The endogenous tokens and ledgers described here are a measure and store of the Use Value of Human Activity/Interaction
endogenous – Definition
Found or coming from within something, for example a system or a person’s body or mind – Cambridge Dictionary definition
From the Taxonomy of Money, we know that all Human Activity which needs to be counted (economic) involves Need and Create. All economic activity has these two elements.
Need – encompasses all consumption of goods and services
Create – encompasses the production and delivery of goods and services
A has a Need and by some means is in contact with B who has the Capacity to Create. They agree that B can satisfy A‘s Need and they agree a Value (which for the sake of this example is 1 unit) and each issues a Token.
Step 1: A issues a Need Token (NT) and B issues a Create Token (CT).
Step 2: at the point of “exchange” (delivery of good or service), a Value Token (VT) is issued to both A and B.
B‘s VT validates the Value of A‘s Need while A‘s VT validates the Value of B‘s Create.
When the transaction is finalised, both NT and CT cease to have a value; they may no longer feature numerically but are the audit trail of Trust and Value Creation. Both A and B are credited with one VT each. The number of tokens issued by the parties is always equal but will vary according to the agreed Value of the transaction.
The audit trail in terms of the specified Needs and the capacity to Create are accumulating data from which valuable insights can be derived in terms of refining or reinventing endogenous token systems. More importantly, the data on Need and Create will be invaluable for those participating in the distributed network.
One evolution of this concept is to record the value of unsatisfied Needs and available spare Capacity to Create, i.e. rather than the issue of Need (NT) and Create (CT) Tokens being equal and co-dependent, they could be issued in advance of any transactions.
Taxonomy of Money reveals 4 essential elements of Human (economic) Activity:
- Human(s) – the parties to economic activity
- Human Activity – Need and Create
- Tokens – symbols of Value e.g. $, £, €, Bitcoin etc.
- Ledgers – either implicit (mental record) or explicit; can be digital, analogue or physical
Distributed endogenous ledgers Capture, Store and Transfer the Use Value arising from Human Activity.
Value Tokens are a Count of Trust
A‘s Need stimulated B‘s Create and the Trustline between them is tentative or provisional (unless they already know each other or the Trustline is validated by third party trust relationships that both A and B can scrutinise and rely on). However, at the point of mutual validation (Step 3), their Trustline is validated and recorded in the Distributed Ledgers.
The concept of Trustlines is gaining traction and there are a few examples, such as The Trustlines Network. From their website:
The Trustlines Protocol consists of a set of rules, processes, and definitions forged into deployable code. The overall system is based on several interoperating components
However, in spite of this idea emerging from distributed ledger technology (DLT) and the internet, its origins predate modern civilisation.
A low tech solution
Rai stones have been viewed by modern economists as a primitive form of money [more accurately, distributed ledgers], and are often used as an example to support the thesis that the value of some form of money can be assigned purely through shared belief in said value.
Endogenous Token Building Blocks
Implementing a distributed network of physical or analogue ledgers would be a challenge but not impossible.
Fortunately for us (currently), we have access to the essential building blocks in the form of digital technology:
- Simple Ledger Protocol (SLP)
- Distributed Ledger Technology (DLT)
- Subscriber Identity Modules (SIMs)
- Smart Contracts
Hence we have all that we need to implement multiple projects simultaneously through co-creative development (Click on Co-Creative Learning for information on how this works in practice). Once an ecology of endogenous tokens is established, their appeal and unconditional accessibility will become obvious and adoption, driven by self-interest, will be rapid.
Latest slide deck on endogenous tokens, presented to the Security and Assurance Working Group of DCGI (Digital Currency Global Initiative) on 17th February 2021.