Feedback and thoughts appreciated.

Gamesnash.ie: Pat

Hi guys,

Some of you may know me already - I generally lurk around the games forums in particular and although a regular enough reader here would not be a regular poster. I'm looking for thoughts from a business point of view on a new site we are involved in.

The background to this story starts a long time ago, around the time of the northern rock bank collapse. There was lots of discussion about banks running out of money etc and the thought struck me - what if banks did run out ? what would be the consequences for the economy ? The immediate answer was that we'd all have to go back to bartering, if there wasn't momey what else could we do ? followed by a more realistic it would never get that bad. But it did get me thinking about money shortages and alternatives to money etc. As the economy started going south and cash became scarcer and scarcer I found myself contemplating this more and more and started thinking about how an economy would look if the emphasis came away from cash and leant towards bartering. Then it became how would bartering look like in a modern technological age. From that spread the idea and for the last year we have been involved with a site build which went live last week. http://www.spondooly.com

There are thousands of barter / swap sites and they all appear to be getting busier by the day. When we looked at how swapping / bartering was done online though in the vast majority of cases this is done by sites often hosted on message boards and requiring people to post wanted and offered adverts. Users have to find someone who wants what they have AND who also has something that they want themselves. Now in the case of the internet and with a very high traffic site that might not be too bad as you can potentially connect with millions of people and surely one of them will match up with you. It struck me though that this was very inefficient verus selling for cash and then using the cash to buy whatever you want. The downside of cash transactions was that there was fees involved - if you take ebay this can be as high as 20% depending on the category so after a few rounds of buying and selling you're left with very little as the value of your item is going down each time along with your bank balance after paying the fees.

So what we came up with was a hybrid between auction sites like eBay and the traditional swap sites / message board sites described above. Our members list their items like they would on traditional selling sites like eBay but instead of selling for cash they sell for credit to spend on the site. It’s completely free of charge so this eliminates the cost of selling – like listing fees and payment fees but at the same time opens up an entire marketplace to the items you have finished with and conversely opens up the entire marketplace for you to choose items you want - eliminating the restrictions of trying to find your for matching opposite.


From a business point of view we're looking to fund this mainly from the sale of advertising etc on the site and link ups with retailers. We're intent on offering people the facility to trade in their credit for vouchers etc at retailers who will provide these vouchers in exchange for advertising their goods and sevices etc. We're in essence trying to build a virtual economy that will trade within itself and interact with the outside real economy as well.

So the feedback I'm looking for and questions I have are ...

1) General feedback about the site / concept itself. We've had very positive feedback from members and boardsies but feedback from users here would be more at the business model than the consumers point of view.

2) Ask the question - would you see your own business trading on a site like this ?

That might sound like a mad concept but how about trading excess stock that you might have to sell at a loss to shift ? and then using the funds to acquire other stock or services from the marketplace. If nothing else stock being traded is going out at wholseale cost price and being traded for items at full market value. I personally think it would make a lot of sense especially for small business owners but I'm biased - would this require too much of a leap of faith from businesses ?

3) Suggestions for improvements

Very grateful for any feedback received - positive or negative !

Thanks in advance,

Pat

Time Magazine

Hey Pat,

I'm going to criticise, but hopefully it will be useful!

Gamesnash.ie (Pat) wrote: »

The background to this story starts a long time ago, around the time of the northern rock bank collapse. There was lots of discussion about banks running out of money etc and the thought struck me - what if banks did run out ? what would be the consequences for the economy ? The immediate answer was that we'd all have to go back to bartering, if there wasn't momey what else could we do ?

Just to point out: there would still be money. There just wouldn't be credit facilities. The physical cash would still exist and you could still use it to buy bread.

Our members list their items like they would on traditional selling sites like eBay but instead of selling for cash they sell for credit to spend on the site.

Doesn't this require me to sell stuff first? What if I just want to buy?

More importantly, what advantage does this have over me buying and selling stuff for cash?

Gamesnash.ie: Pat

The Economist wrote: »

Hey Pat,

I'm going to criticise, but hopefully it will be useful!

