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How it Works

howitworksThe Community Exchange System (CES) is a web service that provides the tools for communities to set up and manage exchange and trade in their areas without using money. It also provides communities with a network that permits them to trade with other communities, wherever they are in the world.

The main object of the CES is to facilitate trade and exchange by providing a range of non-monetary exchange methods. This helps to build community by connecting people and providing a local support network.

By ‘trade’ we mean the normal activities of providing goods and services by ‘givers’, ‘producers’, ‘sellers’ or ‘providers’, and the receiving of these by ‘buyers’, ‘customers’, ‘clients’, ‘patients’, ‘consumers’, ‘receivers’, etc.

The CES serves two basic functions:

  • it is an online exchange system that facilitates exchange in a number of different ways
  • it is an online ‘marketplace’ where users advertise their skills, offerings and requirements

Although the CES is internet-based it also works for those who do not have computers or smart phones. Each user gets an account number and a password, and this gives them access to their account on the CES web site. The site works like a true online banking service. Users can enter transactions, view their current balances and obtain statements of account. They can also keep track of the trading position of others.

Those without computers can interface with the system through local-area coordinators, who serve as local ‘branches’ of the exchange. Coordinators are trusted users who have rights and facilities to perform actions on behalf of others.

The CES provides a number of ways or methods to facilitate exchange. All of these are aimed at eliminating the inconveniences of spot barter, which is what money does too.

Goods and services are advertised on the web site through an Offerings List. Users can advertise their offerings as gifts, for organised barter, to swap for something explicit or for trade using the online accounting facilities of CES. Users look through this list, or do a search, and if they find something they want they contact the seller who then provides the goods or service.

If gifting, bartering or swapping is used, the traders make their own arrangements about how it is done and no records need to be kept. They can, however, record the hours given and received in order to keep account and ensure balance.

When using the trade facilities, ‘payment’ is effected either through the buyer signing a Trading Sheet provided by the seller, or through a cheque-like Trading Slip that serves both as a means of ‘payment’ and a receipt for the goods or service. The information on the Trading Sheet or Slip is entered by the seller into a transaction form on the web site. This credits the account of the seller and debits that of the buyer. Accounts record these debits and credits, giving a balance after each transaction.

A positive balance represents a claim against the community while a negative one represents a commitment to provide goods and services to the community. Those who have received are not obligated to their providers but ‘pay’ for what they have received by doing or giving something to someone else in the community.

To ensure that unscrupulous traders do not exploit the system, details of each user’s overall trading position are available to all, and limits prevent excessive negative and positive balances. General trading statistics are also available to show how much trading is taking place.

The web site also provides all the information needed to contact other users.

There is also a Wants List where users can advertise for goods and services they require.

Trading in this system requires no supply of money, either by the community as a whole or by each user. Instead of using a ‘hard’ currency, which then has to be allocated by some authority according to a formula, the ‘currency’ of this system is the pure metric of the values exchanged in trade. It is a true moneyless exchange system that performs all the functions, and more, of a conventional money-based exchange system.

There are currently 922 CES exchanges hosted on this server, in 86 countries. There are more CES exchanges on other servers. Each exchange has its own ‘currency’, ‘trading space’ and administration but the users of one exchange can trade with the users of other exchanges, making trading with CES even more convenient than trading with conventional currencies.

All CES exchanges are linked into a global Community Exchange Network, which includes other, non-CES, trading systems. This makes the CES a truly global trading system. It does this without the need for a global ‘reserve currency’. A unique system of ‘virtual traders’ and conversion rates permits seamless trading between the hundreds of different ‘currencies’. This keeps the focus local and prevents one currency becoming dominant and more desirable.

CES ‘currencies’ are units of measure (metric currencies) rather than tradeable commodities like conventional currencies (issued currencies). However, to make these ‘currencies’ meaningful to users, their units of value or account are usually referenced against national currencies or time. This helps users to price their offerings. Those exchanges that use the national currency as their price reference are in no way tied to them and can decide to deviate from them in times of rapid inflation.

There are no rules for pricing in the CES: the ‘law’ of supply and demand prevails. However, within the context of the CES, certain services that otherwise would not be highly valued, might increase in value because of their relative shortage. Other services that are expensive outside the CES might be cheaper in the CES because the provider wishes to attract custom.