Trustlines People Powered Money - Real World Case Studies

Transcript

so we're waiting a couple of seconds so the video starts okay thank you everybody for showing up my name is Andreas Fletcher I'm going to talk about trust lines today if you have been a frequently ECC visitor you'll maybe hear some stuff double because 2017 was actually the first time we presented the trust lines at ECC in 2017.

so I'll just go ahead and start uh we'll have like 10 minutes time for questions afterwards if you have any questions the overall vision and the thing that I really believe is that by 2026 we will be able to provide everybody with the means to create money themselves but not just any kind of money but money that they can actually use to spend on daily activities goods and services in basically their daily life if you look at the connectivity that we have and we can see that pretty much everybody in the world is connected by six paths maximum and this is called the small world

phenomenon and you probably encountered that at any point of your life when you added somebody on Facebook or you added somebody on LinkedIn that you didn't know but you wanted to know you could already see that you know somebody that knows this guy or this person and during Evolution and the continuously addiction to our mobile phones this is actually increasing because people are closer connected to each other even though they don't actually realize it now the world is smaller than we think and this is something that for trust lines we want to leverage in a positive way thank you

okay now thank you so leverage in a positive way to allow people to actually give them the opportunity to create money in a specific way um okay so how do we do this we create a programmable money system that is based on trust lines or trust connectivities of individual peoples because trust is the main factor in value if you look at the history of money and value in general the remote is a little bit laggy I'm

sorry okay okay let me let me try to click it I'll I'll figure it out um so then trust lines is basically your open source Mutual Credit system Mutual Credit is an old concept of money where people give each other credit lines and they create ious with each other and pay with the ious themselves trust is a huge this light trust is a huge factor in terms of value if you look at money in general trust has always been a factor in money creation but also value generation it

started in the beginning of History where we have asset-backed value so like backed by gold so people trusted in the value of gold we have now central bank money where we say we trust the central bank or we trust the government we have Commercial Bank money where we say if I put money into a bank I trust the money that this bank will give it back and even if I don't trust the bank I at least trust the regulatory framework that the bank is operating in so that if I put money in a bank I'll get my money back out cryptocurrency is uh also related to trust we trust a trustless machine to verify transactions yeah but we still have trust in it but the next step I'm not saying in terms of better but I'm

just saying the next step is that people can trust each other and create money among themselves and we can be our own bank and this is what we refer to as people-powered money so a promo programmable money system that operates through trusted lines of individual people so how does it actually work let's get a little bit in detail so we have two people Alice and Bob Alice and Bob create a trust line with each other and a trust line is basically two credit lines Alice gives the credit line to Bob Bob gives credit line to Alice and they

agree on an initial balance which normally is zero now if Alice wants to pay Bob something and doesn't have any money she can pay with hey I owe you this money as long as Bob is in a position where he has trust in Alice to accept this IOU it's fine again the important factor is the trust relationship that they have with each other and the limit always reflects the trust that they have with each other so Bob would be happy to accept an IOU from Alice because he knows that at some point of time either Alice will repay him and something valuable to him so either cash or other servers

it gets tricky when you have to pay a stranger because we don't trust strangers so what happens Alice wants to pay something to Charlie because Charlie has something awesome that she would like to acquire but she doesn't Charlie doesn't trust Alice so in trust lines we allow people to find trust relationships trust paths in the overall system that allows people to accept payments from people that they do not trust so in this case we would now have Bob who is basically in a trust relationship with Alice and Charlie Alice could use the liquidity of Bob to pay Charlie

which would result that Alice OS Bob Bob OS Charlie Charlie receives something of value the ious and can give whatever Alice wants to acquire to Alice so the overall system is designed to balance out right so like at some point of time somebody will have a lot of ious so the question is how do you settle the system overall does not require you to settle because it's supposed to be designed and set up in a way that depth cancels out by finding the right path so if you would have now Dave that would want to acquire something from Bob in

this scenario um we would result in basically Dave owing something to Charlie and Charlie owing something to Bob but in the previous case we already had that Bob owes something to Charlie so the depth that basically Bob has towards Charlie is now canceled out to zero and that's how the overall system basically cancels out depth if there are enough connectivities and as shown with the Six Degrees of Separation if we have you know a lot of people in the system we find paths between people that cancel out the depth in overall so why not use this to create a lot of money I can can download the trust lines

app and create 200 accounts and all of them have credit lines with each other with like 20 million dollars and now I'm rich and now I want to go buy something so we have thought about this and I have to disappoint you you can't make money that way I'm very sorry yeah because at some point of time you always have a bottleneck there's always somebody that you have to connect to which is not yourself and that's the person or the entity that basically bottlenecks the credit and the capacity that you can issue to the overall system in this case Alice is the saver because Alice knows Eve and Eve was always a little bit Shady in the back days in school so she