Just to point out: there would still be money. There just wouldn't be credit facilities. The physical cash would still exist and you could still use it to buy bread.



Doesn't this require me to sell stuff first? What if I just want to buy?

More importantly, what advantage does this have over me buying and selling stuff for cash?

Thanks for the feedback - you're right about the cash. The original thought was the doomsday scenario of every bank collapsing and having to rely on the cash in circulation alone which would eventually dry up. That was only the trigger to the idea, in realistic terms cash will still be out there but in recessionary times there is less in peoples pockets.

Does this require you to sell stuff ?
Ideally yes but you don't have to. If you see something you want you can purchase credit on the site. You can also build credit by referring friends etc. Obviously the best way from a members point of view is to list some items themselves and sell them for credit.

Whats the advantages over money ?
There are a few advantages ...

• It doesn't cost anything to trade on the site. Using eBay as an example say you sell a game for €20.00 on eBay, ( I use games because it's a natural subject to me but this applies across the board ) you might end up with €16.00 in your pocket after paying the fees. So when you go to purchase a replacement game you are going to be limited to a value of €16.00 unless you put cash into the deal. When you're finished with that and list it for sale on eBay again you list an item worth €16.00 and assuming you sell it for €16.00 end up with €12.50 to spend. eventually you run out of cash as the fees eat up your value.
• Of course it makes more sense to sell for cash locally where you aren't going to pay fees etc but at that point your market is limited. Sites like ebay are successful because they bring the buyers to the seller and charge a fee for doing so. You might find that selling locally will get you less than selling on eBay due to supply and demand.
• As a contradiction to the above eBay can be too busy - if there are a lot of your item for sale the price is driven down meaning you lose out again.
• If cash is scarce and it is in the current ecomomic climate people who want your item may not have the funds to purchase it. They would however have unwanted items that may be of value to someone else. If they can trade these you have increased demand for your item once you are happy to stay within the economy for your purchase.
• Not so much an advantage over money but if you take game and dvd trade ins to retailers a DVD worth €8.00 might fetch €3.00 credit meaning it costs you €5.00 to swap an item worth €8.00 for another item of the same value. At Spondooly.com the only cost to you is the postage of €1.35.

wexpin

I must say that I think the concept is good and it could work. However, you'd really need to get serious buying and selling going on to make people interested and thats going to be really difficult. For instance if the activity that goes on in adverts.ie was also on this site then you might be onto a winner. For instance, I like adverts.ie but I hate having to meet up exchange cash and all that hassle so if I could sell and post stuff and just build up credit to buy other stuff I would be interested.

In terms of the design I think you need to improve it. The logo and header look kinda 'babyish' and overall the design just doesn't inspire confidence in the site. The 'explanation' piece on the right hand side is blurred so I guess the image thats used is increased or reduced and it just doesn't look good. I also really don't like the amount of ads on the site, i.e. on both sides of the page - I'm not sure how much you'd make on the them anyway, but I think you'd be better off taking a 'small' commission on the sales or something. I'd prefer to pay you commission than be assaulted by all those ads (colours/animations etc)!

Finally, I don't like the way you need to register before looking at the details of something for sale. This will result in huge loss of customers as people need to be really interested to register. look at ebay, adverts, carzone etc. - you don't need to register to look at the ads there.

Anyway, just my quick feedback, idea could be a good one but site needs a lot more polishing, and for the idea to work the site needs to look professional.

Gamesnash.ie: Pat

Thanks for the feedback wexpin.

You're absolutely right that the more that use it the more attractive it becomes and we have various incentives and ideas to get people signed up and using it. We do have an advantage in that we have an existing customer base here at Gamesnash who a) know and trust us and b) already are familiar with trading in / selling finished with goods.

