One of the most important features of the CES is that it permits inter-trading between trading communities wherever they are in the world.
The CES is in fact a global network of communities using non-monetary exchange systems. This means that the registered users of any particular CES exchange can trade with the users of any other linked exchange or compatible system.
This ability to trade globally is achieved through a unique system that allows stand-alone trading entities to trade with each other in an effortless way without having to use a common, second-level, global ‘reserve currency’.
♼ How it works
Each CES exchange operates as a closed entity, as a mini-economy on its own. Every sale within the exchange represents a credit for the seller and an equal debit for the buyer. The sum of all credits must always equal the sum of all debits and the balance of all credits and debits must always equal zero.
Any direct trade with another exchange would mean a ‘gain’ or a ‘loss’ and this would upset the zero balance on both sides.
The solution is virtual users. Each exchange has a single virtual user that operates as would a single human user with an account in every exchange. This virtual user buys and sells within an exchange and then ‘carries over’ the goods and services to other exchanges and buys and sells them there. Instead of using human ‘middelmen’ CES uses ‘virtual users’, who for all intents and purposes operate the same as human users. They do not require a commission however!
In the example above, the Real Seller in Exchange A is selling something to the Real Buyer in Exchange B. When the transaction is entered, however, the Real Seller is credited and the Virtual Buyer is debited in Exchange A.
The Virtual Buyer then ‘walks over’ to Exchange B where he/she/it has an account too. The Virtual Buyer from Exchange A becomes the Virtual Seller in Exchange B and ‘sells on’ the item to the Real Buyer. In Exchange B the Virtual Seller is credited and the Real Buyer is debited.
In reality this is not a two-stage process as described here because the programming enters the transaction records for Exchange A and Exchange B at the same time. The user entering the transaction does so in the same way as if the transaction was local. It operates completely seamlessly without the users being aware of the process involved.
If the units of account/value differ between Exchange A and Exchange B a conversion rate is applied to the amounts that are entered on each side. Let’s say the unit of value/account in Exchange B is worth half what it is in Exchange A. This means the conversion rate between A and B is 1:2. If the Real Seller is credited 100 Units for the sale, the Real Buyer will be debited 200 Units for the purchase. Follow the accounting below to see how this works:
|Overall balance in Exchange A before: 0.00||Overall balance in Exchange B before: 0.00|
|Real Seller credited: +100 Virtual Buyer debited: -100||Virtual Seller credited: +200 Real Buyer debited: -200|
|Overall balance in Exchange A after: 0.00||Overall balance in Exchange B after: 0.00|
Trading with exchanges hosted on other servers and systems
CES users can also trade with CES users of exchanges hosted on other servers, as well as with users of exchanges hosted on servers belonging to other trading systems altogether.
Currently this is achieved by using a third-party server called Clearing Central. This operates as a centralised ‘bridging server’ that connects servers and systems into a broad network.
This arrangement eliminates the need for each server to keep information about the network, including where to send transaction information when a transaction is entered involving a remote exchange. When a remote transaction is entered, it goes via Clearing Central, which keeps routing information about which server hosts the remote trader’s exchange. It also applies the conversion rates if they differ between exchanges. The traders are completely unaware that a third server is involved, as the action of entering the transaction is completely seamless and hidden from view. Entering a transaction with a trader on a remote server or with another system is as easy as entering one locally.