LETS
My friend, Atanu Dey, had once told me about LETS (Local Exchange Trading System). It traces its origins to Michael Linton in 1983 in British Columbia. According to Investopedia: “Local Exchange Trading Systems (LETS) are locally organized, economic organizations that allow the exchange of goods and services among group members. The groups use a locally created units of value as currency which can be traded or bartered in exchange for goods or services. Members of LETS typically view the systems as organized and cooperative schemes that maximize purchasing power while benefiting members and the community.” From Slow Movement: “Instead of money LETS use ‘community credits’. People earn LETS credits by providing a service and they spend their credits on whatever is offered by other people in the scheme e.g. childcare, transport, food, trade services or home repairs. Where there has been a financial outlay to provide the service eg purchase of wood to make a box, the recipient pays for the wood, but not the service of making the box.”
Wikipedia adds:
A list of services offered by network members is put together to create a LETS scheme, and trading takes place between members using a local currency. The LETS foundation is a virtual currency, a check book, a directory as well as a transparent accounting system built on trust and community regulation. The first LETS required nothing more than a telephone, an answering machine and a notebook. Since then, there have been several attempts to improve the process with software, printed notes, and other familiar aspects of traditional currencies.
- Local people set up an organization to trade between themselves, often paying a small membership fee to cover administration costs
- Members maintain a directory of offers and wants to help facilitate trades
- Upon trading, members may ‘pay’ each other with printed notes, log the transaction in log books or online, or write cheques which are later cleared by the system accountant.
- Members whose balances exceed specified limits (positive or negative) are obliged to move their balance back towards zero by spending or earning.
LETS is a full-fledged monetary or exchange system, unlike direct barter. LETS members are able to earn credits from any member and spend them with anyone else on the scheme. Since the details are worked out by the users, there is much variation between schemes.
MuCo can be thought of as creating a LETS-like trading system. Think of it as a two-sided system. Consumers have time, personal information, their social networks, and their recommendations to offer – attention, data, network and voice. Brands can benefit from all of these. But they have no easy way to compensate customers for these. They could use points as part of their existing loyalty programs, but there are two constraints: rewards for these non-monetary actions need to be much smaller than what is possible via the loyalty programs, and not all businesses have loyalty programs. The way to solve this problem is to create a pan-brand solution delinked from money – that is where Mu as points or tokens comes in. Micro-incentives for small, in-the-flow actions all add up to enable a meaningful aggregate for consumers who can now be offered an array of ‘priceless’ experiences by the brands at close to zero cost. MuCo thus creates a LETS-like market where there is none today, a win-win for both brands and customers.