About the design - all points worth considering - the image your referring to as being blurry is not resized itself but is rendering slightly differently depending on the browser used. That's something we will work on immediately. The overall look and feel to a site is something that can't appeal to everyone, all we can do is listen to feedback and apply changes to please the majority. We may tender out a logo design in exchange for credit on the site

As for the advertising, this can be tweaked but I suspect you'd be in the minority in being willing to pay commission to avoid advertising. There are wage and server costs involved in administering this so if we are to offer a free service there needs to be revenue to cover this. With the above in mind of it being critical to build up a large user base enforcing a commission structure wouldn't help this IMO. But again thats only my opinion and feedback is to see if others have a better view point so again it's noted.

Thanks for taking the time to reply.

starbelgrade

The state of California, unable to meet its bills for the second time this year, started printing IOUs on Thursday. Some 28,750 IOUs worth $53.3 million will be issued initially, mainly for personal income tax refunds.

The IOUs helps the state controller stave off a deficit of nearly $3 billion for July. The state plans to send the IOUs to certain county agencies, small businesses and taxpayers owed billions of dollars.

Gamesnash.ie: Pat

What a situation to be in ! :eek:

@wexpin - all users can now browse the listings and will only be prompted to log in if they wish to bid or buy.

gerry87

Hey Pat, I set up a barter site a few months ago, the link is in the sig, so I have been thinking about it a lot. Your site is based on a LETS system, there are some things I haven't been able to wrap my head around with such systems, you might be able to enlighten.

How will the credits be managed? How are credits introduced into the system in the first place? Is there a set amount of credits to start off with or is it indexed to the number of members.

Basically i've been thinking of two potential probems:

1) Will in/deflation not be an issue in the system? What is the real world value of a spoondooly? Does it change? If more people join are more introduced into circulation? If people leave, are they taken out? If you double the amount of spoondooly's, then is that not the same as halving all the advertised prices? (Why would it be different for spoondooly's than any other currency?)

2) This isn't a jibe at you or suggesting anything, just something i've thought about with these systems. But how can you as the administrator ensure to your members that nothing underhanded is going on, for example you see someone selling a car, whats to stop you just issuing spoondooly's into their account and taking the car? On this point, what''s to stop other people gaming the system by refering fake accounts?

3) Linked to the other two points, can spoondooly's be withdrawn for cash? If not does cash just go to you? If you can't then you might be left with a large balance of spoondooly's in your account. If there can be inflation (which there really has to be), then people may be selling a ps3 for 500 spoondooly's, leaving the account idle for a while, and when you come back 500 spoondooly's is worth nothing.

These are just some things that i've been curious about with systems such as yourselves and BarterCard for example, it just seems an administrative nightmare.

Well, I've said spoondooly more than i've ever wanted to, so i'll just leave it at that.

Gamesnash.ie: Pat

gerry87 wrote: »

Hey Pat, I set up a barter site a few months ago, the link is in the sig, so I have been thinking about it a lot. Your site is based on a LETS system, there are some things I haven't been able to wrap my head around with such systems, you might be able to enlighten.

How will the credits be managed? How are credits introduced into the system in the first place? Is there a set amount of credits to start off with or is it indexed to the number of members.

Basically i've been thinking of two potential probems:

1) Will in/deflation not be an issue in the system? What is the real world value of a spoondooly? Does it change? If more people join are more introduced into circulation? If people leave, are they taken out? If you double the amount of spoondooly's, then is that not the same as halving all the advertised prices? (Why would it be different for spoondooly's than any other currency?)

2) This isn't a jibe at you or suggesting anything, just something i've thought about with these systems. But how can you as the administrator ensure to your members that nothing underhanded is going on, for example you see someone selling a car, whats to stop you just issuing spoondooly's into their account and taking the car? On this point, what''s to stop other people gaming the system by refering fake accounts?

3) Linked to the other two points, can spoondooly's be withdrawn for cash? If not does cash just go to you? If you can't then you might be left with a large balance of spoondooly's in your account. If there can be inflation (which there really has to be), then people may be selling a ps3 for 500 spoondooly's, leaving the account idle for a while, and when you come back 500 spoondooly's is worth nothing.

These are just some things that i've been curious about with systems such as yourselves and BarterCard for example, it just seems an administrative nightmare.

Well, I've said spoondooly more than i've ever wanted to, so i'll just leave it at that.

