pelican-website-ge/content/blog/claims-currencies.rst

:title: Claims, Currencies and Cryptography
:author: Will Ruddick
:date: Jun 22 2021
:slug: claims-currencies
:modified:  Jun 29
:summary: We need frameworks and protocols for various types of endorsed claims that can be held self-sovereignty by individuals and groups.
:tags: impact claims,data,CIC,claim



Global financial systems as well as humanitarian relief is based on claims, but the current infrastructure especially in vulnerable communities is weak to non-existent, which causes a lot of friction. The promise of a cryptographic approach to claims, is that groups of smaller actors can now more easily erect infrastructure which is authoritative and trustworthy. These claims can be endorsed and backed-up by data and live in data-objects (such as NFT) owned by an individual or organization.



We live in and have to navigate in a world of claims. One of the chief claims we unknowingly deal with on a daily basis are claims against currency redemption, indeed the currencies we hold are valuable because they are  claims against some form of redemption. Endorsements on those claims give us more and more confidence in currencies.



Governments along with banks issue national currencies, and claim they will redeem that them against taxes over time. This fiat bargain works as long as the issuance of more and more credit doesn’t cause inflation and there isn't a loss of endorsement.  Endorsements to build trust in national currencies are not always obvious but can come in many forms, such as circulation data, peer to peer business acceptance as well as legal systems that upholds claims. This type of currency, being our standard medium of exchange worldwide, has many repercussions – namely inequality as issuance is centralized and the lack resiliency when such massive systems fail.



Issuers, who are not nations or banks, with their own claims and tokens have popped up from time immemorial. The growth of non-national currencies, lies in their claims and endorsements and ability to integrate with other systems. 



`Canadian Tire Money <https://en.wikipedia.org/wiki/Canadian_Tire_money>`_ are simple vouchers denominated in Canadian dollars and have been in circulation since the 1950's with only one business as the backing. Because their supply and circulation (liquidity) is low compared to the size of the community they operate in, they don’t operate effectively as a medium of exchange - but for a village in Kenya or Cameroon they could, or when combined with producer credits from many other businesses they could span a market.



.. image:: images/blog/claims-currencies1.webp



In a credit system like Community Inclusion Currencies (CICs) we have an issuer and a claim of redemption and a token – which is a  divisible and can change owner and can act as broader medium of exchange given strong endorsement. e.g. A group of women in a village may create a CIC to use as a medium of exchange as a claim against the produce from their cooperative food forest. These CICs may be accepted outside of the group by a local hair salon because the local elders have endorsed them and people have been able to spend them on food from the cooperative.



The idea of taking such Producer Credits and combining them together into networks of CICs to build resilience in vulnerable communities, works well as long as there are strong foundational issuers and strong endorsements, such as groups of businesses and leaders. `Towns issuing their own script <https://en.wikipedia.org/wiki/W%C3%B6rgl>`_ (currency) were immensely effective at supporting local economies during depression eras. Had these depression era systems been taxable/integrate-able by larger states they might still be in use today. Now days, we have programmable tokens which can be taxed automatically (via demurrage/ holding taxes ). We also have systems that can network together servers to create censor resistant and secure ledgers. Decentralized economic systems could really change dynamics in areas with chronic shortage of money. Generally, brute force airdropping currency on a population doesn't create local ownership or stakeholders for good reason – because such a token is missing both: fundamental claims against redemption and endorsements.



Cryptographically Endorsing Claims
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How do we trust claims as well as tokens issued against them? If we think of a digitized claim as a declaration held by an entity/issuer and endorsed with an encrypted signature (private key) – we can treat that data object like a non-editable and encrypted file on a computer (or decentralized ledger system / `non-fungible token <https://gitlab.com/grassrootseconomics/cic-docs/-/blob/master/spec/020_redeemable_certifcate.md>`_	) that only the owner can choose to show to others. That claim could declare anything, such as what a currency is being issued and redeemed for and it could be co-signed as an endorsement using the private keys of people and institutions that believe that claim. The number of tokens created against that claim could be determined by the endorsements (in a decentralized autonomous organization (DAO) or `old-school paper contract <https://gitlab.com/grassrootseconomics/cic-docs/-/blob/master/Sarafu_Network_Member_App_-_Draft__en_.pdf>`_	 that is later scanned) as could the various parameters like demurrage and where the initial supply could go and linkages to other tokens or collateral. Finally, as someone looking to accept these tokens, I could look at the claim they are issued against as well as the entire supply and circulation history of those tokens on a ledger – as a form of peer to peer endorsement. These tokens could also be held in `liquidity pools <https://www.grassrootseconomics.org/post/static-vs-bonded-liquidity-pools-for-cics>`_	 connecting them to other tokens and claims, meaning that even if the token issuer fails to redeem them there are other avenues for spending the tokens. We can even look at how these tokens circulate to get a lot of information about how they are distributed, how quickly are they redeemed and redistributed and so on. This gives us a way to de-risk and trust community currencies not issued by governments or banks by inspecting claims as well as endorsements and associated data.



While we can look at currency through the lens of cryptographically endorsed claims, we can also look at all sorts of claims, i.e. I claim I live in Kenya, founded a non-profit foundation and have a daughter. Just like a claim against redemption, that claim can be digitized and endorsed directly by co-signers and as well by secondary data. Community Currencies when combined with other types of claims offer a huge amount of secondary data to support various claims about impacts and even identity. 



Various claims can be supported using community currency data along with other survey or IoT data such as:

* Product offerings: How many people are buying those products and giving ratings on them.
* Organic supply chains: Following the purchases from farm to plate for specific foods.
* Currency risk: How circular is the economy, velocity of the tokens, distribution of the token supply, connection to other currencies


Rewarding Verified Claims
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.. image:: images/blog/claims-currencies124.webp



Frameworks and protocols for various types of endorsed claims that can be held self-sovereignty by individuals and groups (related to trade, demographics, impacts and even carbon offsetting) as well as marketplaces that consume that information, are needed across sectors; from humanitarian organizations trying to measure and reward impacts against sustainable development goals, to people wanting to derisk an investment.



Consumers of endorsed claims (organization that need trustworthy data) could include the `UNICEF <https://www.unicefinnovationfund.org/portfolio?theme=blockchain>`_ supporting `SDGs <https://www.grassrootseconomics.org/post/cic-indices-for-sdgs>`_	, carbon offset purchasers, impact investors, loan and insurance providers and so on. Rewards or payment related to such claims also need to support the system of endorsements, (such as peer endorsements, web of trust and surveys), as well as the ledger systems that are holding those claims and providing data integrity and security. Such a claim market and reward system would promote people, institutions and even impact investors to seek out verified impacts. The same could also give people positive incentives for running servers (nodes) in order to validate data in order to mine impact rewards.

	`UNICEF <https://www.unicefinnovationfund.org/portfolio?theme=blockchain>`_		`SDGs <https://www.grassrootseconomics.org/post/cic-indices-for-sdgs>`_	

While Grassroots Economics is working to implement these concepts, the creation of open source frameworks and protocols for claim endorsement and rewards, is a vision held by many people and organizations. We’re proud to join the ranks of inspiring humanitarian organizations like the Red Cross, UNICEF, World Food Program and GIZ who want to enable local resilience and measure and reward impact, as well as technical groups like `IXO.world <https://www.ixo.world/>`_ and `Regen.network <https://www.regen.network/>`_ who are building open source application specific systems on `Cosmos <https://cosmos.network/>`_ meant to give humanity the infrastructure we need to solve real problems and live in harmony while navigating a world of claims.