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Closed Loop Economies - Making the case for an alternative cross-border trading method

Closed Loop Economies – The answer to the outdated game theory economics

Human interactions necessitated the creation of the money we know today.
It was invented to tokenise debt. Debt that derived from rewarding another’s contribution during these interactions.
Contribution expressed in the form of information, effort, material or intangible goods.
Becoming a standard, a medium of exchange, or a store of value were natural progressions of the original idea.
Only recently we added IoT and AI to the equation.
Tokenisation of debt progressed as well over the years. It can now be expressed in many forms from silent gratitude to owning a favour, to symbolic rewards, to tangible ones expressed in assets, to digital ones, to futures (derivatives).
From trade to inter-country relationships creating instances of debt, inevitably need to be expressed within this limiting framework.
All of our economic theories are based on this foundation. And it is failing us. Trade cost exceeded already of $ 23 tn per year!
From wealth distribution to global debt, to killing the planet in the process … 1940's game theory economics have proven its inadequacy.
We tend to forget that at the end of the day, it is all about human interaction with something or someone and human behaviours are far from “rational”.

Game theories cannot predict human behaviour.
We keep “inventing” new Financial Instruments, methods of moving faster money around the globe, digital currencies and new approaches to game theories to describe and predict, but is this really the path to a prosperous for all future?
Where is the social dimension within all these? Where is the influence of our social institutions on the outcome of these interactions? Are we really suggesting that “companies” behaving in a human-like predictive way or they can make decisions on their own free of influences from their supply chains or the regulatory framework they operate within?
Are the financial instruments at our disposal or what is predicted to be developed (according to the trends) the only way to tokenise interactions?

Facts Humans are and will be in the center of all or the reason for all for many years to come.
Interactions will keep happening as we are predominately social creatures.
Debt in one form or another will keep being created.
The majority of people, and that include business decision-makers, will keep making decisions based on their limited knowledge of socio-economics, fragments of relevant information, ignorance of the decision-making process of their counterparts (suppliers and customers), a large number of unqualified assumptions, and most probably driven by their emotional state at that time.
Given consequently that our current mathematical approach to the distribution of wealth (the actual meaning of economics) will keep falling us, there is fertile ground for a new model to inevitably arise and this time around with a social dimension in its design.

The current trends
International trade, as resources needed for the human race to progress and innovate, cannot be found in a single place, will continue and increase.
Nationalism will not dissipate easily and true globalisation will delay, imposing restrictions on supply chains for the years to come. The EU creating and BREXIT are prime examples of the resistance of the institution.
National currencies will persist in the foreseeable future even if the discussions to move into central banks-controlled digital forms proven to be fruitful.
The use of debt as a means to gain power will equally persist. The dislike of governments against crypto assets is there for all to see given that they undermine their power to control debt.
The ongoing battle between multinationals with country-level revenues and states will intensify and attempts to control the masses through the use of debt instruments, from new digital currencies (see libra) to tokenised loyalty, will multiply.
Redistribution of wealth and elimination of poverty will take many decades to say the least.
Migration of populations from weak economies to robust ones in the meantime will continue. This will keep increasing the need for remittance services.
The “unbanked” will become less and less thanks to new technology-based financial instruments.
The relationship between Banks and Governments will weaken and new forms of Financial Institutions will emerge.
The dominance of the Schemes (VISA, MC etc.) in B2C interactions will keep increasing for years to come before DLT technologies start to make an impact by dominating clearing networks.
The $ 23T that the current banking practices cost the global economy will start to erode to the benefit of the enterprises and individuals.
The $ 23T that the current banking practices cost the global economy will start to erode to the benefit of the enterprises and individuals. Game theory economics and the “benefits” of inflation will keep affecting human life and the freedom of Enterprises from local Law will delay.