Hi Gerry,

Nice to hear from someone who has churned over the same issues. And congrats on your own site. They're very valid points and have come up in our discussions. In order of the points raised ....

To start off with and to make clear although I am involved with Gamesnash and Spondooly they are seperate entities and there are other people involved with Spondooly that aren't with Gamesnash.

The main point to make is that we're basing the concept on a strict ideal that there has to be matching value of goods in the economy versus the amount of spondoolys in accounts.

There are no credits per say being introduced for free. The ( credit )spondoolys that Gamesnash are giving away are being provided by Gamesnash in return for listing Gamesnash stock on the site. This allows an injection of credit into the economy to start it off. Gamesnash in effect have a (-)250,000 spondoolys balance which will be worked off. The benefit for us as Gamesnash in this arrangement is that we are being advertised on the spondooly.com website and will be able to trade with members there in regards to pre owned games etc which is one of our key target markets.

The bonus spondoolys being offered in order for someone to refer friends etc are not going to be a full time feature and it is our intention to match those spondoolys with physical items of the equivilent value being introduced to the economy from advertising revenue.

The whole valuation / inflation / deflation thing is very interesting and is incredibly complicated when you drill into the various possibillities. My head was wrecked for months with this. We have set a marker that 10 spondoolys = 1 euro. This allows for people to set a value on their items / bids in relation to the real life euro cuurency. Therefore if inflation is present within the euro currency it will also be present in the virtual spondooly currency and there is no avoiding it.

We don't anticipate that the virtual economy itself would have its own major influences in regards to inflation etc. Obviously if the amount of Spondoolys in the economy suddenly doubles versus the real life value of goods within the economy then the laws of economics would lead to inflation. But that is not going to happen. To be simplistic someone "deposits" something into the economy, gets spondoolys for the sale and then "takes something out" in exchange thus beginning the cycle again as their spondoolys / credit has been given to someone who just deposited into the economy. It's like a long series of chain moves in a house sale. So we'd see it that the amount of spondoolys within the economy will be a direct link to the value of the items within the economy.

In regards to point 2 it's I suppose no different than trusting a government of a country and its officers to run things in a fair manner ( probably the worst possible analogy to use ) but when it comes down to it it's a trust situation. Does the minister for finance head off to the central bank and grab 50k when they fancy a new car ? I hope not !!! but it's ultimately the same situation for administrators of economies like this. At some point an independent administrator / inspector could be appointed to insure no funny stuff was going on. We've built a very strong reputation as Gamesnash that we think will give enough trust to us to get it to the point where independent verifications etc would be needed.

Fake referrals are an issue alright. The referral fee is only paid when the referred person completes a transaction. As such they have to have contributed to the economy by selling an item before the credit is given to the original person. That doesn't stop someone having multiple accounts and trading with themselves - there are things that can be done like the way boards.ie here weed out reregistration and multi accounts which we will do ourselves. If you're familiar with paypals history paypal started off by giving $10 to every new account holder and then paid for referrals too so it's a well worn path of incentivising sign ups until there is enough within the business to sustain itself. As I said earlier on the whole concept of referrals will not feature in the long term - our approach will be similar to paypal in this regard.

The spondoolys cannot be withdrawn for cash. They must be used to purchase something from the economy itself. As a core the concept is that this is a swapping site but a swapping site made a lot more effiecint because it's treated as an economy. You can purchase spondoolys for cash - however we don't see this as being a major factor at alll. It's a handy service for people who see something they want and can't or don't want to wait to earn spondoolys to buy it but we don't see this as being a large percentage of transactions. It is our intention to use cash generated in this manner to buy goods and services to put back into the economy - again keeping the balance of value of goods and spondoolys right.

Someone leaving 500 spondoolys there and not using it for years, coming back to find there 500 spondoolys does not go as far as when they earned them is no better / worse off than someone putting the same in cash into a mattress at home and then trying to spend it.

Bartercard is a whole new level again and I'd love to see spondooly.com replicate it.

gerry87

Good reply, but i'm still erring on the side of unconviced.

