 -0400 (EDT)
To: dgcchat@, webfunds-chat@

Well, Systemics finally got off its corporate posterium
and issued a dollar.  For the technically minded, it is
a Ricardian Contract, and you can read it at

We've been toying with the idea for a long time, and
it has been a bit of political hot potatoe.  First our
people loved it, and then they hated it.  And then
they wondered why we hadn't done it already.  And now
they wonder if they can do it...

After very long discussions here at the Council for
Monetary Revolution, we came up with a plan to issue
an internal, trading unit dollar that is unreserved,
unredeemable, and undesirable.

An "inferior" dollar, if you like, only suitable if
you really absolutely must deal in Systemics stuff.

Otherwise, not much use.  (Actually, hugely useful for
us, as we need a trading unit real badly.)

Originally, I wanted this dollar to look so poor and
shoddy that some white knight of an Issuer would come
riding along and rescue us.  Show us all how to do an
honest, safe, strong dollar!

For a fee of course.  None of us believe in fairy tales.

(Meanwhile, we'd limp along wearing this sorry excuse
of a currency, skimpy and indelicate.  Maybe do a bit
of trading, maybe some colo.  And keep our eyes peeled
for the rescuer!)

Honestly, that's what I tried to do.  So we wrote it
unreserved - no dollars sitting there in a bank account
- and we wrote it as explicitly denying *anyone* *any*
right to use the dollar to acquire stuff from us!

Seriously, if you hold these things, you can't - by
the contract - redeem them at all!  Talk about room
for improvement :-)

Here's a dollar:

This is a payment for PSD 1.0000
from Iang Personal (f12fedf6e27992156b88765cf27d1c7c706cae00)
to   <OPEN>
valid from the epoch till five days hence

Version: 2.0.1
Comment: SOX by Systemics


I guaruntee that you can use that dollar for ...
almost nothing!

But, absent assurances, we will try and take them for
just about anything.  Systemics just doesn't promise
to do that.

Colo services, trading fees, and consulting is more
or less what we do.  And licences.  We do a bit of
business in each, and our price list is written with
PSD in mind, because it is easy.  (We'll take other
currencies, but only at a premium.)

But we reserve the right to not take PSD!  And we
reserve the right to change our mind and be as
flippant and unreliable as any other Cinderella
out there.

So, you'd think they wouldn't move real fast.  Dead
wrong.  We are still gasping at the surprise of seeing
them literally flee out into circulation.  This has
been - to date - the fastest of all Systemics issues,
in terms of speed of growth at least!

I had minted $10,000 at the start of the inaugural
weekend, and then before the weekend was out, I was
forced to mint another $20,000 as this debutante went
to town.

Parties out there wanted it.  They actually wanted to
hold my inferior dollars.

(Well, they wanted something.  You can make up your
own mind as to what they really desired.)

We had talked about insisting that all payments be
made in this unit, but couldn't work out how to
force the customer to hold.  In the event, what
happened was that creditors came sailing in and
took down the whole bunch.

Creditors?  Why?  Well, our creditors to Systemics
(those fine people who keep us alive in the current
time of treacle-like cash flow of this post bubble
world) have found themselves in the unenviable position
of not having a collectable or reliable cash flow.

And, rather than forego the business, they prefer
to extend more credit.  After all, it's better to
be in the business than not.

Now, what's the problem with the credit they've

Well, it's an undefined position.  The amount is
uncertain - unless they take the trouble to account
for every little loan.  The quality is uncertain,
because each loan is subject to my whim and the
clients' weather.

(Maybe I'm not exactly the most reliable debtor?  I
write accounting systems, mighty fine ones at that,
if I say so myself, but that doesn't mean you'll catch
me using them...)

And it's not tradeable.  Not sellable.  Not disposable
under any circumstances.

So, when I offered them some PSD - Prepaid Systemics
Dollars, we call them - there was a cautious eye
cast over this strange new slipper of a leftover,
and then snap, gulp and gollum!

The issue was taken up faster than one can say New
Monetary Order.

Here's what happened.

Creditors swapped their uncertain, undated, undocumented
unsellable position in debt held with Systemics for a
currency that suddenly gave them a documented, dated,
certain situation.  What's more, any loan made is as
good as any other, they are all the same quality, and
they are *fungible*.

It's a currency.  You can settle your debts in it, as
many already have.  You can especially pay Systemics
for stuff in it.  As some are doing.  So, we provide
all these things and receive a trickle of PSD coming
back to pay for services.

What's the significance to Systemics?  The huge
advantage to us is of course that we have financed
our book of business for 0% interest rates.  The
disadvantage is that we have opened our credit
situation up to scrutiny.  You can check the
entire float outstanding over here:

Click on Sheet to see the currency balance sheet;
that is our debt exposure ... except it is no longer
debt, it is our currency exposure.  And it's not
redeemable in any way, did we mention that?

Potential creditors can now look at the size of that
and decide whether to dance with this pumpkin or go
try another ball.

What's the advantage to creditors?  Presuming there
is a steady business out there for Systemics stuff,
they can go out and sell their notes to my customers.

They know what their own position is, down to the PSD.
There are no more vagueries, no more trying to jockey
for paybacks - their PSD is as good as anyone else's.

What's better than an accounting system?  I can now
tell you the answer to that.  An accounting system
is a record of entries that can be changed, switched,
fiddled and basically turned into mud.  Just add water.

A currency system is used to record money as a series
of non-repudiable, transactional, atomic transactions.
A transaction is solid.  It holds, it is blessed by
digital signatures, it is recorded by secure servers,
it is protected by governance features.  It provides
defined actions on assets.

A currency system is 7 times more powerful than an
accounting system (and I have the paper to prove it:)

I swapped my unreliable accounting system for a rock-
solid currency system in the space of weekend.

And I changed everyone else's position from that of a
liability to an asset.

As a useful by-product, it also accounts, as well,
and I can manage all my payments, in and out, just by
clicking a few buttons on my WebFunds.  Or my Koalagold

And, what's more, I now get to bed before midnight.
It's so much easier to count the number zero on the
balance sheet than to count sheep.

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