Complimentary currencies in the future of the software business

As I write this, it has just been announced that Keith Mills is to head up the team charged with bringing the olympics to London in 2012. "Keith who?", I hear you ask. The man who created frequent fliers, that's who.

Mr. Mills deserves to be more famous than he currrently is in IT circles. That will change I think. Why? Well, at a mundane level, the frequent flier system is an excellent example of a system that would be simply impossible without information technology. The whole system hinges on the ease with which pervasive computing can be brought to bear on the number crunching involved in tracking all those air miles.

At a less mundane level, I suspect Mr. Mills and his frequent flier system will be seen in years to come as a watershed moment in the evolution of a whole family of what the money guru Bernard Letaer refers to as 'complimentary currencies'.

Simply put, a complimentary currency is anything that acts as a medium of exchange in a community. There are many examples around the world and indications are that the trend is growing. Bernard Letaer talks about some of them in a very interesting article entitled 'Complimentary currencies for social change'.

In the article, Mr. Letaer makes a powerful case for the use of complimentary currencies as a catalyst for social change. Frankly I'm intrigued and I see all sorts of opportunities in government, in business and in social spheres alike for this idea.

From an IT perspective, it is interesting to compare and contrast the growth in complimentary currencies in the world with the growth in open source. Open Source has been called a gift economy in which no point-to-point value exchange takes place. The entire community benefits, however, from the rising tide of quality technology that results from an uncountable number of donations (gifts) made by community members.

Reconciling the indisputable benefits of Open Source with traditional, hard currency based business models is a hot topic at the moment. I think it is in this context that complimentary currencies will come to the fore in the software business.

As I see it, open source emanates from an investment of time by participants. To understand who will contribute and why they will contribute, you need to understand how they have cost justified the time investment they make. Some are paid to do it by someone who has cost justified their time for them, some do it to extend their resumes, some do it for the peer status and so on. A common thread through all of these is an adequate supply of hard currency so that no direct value exchange is required to justify the time investment made.

But what if no such justification can be found to develop open source? Perhaps because their is no identifiable payback thanks to the specialized nature of the software you produce and consume. Perhaps because you need to spend all your waking hours accumulating legal tender to survive.

It is in these circumstances that I think complimentary currencies for software could flourish (1) vertical markets with specialist requirements not likely to be fulfilled via the gift economy model and (2) developing economies where some form of direct value exchange is required because all time investment needs to be carefully justified.

It is interesting to speculate what the future might hold if some complimentary currencies take hold in software development. We can perhaps look to frequent flier miles for clues as to where we may end up.

A most interesting thing about the frequent flier miles is that they have spread beyond the original community. It is now possible to get frequent flier miles by purchasing things on credit cards and then "spend" those miles on groceries - all without ever leaving the ground.

Where might this line of thought lead us? Paying for a carwash with frequent-programmer-points?

Why not?

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