Envesting – Distributed Investing for Sustainability.

Financial markets are expensive and inefficient.

According to the Global Policy Forum, in 2011 only 0.6% of foreign exchange could be traced to genuine international trade in goods and services. Most of the rest is for price discovery and speculation.

Each month 10% of the total value of the world’s stock markets is traded. Most of these trades are for price discovery and speculation.

In 2015 the NYSE raised 136 Billion in new equity.  The NYSE has a total capitalisation of 25 Trillion.  New equity is a fraction of a percent of a market capitalisation.  Raising equity through stock markets is expensive and so most development funds come from expensive bank loans.

The cost of operating foreign exchange markets and stock markets is high.  These costs increase each year with the derivatives markets adding further costs.

Stock market prices follow a random walk pattern. Randomness increases uncertainty and risk. Investors and companies pay to reduce the risk with insurance, hedge funds and the like. These overheads increase the cost of establishing prices.

If we had a complementary way to discover prices in money markets the overheads would drop.

Sustainability through Sustainable Funding

Sustainability starts with communities of common interests.  These communities cooperate to create sustainable regions. Regions group together to build sustainable nations and nations working together make a sustainable world.

In a sustainable world, funds to build comes from the community of interest customers of goods and services.  Envesting is pre-purchasing the right to buy goods and services for a discount.  Consumers envest in local producers by pre-purchasing the right to buy discounted goods and services.  The size of the customer discount depends on how long since they received the right to buy.

To protect envestors, the community of interest suppliers agree to accept pre-payments from other suppliers.  But, they do not give a discount.  Fur further protection envestors can sell rights to pre-purchase goods and services.

Trading Suppliers Value

Trading ownership in shares is trading future profits. We assume the profits of the company go to the owners of a company. But the size of future profits and whether the profits will go to shareholders is uncertain. Many factors influence the returns to shareholders.

The value of future unit sales of goods and services is well defined. Using future sales estimates is easier to predict than company profits. It may be difficult to predict when the sales will occur or if there will be sales. But, if they do occur we have confidence in their value.

In addition to a regular market in the share of ownership, we can establish a market in future sales of goods and services. We can create a market where companies can sell rights to buy future output. This same market can be a secondary market where holders of the right to buy future output can buy and sell their rights.

Conditions applied to the rights are defined at the time of sale. The conditions can differ for each sale.

Rights to buy does not change shares and share trading. It is an addition to, rather than a replacement of, share trading to transfer value in a Company.

We still need shareholders to look after the company. But, they can be repaid in the right to buy output rather than dividends. Companies have less need to keep large cash reserves or have expensive bank loan facilities. It provides a base price for shares. All these factors reduce the volatility in share price.

There is less market contagion. A drop in price in the value of one company is less likely to affect the value of another company. What happens in another country or market has little influence on the sales of a company. A change of central interest rates has little effect on output.

Any entity, including individuals, not for profits and government bodies, can raise funds for funding infrastructure and other capital works. Envestment is available for any capital raising by any entity. Having a common way for any entity to finance capital works allows for easy movement of capital between types of entities.

The Loans

We treat a conditional right to buy as a long-term unsecured loan. If the right to buy includes a discount, then the right to buy becomes an investment. To distinguish this investment from a bank loan, we call it an envestment.

Each envestment can have unique rules and terms and conditions. The tokens representing future output are transferrable. They are a form of money, but they can only be used to pay for goods and services from a given entity. The conditions make them different to futures which are for a specified product or service at a specified time. They are different to bank loans as they are repaid with goods and services and they earn discounts, not compound interest.

Typical Rules for Envestments

An Entity will issue loans with the following conditions.

The loans are repaid with goods or services supplied by the Company.
The loans can be sold to other envestors.
On delivery, of goods and services, a discount of X% per annum applies.
On delivery, the loan value increases by CPI inflation.


The loans are repaid with goods or services supplied by the Company.
The loans can be sold to other envestors.
On delivery of goods and services, there is a 50% discount.

The rules and regulations around envestment loans are the same as the buying and selling of goods and services. These are well known, easy to administer and fit within existing taxation regimes.