knows that Eve wants to basically screw a little bit the system so Alice gives Eve a Max Capacity or a credit line of uh 10. yeah so even though Eve in theory has you know tens of millions of whatever in her system she can only spend 10 towards the overall system because Alice bottlenecks are basically so the question is is this money and you know you can determine money in different ways but as long as you can actually use it to buy stuff I think it's fair to say that this is money um you can make your own opinion about that

yeah but if people are able to acquire goods and services that they need in their daily life we think that it's money or it should be determined as money and ious are also one of the oldest form of money overall and if you look at what a bank issues you it's basically the same as an IOU because you don't have like if you put money into the bank you don't have that money anymore it will eventually result in the bank promising you that you can get the money back if you need it and normally that also works very good so for who is this most useful so in theory everybody could use this but in theory not everybody has the same

problems so Europe has very good money system but even though Europe does have a good money system you still have people that are not part of the traditional Financial system out of many different reasons they don't want to they don't want to be they don't want to trust the bank they don't have a an ID card Etc but we also have a lot of other people on the world which are unbanked or underbanked yeah but 66 percent of these people have mobile phones which gives them basically access to trust lines so that they can use it and a lot of people have trust between each other so they can actually use it so we have a team in Venezuela and that's one of my Pilots or the pilot

projects of trust lines and I'm going to hand over to Daniel because he's that guy yeah and you can talk about what trust lens is basically doing in Venezuela I can try use it okay oh yeah because we're coming up thanks uh okay so these are my guys it's been going on for for some time now like basically this whole year I found Journey oh I I actually can speak this way that's I prefer yeah for the video okay yeah thanks so yes um what's going on down there I mean

like this is kind of tricky in the sense that you all had hair like Venezuela hyperinflation in every country like everything is going nuts right now they just advertise kind of like Alpha League that they're going to take down six more series out of the currency makes sense I don't even know how current bills look like they're like printed at home you know like if you download a PDF and you print it it doesn't make sense the paper is more expensive so that makes sense um Sally I didn't even brought some bills because that's always fun um so basically what happens like there's no cash in Venezuela it's very hard to get cash and it's it loses value so so fast that it doesn't even make sense so people cannot directly buy Goods with cash they just use this um to

get into like public transportation because that's the only way you can pay uh so Merchants lose sales sometimes because of this and for many other reasons because of the very complex uh you know like uh yeah they're very complex um we've been I mean Network different payment system that's live in the country so basically down down in Venezuela right now people I I do grocery shopping with like uh my American you know account pay will sell do some memo and PayPal and stuff like that some people pay with crypto binance is huge like a lot of people are using it like a bank account and a bunch of stuff like that and American money is everywhere you see dollars everywhere in the streets like everybody's is doing

that you pay for the boss as well with one dollar and you're good getting small bills that's tricky you know you pay with 100 and you're like yeah last time I put gas in a car I had to I basically gave gas gas for like five other people like hey they don't have any change you want gas you want gas everybody wants gas go ahead so people are resorting to creating these paper ious so you see them even like that printed like in an industrial way and they sell it to other businesses like you know uh yeah we just got out some things because of yeah censorship but good censorship not to

get you know so everybody's doing this like uh everybody's got one of these everybody has watched one of these and and lose the money value that's there you go buy some coffee you don't have change you know and it's kind of like a fidelization approach as well like you know you're coming back because you can get an oil coffee later so this this is this is one one thing that I very much recommend that you check out we we did a lot of research uh in the field um basically one of the most fun things is just stepping into a network of local merchants and gonna go deeper down into that in a sec but this was a live kind of thing like um um the grocery shop uh besides this one

was just basically selling apples like that very easily and there was a gift what happened to the gift anyway so this is the perspective from the consumer this is a as you can see it's a it's a small um some a small Target uh for the research but it wasn't in any way very I think it was way bigger in terms of The Impressions it was done through Instagram mostly besides the on-site uh interviews so do they know what an iouie is yes maybe not as an IOU but as a Bugatti as a ballet uh so many you know just basically they give the the people oh you know this the the tiny Square

paper with the seal okay yeah that's that so receiving IO use um that's that's very big I mean I I'm the kind of consumer that goes away like you have changed you don't have this and this way of payment I'll go buy somewhere else but a lot of people are divided between less uh so it creates a very interesting um very interesting Dynamic down there um besides these um okay well this is this is me this is me living uh a bakery shop basically but the fun fact is that people do want to try something new so how do we handle this how do we not

um you know watch this i o use in the washing machine and stuff like that don't lose them don't don't break them etc etc and anyway like making a good IOU is also expensive for the for the merchant so it's like you know you had a lot of extra overhead to do just that so they are losing sales uh because people keep asking about potentially random uh payment methods because right now like every month we had a new payment method down there everything is fintech down they're kind of crazy so what are we doing right now we are piggybacking on this beautiful Network this is a a very geologalized number of merchants 2600 Merchants across uh Venezuela mostly based in the Caracas Metropolitan