So gamesnash has a -250,000 balance, which it has to pay off. So when somebody buys something from gamesnash, does it go to paying off their debt? If so, since there is no other source of money in the economoy then the 250,000 will eventually filter round back into gamesnash leaving no credits in the economy.

Also, if 250,000 is the set amount to be in the economy, then if you have 1000 members, they each have 250 spondooly's or €25. Unless there can be an increasing amount of spondooly's, if that's the case how does it increase? That puts an upper limit on the number of members possible, putting a limit on the number of potential goods for sale.

Where are these 250,000 credits now? Forgetting about competitions or anything like that, in a normal scenario how do I get some? I know you're answer is probably going to be by selling something, but then where did the person who bought from me get them... and so on. The question i'm asking is where did the first person in the chain get their spondooly's?

I don't mean to be a buzzkill, but these are some things I have been thinking about too, and bringing them up might help you avoid problems down the line. It mightn't be clear from my posts, but I do wish you the best of luck with it.

conolan

You are creating a virtual currency. You are the central bank. But you don't have resources to back it up. I might not want anything that others are offering. I could be left with lots of your dollars and be unable to turn them into cash. OUCH.

Gamesnash.ie: Pat

gerry87 wrote: »

Good reply, but i'm still erring on the side of unconviced.

So gamesnash has a -250,000 balance, which it has to pay off. So when somebody buys something from gamesnash, does it go to paying off their debt? If so, since there is no other source of money in the economoy then the 250,000 will eventually filter round back into gamesnash leaving no credits in the economy.

Also, if 250,000 is the set amount to be in the economy, then if you have 1000 members, they each have 250 spondooly's or €25. Unless there can be an increasing amount of spondooly's, if that's the case how does it increase? That puts an upper limit on the number of members possible, putting a limit on the number of potential goods for sale.

Where are these 250,000 credits now? Forgetting about competitions or anything like that, in a normal scenario how do I get some? I know you're answer is probably going to be by selling something, but then where did the person who bought from me get them... and so on. The question i'm asking is where did the first person in the chain get their spondooly's?

I don't mean to be a buzzkill, but these are some things I have been thinking about too, and bringing them up might help you avoid problems down the line. It mightn't be clear from my posts, but I do wish you the best of luck with it.

Hi Gerry,

No offence is taken - in fact I'd have loved to have had you with us 1 year ago when we were teasing all this out.

I'm not exactly making myself clear. I know I've used the term virtual economy but this is not an economy in the traditional sense of the word. In essence what we're trying to do is provide a more effiecient platform for users to swap / barter with than what is generally available.

The main criticism of the majority of swap sites and swoponomics would be one of them ( and I say that with all due respect ) is that you have to find a direct match to swap with. Your market is completely restricted to persons who want what you have and who also have something you want. This makes it difficult to find someone to swap with and completely restricts what you can swap your item for. Also sites like this can't easily allow for a difference in value between the two items.

What we're doing is taking the swapping process and splitting it in two. So step a) is put something into the economy and step b) is take something back out. This can be, put one item worth a lot more in and several items worth less coming back out but all in all it's a swap transaction.

In its most simplistic form assuming the value of each item is the same instead of swapping with the same person 3 people are involved. There is you, the person you give your item to, and the person who gave their item to you. And each of the other 2 is involved in their own triangle.

Just for the moment forget about the free spondoolys - I will come back to them shortly. Take the concept without free spondoolys. You're quite right the person who bought your item has to have sold something in the first place. They have placed an item into the economy which has sold at the market rate and they then use those funds to buy your product. Transaction is over with as far as they are concerned. They have swapped in and swapped out. As far as you are concerned you are at the beginning of the cycle - you have just swapped in and now you are reasy to use those funds to buy something and swap out.

So this isn't an economy as the real world economy goes. There is no concept of added value, production or manufacturing etc. What goes in in value comes out in value. If you were to break it down even simpler you could have this ..

