What are “smart contracts”?

Smart contracts are inherent to blockchain technologies. They are like trained dogs, who do things when certain things they’ve been trained for, happen. For example, they sniff out drugs, or bark when there’s a stranger at the door…etc.

With smart contracts, if certain conditions are being met, these programs execute a certain action.

In the case of Circles, the smart contracts define for example how many Circles you get when you sign up and your daily UBI amount.

In short: smart contracts are programs on the blockchain.

Are the Circles tokens (CRC) officially real money?

If we look at the more commonly used terms, CRC tokens can be considered vouchers (Gutschein in German), and the Circles system could be considered a new type of mutual credit system or a mesh credit network. Of course, for something to be ''officially real money'', it has to go through a process of broad political and economic acceptance.

How do you mean each user has their own, personal tokens?

By issuing your own, personal basic income, your tokens will be different from other people’s tokens. It’s the very heart of our concept: the system will know and will always know the routes and the original sources of the tokens, even after many exchanges. This helps you to only use your Circles tokens (CRC) through your trust connections and through the transitive trust connections. This will protect the system against fake accounts. This very complex tracking and booking process is only possible on the blockchain - that’s why we use this technology.
This also means that your CRC tokens might have higher or lower usability-value compared to another person’s tokens, who has fewer trust connections, or they’ve trusted more fake accounts, which harms the value of your tokens too. That’s why there’s no simple answer to the question “What’s the exchange rate of EUR and CRC?”. If you receive CRC without meaningful, quality trust connections, or you’ve trusted fake accounts, then your CRC tokens won’t have any value. But if you are part of a living community, where real economical values are available, and you didn’t trust fake accounts, your CRC tokens will be pretty valuable.

How do you imagine setting up such an alternative economic system?

Here’s a concrete example:

In the Berlin Pilot, particular kinds of businesses are involved: they should represent/contribute to the social side of basic income and they should be in a hub position in a circular economy: like bookkeeping, cleaning, marketing, selling food, or baby-sitting. In addition, also businesses that offer services, which are valuable for many - and especially for other businesses.

For the time being, we can subsidize these businesses with Euros. As long as the number of businesses in the Circles system is small, they can’t have much use of the CRC tokens. If later they can find enough suppliers and partners to pay them with CRC (and this way, save Euros), they won’t need this additional, temporary support and we can phase it out.

Later on, we imagine this alternative economy will not only see basic income as an act of solidarity, but also as a business interest.

Demurrage: How does it work in the Circles system?

Inflation is everywhere and always a process of redistribution. In the current money system, which is based on debt, the creditor classes accumulate the debts of those who owe them money: the debtor classes. As prices for different goods increase, wages remain the same. Therefore, inflation currently benefits those who have the power to issue debt (like the banks) and those who own assets who can raise prices (real estate).

Circles is a unique type of basic income because it’s not necessarily for saving but for spending, giving everyone the equal power to issue money.

In Circles, money is created from the perspective of the people, and not from the perspective of the banks (or other governing bodies). This means in Circles people create money (Circles units – CRC) when they issue payments to others in their community, creating interdependent relationships with each other.

Circles money supply works like this:

Everyone who joins Circles issues 1 CRC per hour or 24 CRC a day, equaling 720 CRC per month (30 days). As more people join, the money supply increases.

To counter the constant increase in the money supply as more people join, we use something called demurrage.Demurrage means that money has a life-span and it decays over time, acting as a type of parking fee or tax on the money supply.

In Circles there is a 7% demurrage rate or decay rate on the amount of CRC in your balance. At the beginning, when you join Circles, the decay rate is very low compared to the UBI. Over time, the absolute amount of  CRC  you pay into the system becomes greater than what you issue as a UBI. In the Circles system, this happens after approximately 14 years of joining. It results in your net balance decreasing and not increasing relative to the UBI. Nevertheless you can still issue payments (e.g. buy and sell).

While the amount of CRC you are shown remains the same on the screen display, over time, the amount of demurrage increases.

Therefore, the decaying aspects of CRC are there to ensure that, over time, there is a convergence between those who have less and those who have more CRC. This decreases the disparity between those who join first and those who joined later.

In other words, at Circles, no one is left behind.

The goal of this is to increase the velocity of spending, so that you and your network are motivated to spend and redeem CRC for things of value, instead of sitting on them. This supports a flowing, vital economic system instead of a stagnant one. That’s why it’s called Circles. It’s built for circulating. Just like a healthy body needs healthy blood circulation.

Why is it beneficial to use Circles?

Circles tokens (short: CRC) move via trusted connections in the system, fostering local economic interactions. As an alternative to traditional capital, Circles gives communities the opportunity to value those things which are not seen, are invisible, or are not valued in our current system, such as care work. In Circles, there is no, or much less scarcity. Which means you can’t ‘run out of’ Circles. And that’s why people are more likely to pay with their CRC.

This is a big advantage of Circles. A healthy and fair economy needs money-circulation, like a healthy body needs blood-circulation

What is Circles UBI?

Circles is a digital complementary currency. It works just like Euros or your local, official currency. But at the same time, it also supports a more democratic and fair economy.

How?

Circles is a system that contributes to a Universal Basic Income (UBI) for its users. This means that rather than relying on external institutions (like banks, for example), people can build their own economic systems to support each other. With Circles, they can issue their own people-powered-money on an unconditional basis.

Circles offers a new medium of exchange, completely different from any kind of money in use today. It comes unconditionally, and grows in value based on how much value a community (businesses and individuals) offers for Circles.

Isn’t this all a bit radical?

We know our approach can sound revolutionary. We offer something unique and innovative.

Our world is in such complex crises that only radical actions can save us from total collapse. The economic crises of the recent decades, the climate crisis, the Corona crisis and now the war in the Ukraine showed us how critical it is to achieve our two main goals as soon as possible: giving everyone basic income, and valuing care and mutual aid with meaningful compensations.

It’s now becoming clearer for more and more people that a basic income system is an inevitable part of the solution.

Does Circles issue real basic income?

Circles provides basic income in the sense that every trusted member of our community can issue Circles tokens (CRC) regularly and equally through their smart contracts, without any further conditions. The value of this basic income is up to the community, which offers goods, products, and services in exchange for our complementary currency. In the beginning, it’s all about solidarity. Later on, however, when people can cover all their basic needs with CRC, it will also be their business interest.

However, unlike most basic income initiatives, Circles is decentralized. This means there is no single issuer of money and it relies on Distributed Ledger Technology (DLT). Instead of banks and monetary politics setting the value and price of CRC, Circles is all about community agreements and negotiations.

By spending CRC, people begin to claim the goods and services they need. At this early stage, Circles tokens will probably rather serve as pocket money.

Why is it good to have a complementary local economy?

Think of it this way: Euros (state money) and the hegemonic monetary system ruled by big banks is like a racing bike. It’s good for some purposes, but not for all of them. If you are on muddy or slippery roads and you want to take your child and your dog along with you, you will need another kind of bike: A complementary bike. Similarly, Circles is a complementary currency - a type of money which is not meant for accumulating, but for local community building and community spending.