District and they sell over WhatsApp they sell over WhatsApp groups it's super common selling over was that groups on Instagram in Venezuela well it's kind of common in Instagram is kind of common everywhere but anyway this is a very localized Network so it's been very fun just to test it out with them we recently had a small pilot just to kind of start in training people on using trust lines and yeah we just Andreas I had to tell you like we are feeling like we had to ins you know be more intense on the geologization because to get to capacity really so that's another thing for the HQ but otherwise yes this is coming together very very good and they are very much a lot of potential of doing like time

banking for local entrepreneurial networks co-working spaces volunteering networks and just as well be back in on on the problems that local Merchants have so I think this is it yes yeah you're coming questions from crazy Venezuela anytime any question somewhere some more slides yeah so um okay yeah so that's basically what we're doing in Venezuela we need to just one of five pilot projects that we have on the world get into detail some more of that but the overall vision of trust lands is that trust lines as it is is an infrastructure that anybody can use to

create their own local currency create their own complementary currency use existing currencies that have been deployed to build their own apps or use the protocol as any means of payment because they're also even though the the the golden use case of trust lines is payment there are many different ways of payment you can do a bill splitting with friends you can do like gift vouchers you can do like convenience the replacement of paper ious so that the local businesses can basically still could generate sales without losing customers but also allowing the customers then to go to different stores and using the ious that they got from a different store so the overall vision is

open source trust lens protocol is the fabric and the underlying structure and people can build stuff on top of it we have the trust lens protocol which people basically enables to create their own money we have the trust lines app which is a app that you can download in the app store or in the Google Store and you directly gain access to anything that is deployed on the trust lines protocol and can directly use it with friends family or whatever use case you want to basically do you can also approach us if you want to have a customized version of the app or for specific use cases um we have 47 different currency networks deployed on the trust lines blockchain

which is a side chain to ethereum it's been up and running for more than a year now we launched the app last year in March at ECC which was uh cool but then covet struck which was a little bit then disappointing we have more than 6 000 app downloads about 400 active users in a month and five active Community growth programs on the world which some of them I cannot disclose because there are in political problematic regions where the government is very bad so we don't want to tell who's basically in charge of those Community projects

um and the overall plan of growth is that we're currently in a phase where we are doing feel and reach and we're talking to people on the ground we have people in Venezuela we have people in different countries that try to understand the need of the people so I personally live in Germany I don't know what the problems of somebody in Africa is but I know that if we find people there we can basically talk to these people we can understand it and then we can try to help these people so have 10 pilot projects and then basically growth from an inorganic growth to an organic growth if the value is provided and then just repeat the same thing over and over till we scale up to x amount of users

um and that's where you come into play yeah so we are always actively looking for people that help us support us the trust lines Foundation is giving away grants where people then basically can receive um tokens which they can use to pay um Community initiatives um or just you know people that are interested in trust lines and want to use it for a specific use case please feel free to reach out to us or give us feedback what you think is missing and we can also then implement it we have free beer that's the flyer if you want to try out the app feel free to come down we're on the third floor in the corner room

um it's also cold since we have a refrigerator and that's basically the picture of the flyer you can scan the QR code we'll create a trust line with you where we automatically already owed you a beer and you can just redeem it and get a cold beer for that yeah thank you [Applause] any questions one question no do you have a question hi I I like the idea I I remember you from from two years ago or one ago but how exactly does this setup with the grocery store

would look like like if I'm in a grocery store that has like 300 or 400 customers how do I actually set up this just starting with them as we will be giving credits to each other so if it's 400 customers if it's like ten dollars there's four thousand dollars somehow in a void so how does it look like yeah so the the the like this is nothing that we're trying to figure out we know that it works there are other systems out there that already do this yeah in zadinian which is a small island yeah very beautiful there's a Mutual Credit system called zadex yeah and they're operating since 10 years they're centralized and they do exactly they do B2B and b2c relationships with Mutual Credit where the stores create credit

lines with other stores but also give credit lines to their customers and so the the concept itself of works so how it works is if I go into a store and create basically a trust line I just need to trust the store that if he owes me three dollars that I will get it back at a different day now either through cash or through a different service the shop doesn't need to trust me because he's not giving me a credit line yeah you have always two credit lines but one of the credit line can also be zero that's fine yeah so you have a bunch of customers going into store they basically create credit lines with the store and the store gives out the ious yeah and that's as if the store would

give you a voucher or Gucci yeah like everybody all of us already had like a voucher of something from a store yeah it's like we trust the stores if you don't redeem it the store goes uh um bankrupt and then it's gone that's sad yeah but but the the trust is there so the interesting part is when the stores them himself actually have trust relationship with other stores and in a circular economy that's the best case because you know store a has a connection with store B Because store a buys stuff from store B and store B buys stuff from store a and with trust lines and that's what we're basically trying