Shareholdings and shares operate the same as they do today.

However, shareholders can convert their shares into envestment loans at any time. The value of the loan is the price of the shares set by the directors times the number of shares. Directors would have preset rules on how to calculate the share value. A possible rule could be the cost of the shares with double the current loan discount applied since the purchase of shares.

Other variations might be that shareholders can purchase loans with an initial discount.

This approach reduces the volatility of the market because shareholders have a minimum value of shares. They know how much their shares are worth as they can convert them into loans. Investors who do not wish to risk buying shares can still get good returns by buying loans.

Sharing Risk with Envestment Loans

Investors put money into banks, and the banks make loans. Banks take on the risk of investment. The banks charge for taking on the risk. With envestment loans, it is possible to distribute the risk across cooperating entities.

One way to do this is to get small sets of entities to cooperate on the issuing of envestment loans. A percentage of the money envested in any one entity goes to other entities. These envestments go into an envestment pool. The company receiving the envestment receives less but repays the whole envestment.

Cooperating entities agree to the use of other entity envestment loans to pay for their products and services.  But, the envestment loans have no discount if used for goods and services from other enterprises. If an entity fails and cannot provide products and services, the cooperating entities are compensated from the pooled envestments.

For the envestor, their risk is now the risk of the group of cooperating entities failing.  If a group fails, it has little impact on other entities outside the group.

Having a stable price for envestment loans means the value of shares stabilises.  A known value for shares reduces the need for share trading to establish prices.


Once an Entity has significant sales or the potential for sales, they can raise money by selling envestment loans rather than issuing shares or taking out bank loans. Envestment loans are lower cost than bank loans as payment is in goods and services. The cost of funds goes directly to envestors as prepaid output. The direct saving is the cost of compound interest on regular loans.

An entity can raise money with envestment loans without being on a regular stock market. However, groups of entities can cooperate to reduce the risk to envestors. Secondary markets for envestment loans within the group increase the liquidity of envestment loans. The advantage of a market is that the market operators add value through oversight of companies, of trades, and through mechanisms to share the risk of failure.

Existing stock markets can add these new services to existing companies without changing their operations.

Envesting works for any size or type of entity because there is no need for entities to sell ownership. Envesting amounts can be small or large.


An Electronic Identity System with Law Enforcement by Design

An approach to Law Enforcement is for citizens to know their transactions were lawful.  If asked they should be able to prove they have complied with all relevant laws.

Governments can certify applications that, if used, give a person “safe harbour”. Citizens can choose between certified applications.

When questioned a citizen can say to Law Enforcement. “Please run your audit applications on my transactions where I used your certified applications”

Government can use certified applications for its own transactions with citizens.  Some applications may work for non government purposes. All applications use underlying certified open source connection systems.

Government can start with a certified identification application.  That is, if a person uses the application the government accepts that the person is who they say they are. If questioned the person can provide access to their history of identification.

The Welcomer connection platform

Welcomer provides a platform for low cost high reliability identity applications. The applications provide swarm intelligence to the entities using the platform. The applications are close to optimal;  where the government defines optimality. Optimality might be lowest cost with highest levels of privacy and security.

The government certifies these identity applications for individuals and organisations. For the government to certify an application the software must be open source.  Verified parties, including  citizens, should hold the data.

Following on from identification the government can certify other applications for its own use. These applications also use the Welcomer platform. Examples are payments, loans, and transfers of funds. If a person or an organisation uses these same applications they will know they followed the law.

The government can take an active part in application specification and construction.  Or, they can act in a certifying role.


The Welcomer platform provides the network connections for swarm intelligence.  The intelligence is in the applications. The swarm intelligence optimises value for the lowest cost. The data is verifiable and held by verifiable entities.  Welcomer provides open source connection software for the applications.  Verification and auditing are in the form of government applications. These applications are separate from operational applications but use the same platform.

Ants, Metaheuristics, Intelligence, Brains and Welcomer

Deborah Gordon in her Ted talk “What ants teach us about the brain, cancer and the internet” describes the operation of distributed systems of autonomous ants.  She describes algorithms that ants have evolved to solve particular problems. She relates the ant algorithms to algorithms used in computer networks and the brain.