Economy starts off with 0 items and 50 spondoolys in it.
Person 1 lists an item for sale - valued at 50 spondoolys. There is an item worth 50 spondoolys in the economy and there are 50 spondoolys in the economy.
Person 1 sells to person 2. ( assume that person 2 has the 50 spondoolys just for the moment ) there are now 0 items in the economy and 50 spondoolys.
Person 3 comes along and lists an item for 50 spondoolys. There is now an item worth 50 spondoolys and there is 50 spondoolys in the economy.
Person 1 buys off person 3 and disappears. There is now 0 items in the economy and 50 spondoolys in the economy.
Person 4 comes along and lists an item ........ we're back to there being an item worth 50 spondoolys and there being 50 spondoolys in the economy.
Person 3 buys off the new member person 4 - person 3 dispapears. ......

This could go on ad naseum with millions of people buying off each other one after the other and at the end of it all there will be the same amount of spondoolys versus the value of the goods in the economy.

In practice there will be thousands of strands like this criss crossing each other but the fundamentals remain the same. When you sell an item the economy gains an item and loses the spondoolys. But when those spondoolys are spent the economy gets them back and at that point loses the item you just bought.

Now there has to be spondoolys in circulation to allow this to happen. On day 1 if everyone had things to sell but nobody had funds to buy then you're in a tricky situation. So there has to be spondoolys placed into the economy to get it going.

So we are doing 2 things to get this going.

One is by allowing people to refer friends etc and the promotion that Gamesnash are running to. We're putting spondoolys into circulation but we are putting stock to the value of those spondoolys in to match it. So people have spondoolys to spend with each other.

Secondly, for the moment, we are going to buy items as spondooly.com and then relist them back on spondooly.com after we have received them into us. In simplistic terms we are acting like a bank - giving funds out and taking them back in using the property placed into the economy as security. This will give it a kick start too.

There is a 3rd option which is to give people credit on the site but this would be open to abuse and we have not gotten our head fully around this yet.

As things stand we're starting at 500,000 spondoolys going into circulation as such to start things off but that will be balanced with 50,000 worth of items provided by ourselves personally and by Gamesnash.

Gamesnash has a negative balance on the site and it's getting more negative with each set of spondoolys we give away. But Gamesnash has put aside 25k euro of stock to balance this out. I completely understand where you're coming from when you say that eventually these items will sell and Gamesnash ends back up with a 0 balance and no spondoolys in the economy.

However Gamesnash will not actually sell out or go back up to the 0 balance. Gamesnash will continue to trade on the site so that means buying and selling, constantly listing new items and buying items that are put on sale so this balance will pretty much stay hovering around the -250,000 mark with at all times 25k euro of gamesnash stock within it. The 25k of stock is an investment on Gamesnash's part in return for advertising exposure etc. It won't be coming back out.

As I touched on earlier one set of 50 spondoolys can be passed around millions of transactions. At the same time waiting around for those 50 to get to you in the chain would be a pain in the ass if you were person 1 million so there has to be more than 1 set of 50 going around. ( Obviously other factors like not all items being worth 50 spondoolys comes into play ) so there has to be more than 50 spondoolys. But at the same time there is no point in having millions of spondoolys released into an economy with no products to match it. Otherwise you would end up with a Zimbabwe type hyper inflation. So our estimates is that 500,000 spondoolys matched with 50k euro worth of physical goods will be enough to serve many thousands of users.

We are offering people the ability to purchase spondoolys for cash. But funds generated here will be used to purchase items that will go back into the economy maintaining the level of spondoolys versus actual items.

If there is a need to directly introduce more spondoolys at a later date, be it because there are a lot more users than anticipated, the spondoolys don't go as far as we have calculated, if people do leave spondoolys sitting in accounts etc then we will introduce them and in the same fashion - by matching physical goods as well as the spondoolys themselves.

Gamesnash.ie: Pat

conolan wrote: »

You are creating a virtual currency. You are the central bank. But you don't have resources to back it up. I might not want anything that others are offering. I could be left with lots of your dollars and be unable to turn them into cash. OUCH.

Yes we are creating a virtual currency and yes we are acting as a central bank but we do have the resources to back it up. There is at all times the same ratio of goods to spondoolys present.