to do is map out certain trust paths Within These Merchants so that if I go into a store and get an IOU from that store that I can actually redeem it also at a different place in a different store because that then basically increases the usability of the overall system yeah it's like I don't always want to go to that one store I also want to go to a different store but at the core in the beginning at least it's a lot of you know hands work and you have to talk to the people you have to find the right connections Etc to answer your question okay okay hi um what's the purpose of the trust lines token whether the ethereum

token and what's like the relationship between that token and the actual like trust lines being built between Merchants so um the trust lines token was created back 2018 as we created our own side chain to ethereum we looked at all other possible solutions on how to avoid creating your own blockchain because that's definitely not the coolest thing that to do yeah but there were was no other solution we looked at roll ups we looked at other side chains but in general we said that one requirement is that the transaction fees need to be very very very low to be sufficient for people in Africa or in countries where they cannot afford to pay five dollars

for transactions especially if it's like buying bread or buying a Coke or buying water so the blockchain itself since it is an evm chain needs to have a native coin in general otherwise transactions cannot be paid for to make adoption work in a better way we created a token on the ethereum chain and the foundation gave away 40 million of those tokens in a Merkel drop which you can still claim so go to trustland South foundation and then you can enter ethereum address and if you're an eligible you can claim tokens this was this was because for the trust lens blockchain we need to have

validators running and validating the the trust lines blockchain basically but we wanted to basically not have one person running more than one validator so we created something that's called minimal viable proof of stake where we basically have a complex proof of society process up front of a validator auction which rotates every nine months or launches every nine months again and you need the token to participate in the auction yeah but when you participate in the auction itself you can claim your tokens after the nine months holding period and get them back yeah you can also take the token and transfer to the trust lines blockchain to pay transactions for so we

have a mono-directional bridge where you transfer tokens to the ethereum chain in future the overall plan is to migrate back to ethereum and so we don't want to continuously stay on a side chain we want to use a scalability solution that will hopefully be developed soon yeah so a lot of CK rollups or Roll-Ups in general are still not in a state where we can actually use it yeah but that's the overall plan to migrate back and then the the token on the trust lines blockchain will also be migrated and then everything will go back and then the token itself is there to collect rewards and also to pay transaction and to take part in the validator auction or in some governance model to answer your question yeah thank you

okay awesome bless you yeah so like maybe these are more like two comments so I love the idea in so many different dimensions like the fact that I shop at a store and they expect me to come back and there's money waiting for me like I think that's amazing because in the US we do all sorts of membership schemes to get user to come back in here it's like baked in to the system so you've built out retention and then furthermore um in the US as well like we increase the price of all of our products because

we expect theft we expect people not being able to be pay but if you have those trust lines Network and there's trust like now the merchant like has better customers and maybe they can lower their price by 10 making like all of these Goods more affordable and then the the very very last um thing is in my business like five percent like maybe it's not that much anymore but like two to three percent of our um sales get charged back so the credit card like takes the money back and that like really sucks for us so if I knew like who my customers were were more likely to pay then I can avoid like these chargeback fees and work with the

customer in a different way of paying um because we still want their business but make it on their terms so this is huge thank you for your time and like my brain's going off in a lot of Direction so really excited thank you you're welcome yeah and and that that's a good point to like stress again the what is trust actually yeah you can have very close trust relationship with like friends and family but you can use trust lines to exactly do stuff like you can onboard customers and also do kyc processes with them um to like bind the customers to you because trust could also be you know excluded and can be based on a contract or some other agreement Etc and so there's a lot of dimensions of trust in

trust lines questions no questions then thank you very much one more question that might be of a basic question but how do you know that people won't just steal your money and not give it back yes that's again the trust Factor yeah so like if you borrow money from a friend and you don't give it back to him he's probably not your friend anymore like we take the same risk assumption here like don't open a trust line with somebody where you know you won't get the money back and even if you trust the person don't go and make a ten thousand dollar trust line with him because he

might come to you and say hey I would like to have ten thousand dollars because you said you would trust me to give me ten thousand dollars but you could also divert that and have a contract with that person like give him a credit and then have a like legal set up credit contract with him Etc yeah so you cannot solve that problem with technology you can only solve that problem with social engineering or with legal contracts yeah especially if you depend on a uncollateralized money creation way yeah so like if it would be over collateralized you could like build in certain mechanics where you like say hey you didn't give it back to me I uh sell the collateral and get the return

in that way but then again you go into countries where you basically say yeah you can use trust lines but you have to buy stuff before using it and they're like but I don't have any money I cannot buy stuff yeah that's why I want to have a system that basically creates money on its own in an uncollateralized way okay okay thank you very much [Applause] that's the worst thing that happens