The future of interactions
Glimmers of hope for a new model
Multinationals’ monopoly of AIs will give way to services that offer mass customisable personal AIs allowing interactions to happen in the background without dominant mediators.
Given the certainty of AI2AI protocol emergence, interactions-deriving debt management will gradually be assigned to AIs. The first hagglebots exist already.
AI and IoT will merge into one notion.
With all of the above almost a given, debt as a notion understood by the masses will eventually expand to include all tangible and intangible assets.
Thanks to Fuzzy logic “the present value” of an otherwise fluid asset is only an instance in time. Expressing consequently all types of assets, including currencies, as derivatives will offer innovators the ability to create hybrid currencies and meta-currencies.
Tokenisation of everything thanks to Distributed Ledger Technologies (Blockchain-based clearing protocols) is now possible. See all ICO, IEO and STO projects currently in existence.
Tokenisation on demand (Smart Token creation platforms) will be created in large numbers similarly to crypto-exchanges until dominant forms/players of the practice/market start to emerge.
Ultra-secure mobile payments bypassing banking clearing channels will cause a rethink in the need of cards and all mediators from local clearing networks, to banks, to currency exchanges to POS manufacturers. The new EU digital currency will bypass all existing banking clearing networks.
As all entities’ interactions are both direct and indirect and we all individuals, legal entities, state institutions, and international ones are part of a gigantic interconnected ecosystem, the use of techno-methodologies like 2DVVI will help us make sense of the true value of each entity to the society, enabling thus redistribution of wealth according to our social contribution.
Of course, our ability to create these interconnected trustless ecosystems on its own will not be enough. Overcoming the short-sightedness of game theory economics lawmaking and the lack of regulation in regards to the interaction of business ecosystems (seen as a single entity) and individuals or other entities or other ecosystems will require a different approach.
Thankfully, we have the blueprint to build it. Shapley, Nash and all the unknown innovators of loyalty schemes created the foundation we can build on. All is needed now are the right technological enhancements to create Closed Loop Economies (CLE) that can co-exist side by side with the current non-sensical financial frameworks. Within them the seeds of socioeconomics can emerge without causing any allergic reactions to the “system”.
We believe that forms of socioeconomic models will inevitably become mainstream and subsequently debt will be at last smartly tokenised to the benefits of us all.

Closed Loop Economies (CLE) - The future of trading
CLE should not be confused with Circular Economies the scope of which is the reuse of resources.
CLE is about the independence of trading of a supply chain or a business ecosystem from external restrictions and the achievement of economies of scale that can cascade to a consumer level. The participants of these ecosystems can define their own rules of trade between them and with external entities, their own rules of expansion and their own medium of exchange.
Let me offer an example.
Think of an almost linear fuel supply chain comprising businesses owning fleet of vehicles, the petrol stations, the logistics/fuel distribution company, the Brand (i.e. BP) and the distillery.
Replace within it, disperse and incompatible Purchase to Pay mechanisms with a universal one like 2DVVI, introduce a blockchain-based payment system (i.e. u-paid-m), a dedicated meta-currency (i.e. msc1), and at least one blockchain nodes and you created a CLE.
Based on estimates, the above configuration can offer economies of scale that can reach 93% across all participating entities and depending on the supply chain can reduce the non-tax part of the value of the end product -fuel- by up to 51% !
The great thing with these types of CLE is that thanks to 2DVVI they can actually expand practically indefinitely. If for example, one wanted to include the landlords of the petrol stations or the State, in order to collect taxes in real-time, in the ecosystem all that is needed is to add some lines of code within the Smart Contract that underlies the interrelationship between the parties and press “execute”.
Any supply chain and any business ecosystem can create Closed Loop Economies based on their existing ecosystems. All it takes for a CLE seed to be created is for any two entities to decide to encode their future interactions using our technologies.
We have now the tools at our disposal to automate and manage the internal “affairs” of these ecosystems as well as their interactions with any external entity using any other asset as the exchange medium. Any new innovative asset can be used as the internal currency of these ecosystems, but given the fact that every entity within them can belong to more than one ecosystem (no business has either a single supplier or a single customer), it makes sense to have one currency across all or an ecosystem owned exchange.
The benefits of creating these CLE-ecosystems do not stop there. New forms of financial instruments like Ai-managed advanced Loyalty schemes, Supply Chain Management, Smart Supply Chain Finance, Tokenisation of Loyalty into occupation pension schemes, Dynamic Management of the ecosystem’s Cash-Flow surplus (i.e. to offer consumer loans) can be created with just a couple of additional lines of code in their existing Smart Contracts.
With regulatory compliance, the above banking grade security a given, and freedom from dominant institutional pressures we believe that Learning Systems managed CLEs represent a viable solution now and are the future of trading.