True you may not want what others are offering but this would be the same in any swapping situation. Granted you have already gone halfway but I think it's a fair assumption to make that before selling yourself you would have a general feel as to what is available to spend your funds on.

http://www.bartercard.com.au/

Do you think you could use something like this, develop your own one?

Its been around a while, I've been approached by the directors before to accept barter dollars in payment for apartments, and then in turn I could use those dollars to purchase construction materials or similar things from other businesses that used the system. I turned it down because it was too many barter dollars to be holding and too high a risk. But I liked the concept, only downside is that there were not a huge amount of affiliated business so big limitations on how to use your dollars. Thats the challenge for you I think.

Best of luck!!

Gamesnash.ie: Pat

Bartercard is a phenomenally successful business based on the exact same concept and geared up for business users too. They've taken things to a whole new level and have the equivalent of their own credit card system which in some cases is integrated onto participating businesses credit card terminals.

Their success is something I would certainly be aspiring towards.

Graham

Hi Pat,

I'm really trying to get my head around this business model, but ultimately still struggling. Hope my questions help, please don't take them as a criticism.

So I can buy from Spondooly using my credit card to buy Spondoolys and exchanging them for goods(like buying things in a shop but with an extra currency-exchange step).

I can sell things to Spondooly like a second hand shop, the only difference being you pay me in vouchers(Spondoolys) for your second hand shop and I have no way to turn them into cash.

I can visit the virtual second hand shop whenever I like and if there's nothing I want to buy I get to keep my vouchers(Spondoolys).

In the mean time, the buying power of my vouchers is decreasing because you're giving away vouchers (Spondoolys).

I'm a retailer that has an excess of "product X", I decide it would be a good idea to trade these for Spondooly's. How do I account for VAT? Do Spondoolys qualify as an asset on the balance sheet?

I'm offering a service rather than goods, initially as a central buyer how are you going to buy that service for resale?

I've got 50'000 small frozen fish that I'd like to swap for Spondooleys, where should I have them delivered? How do you decide on there Spondooley value? (deliberately playing devils advocate here).

antoinolachtnai

What is the problem with doing exactly the same thing, but trading in euros?

You say that the benefit will be that it will be free to trade. But presumably the operation of the system will be paid for by devaluing the currency? So in effect, if I change money into your currency, there is a 'haircut' going towards operation of the site.

I hope you have registered with IFSRA or FSA in accordance with the e-money directive.

Gamesnash.ie: Pat

Graham wrote: »

Hi Pat,

I'm really trying to get my head around this business model, but ultimately still struggling. Hope my questions help, please don't take them as a criticism.

So I can buy from Spondooly using my credit card to buy Spondoolys and exchanging them for goods(like buying things in a shop but with an extra currency-exchange step).

I can sell things to Spondooly like a second hand shop, the only difference being you pay me in vouchers(Spondoolys) for your second hand shop and I have no way to turn them into cash.

I can visit the virtual second hand shop whenever I like and if there's nothing I want to buy I get to keep my vouchers(Spondoolys).

In the mean time, the buying power of my vouchers is decreasing because you're giving away vouchers (Spondoolys).

I'm a retailer that has an excess of "product X", I decide it would be a good idea to trade these for Spondooly's. How do I account for VAT? Do Spondoolys qualify as an asset on the balance sheet?

I'm offering a service rather than goods, initially as a central buyer how are you going to buy that service for resale?

I've got 50'000 small frozen fish that I'd like to swap for Spondooleys, where should I have them delivered? How do you decide on there Spondooley value? (deliberately playing devils advocate here).

Hi Graham,

Thanks for the input - taking things in order ...

I can sell things to Spondooly like a second hand shop, the only difference being you pay me in vouchers(Spondoolys) for your second hand shop and I have no way to turn them into cash.

In the vast majority of cases you sell things to other members but are paid in spondoolys. The concept is not that you sell them to spondooly.com but in some cases at the very start only spondooly.com will buy the goods and then relist them purely as a way to allow spondoolyflow ( cashflow ) in the economy.

