Cred System

The Cred System is an alternative to traditional currency that increases community resiliency and reduces participant's dependence on traditional dollars. This model is a basic description of the Cred System, involving four people and two loops.​

The Cred System is an alternative to traditional currency that increases community resiliency and reduces participant's dependence on traditional dollars. This model is a basic description of the Cred System, involving four people and two loops.
Jim, Bob, and Frank are friends who often do odd jobs for each other.
Wanting to try out the new Cred currency, Jim gives Bob his old bicycle, and accepts a promise of 50 Cred in return.
The transaction is recorded: Bob received the bicycle, and 50 Cred is promised by Bob and received by Jim.
Later, Bob offers to help paint a fence for his friend Frank, and Frank promises 75 Cred to Bob for his services.
The second transaction is recorded: Frank gets his fence painted, and promises 75 Cred to Bob.
Then, Jim offers 50 Cred to Frank in exchange for a knitted sweater.
The third transaction is recorded as: Jim receives a sweater, and promises 50 Cred to Frank in exchange.
All three friends have provided value to each other, CLOSING THE CRED LOOP: 50 Cred from Jim to Frank, 75 Cred from Frank to Bob, and 50 from Bob to Jim. Because 50 Cred is the least amount of Cred that was exchanged when the LOOP closed, they have fulfilled 50 Cred of their PROMISE to each other.
Bob's promise of 50 Cred to Jim was fulfilled when the LOOP closed. Jim's Cred balance is now 0.
Jim's promise of 50 Cred to Frank was fulfilled when the LOOP closed. Frank's Cred balance is adjusted to 0.
50 Cred of Frank's 75 Cred promise to Bob was redeemed when the LOOP closed. 25 Cred of Frank's promise is still outstanding.
Meanwhile, Alice has been participating in the Cred economy as well.
Alice has made two transactions: promising 25 Cred to Frank in return for a houseplant, and receiving 25 Cred from Bob in exchange for some fresh eggs.
Alice's transactions have CLOSED a second LOOP, with a value of 25 cred, between Alice, Bob, and Frank.
The second loop has closed.
Frank redeems his outstanding 25 Cred promise to Bob by giving Alice a houseplant!
Alice redeems her 25 Cred promise to Frank, and Bob redeems his 25 Cred promise to Alice. The Cred balances are adjusted to 0.
Many items of value have been transacted: fresh eggs, a sweater, a bicycle, fence painting, and a houseplant. However, by using the Cred system, no one has spent any Canadian dollars, and no one is in debt to anyone else!
For more information, please visit www.credex.org or www.facebook.com/credexperiment.

Thanks for viewing!

View the model in Insight Maker