What she describes are metaheuristics of distributed systems or Swarm Intelligence. Swarm intelligence emerges as a result of simple interactions of distributed autonomous agents.

Gordon postulates that the Brain works in a similar way.

What we have created with Welcomer is a platform. The platform enables metaheuristics to evolve on the Internet of Things. It is a platform to evolve interconnecting prefrontal cortices on the Internet of Things.

Welcomer autonomous agents are any object on the Internet of Things. Messages between agents are the building blocks for swarm intelligence.  The metaheuristics or intelligence are the applications that act on the messages.  Mutations are changes in the communication mechanisms. The environment is the physical world occupied by the objects on the Internet of Things.

Example problems that Welcomer Swarms can solve are low cost high value homes, reducing the level of green house gases, and low cost effective law enforcement.

Welcomer is a platform for the construction of Swarm Intelligence. The Intelligence finds low cost solutions for high value problems. It works for any problem we wish to address.

See this blog post on Scaling Intelligence.

Parasitic Financial Systems

We all know that the study of Economics needs fixing. Its predictions are rarely accurate and you can hire an economist to give you any answer you want.

We get books with titles “Zombie Economics”, “Sack the Economists and Disband their Departments”, “Confessions of an Economic Hit Man”, “Killing the Host: How Financial Parasites and Debt Bondage destroy the Global Economy”.

Economics is about Finance and the transfer of value.  Finance includes banks, investment houses, real estate, insurance, taxation and most of government. All these industries account for 75% or more of the cost of operating a modern Economy.  Costs increase with every passing day.  The productive sectors of the economy can no longer support the overheads of finance.

Most of these costs are avoidable.  They are avoidable if we demonetise the economy.  We can transfer value without giving money tokens a value.

Monetisation of Value is the problem

We monetise value by creating tokens that take on the value of the asset referred to.  We then exchange the tokens assuming the value of the asset is now with the token. Value is separated from the asset.

The Financial System is a parasite.  Its purpose is to exchange tokens with value as though they were the assets.  It exists as an addendum to the Productive Economy. It is parasitic because it pretends to add value by making the transfer of value more efficient. Instead it consumes value while leaving the Productive Economy host unaware of what is going on.

We do things such as create money markets where we trade these surrogate assets. We don’t need to trade the surrogate assets when we can more easily trade the real assets. Errors and manipulation of tokens are systematic.

Like all successful parasites it tells us to solve the problems it causes by increasing the costs of the financial system. We make laws, we make regulations, we invent redistribution methods, we add to the costs.

The solution

The solution is obvious.  Stop treating money tokens as though they had value. Leave the value with the asset.

The parasitic mechanism comes in the way we give money tokens a value.  We do this by creating debt.  The creation of debt transfers the value of the asset to the money tokens.  We monetise assets.

If we stop doing this the cost of operating the financial system will drop to about 2% of its current cost. We don’t need all the regulations. We don’t need money markets. We can have more efficient redistribution methods. We can remove the need for most taxation and pay governments for services they provide.

We can make this happen by repaying money debt with goods and services produced by assets.  The money tokens we were given have no value because they were not returned. Real goods and services were given.

Evolution of the Financial System

Living systems like an economy change through evolution. They change through mutations of internal processes. To demonetize the transfer of value we find mutations of transfers of value. These mutations don’t get rid of money. Rather they get rid of the value of money tokens.  We put mutations into the real world and we observe which ones work and which ones don’t.  The ones that reduce costs will survive and the others will die.  Low cost loan mutations will replace parasitic loans.

Repaying debt with goods and services is a mutation of the transfer of value.

Evolution of Economics

Economics is about money tokens. If we change the nature of money tokens to have zero value then this changes economics.

Economics will become a true science.  We can run observable experiments.  Such an experiment would be a system like Water Rewards.

The future

The future will be different.  What it is going to look like is something we will find out as the system evolves.  But, we will direct evolution and it will not be wholly random.

One thing that will happen is that evolution will evolve intelligently.   This is because intelligence of the whole will increase. This in turn happens because the system to demonetise finance is the same system that increases intelligence.