I can visit the virtual second hand shop whenever I like and if there's nothing I want to buy I get to keep my vouchers(Spondoolys).

In the mean time, the buying power of my vouchers is decreasing because you're giving away vouchers (Spondoolys).

Not at all. The only way that giving credit away for free causes each credit to be worth less is if that action is not balance with stock being added to the economy. If you take the hyper inflation that occurred in Zimbabwe this happened because the government kept printing money to pay their bills effectively devaluing the rest of the currency in circulation. In our case although we are giving away some free spondoolys we are matching that with the equivalent value within the economy.

Think of it a different way. Lets say you have 50 spondoolys in your virtual pocket and you give them to somebody else. This has not devalued them at all merely changed ownership. You could look at what we are doing as creating a user account for ourselves - selling the physical stock which we are providing to the economy itself for spondoolys and then giving those spondoolys away.

The important thing to remember is that for every 10 spondoolys in circulation there is at the very minimum goods worth €1.00 available at all times to trade. ( the exchange rate being 10 spondoolys to the euro ) In practice though there will be a lot more in euro value of physical stock listed on the economy versus the spondoolys in circulation.

If at any point there is a sudden exodus of members and everyone decides to stop using the site, no new items are listed etc there will still be products in the listings that members can trade their spondoolys off.

I'm a retailer that has an excess of "product X", I decide it would be a good idea to trade these for Spondooly's. How do I account for VAT? Do Spondoolys qualify as an asset on the balance sheet?

We've geared this at the moment for private users - was asking here about business users to gauge the potential of expanding the concept further. In the case of bartercard for example in Australia one bartercard dollar has been given the same legal status as one australian dollar and members who are vat registered account for vat as if it was purchasing / selling in real currency.

From our own point of view the sale of spondoolys would subject to the standard thresholds etc being reached would be subject to vat being involved. Again it being geared at the moment towards private users this has no effect for members but if a business did decide to purchase spondoolys for some reason then they would be able to claim vat back on the purchase.

I'm offering a service rather than goods, initially as a central buyer how are you going to buy that service for resale?

We're not. It's not practical at all. As mentioned earlier us buying and selling would be purely to get spondoolys moving.

I've got 50'000 small frozen fish that I'd like to swap for Spondooleys, where should I have them delivered? How do you decide on there Spondooley value? (deliberately playing devils advocate here)

We wouldn't decide on the value at all. You can set your own price and if it's reasonable and there is demand within the economy from someone another member they may pay your asking price, offer you less etc and they would dictate where to deliver etc. AS above this would not be a situation we would be involved in at all.

gerry87

The problem with your assumption that there will be an equal value of goods in the sponconomy to match spondooly's, but there's essentially a fixed amount of spondooly's which means there has to be a fixed amount of goods. To make your assumption true, you have to either limit the value of goods at any one time or vary the amount of spondooly's.

The most feasible way is by varying the amount of spondooly's, but then you've to decide on a method to determine the amount which is where it would get complicated. You could do something like working it out on an expected value per member basis, for example you've worked out that a late 20's young male professional from dublin etc., on average, trades X value of goods on the site - so when a new member with the same stats signs up, you introduce X spondooly's into the economy. Essentially the actual value in the economy is the member, not the goods.

Then, even if you have a perfect plan for how many spondooly's there should be, there's another problem... how do you filter them into the economy? Central banks have their methods through money markets, but unless you have members setting up spondooly banks offering spondooly credit facilities to other members, you won't have that option.

If it did become a rip-roaring success it could be a great for experimenting with economic theories, but thats just me with my economics geek hat on.

Then again, I could be just over complicating things way to much and confusing myself, but it just strikes me that it's way too similar to making a whole new economy, and if we can't figure out how to use the one we've got, then a new one won't be that easy.

I'm not saying it can't be done, these systems can work and have done in the past, and if it can work in real life then all the Internet will change is to turbocharge it, I'm just having trouble getting over the organising.

Gamesnash.ie: Pat

gerry87 wrote: »

The problem with your assumption that there will be an equal value of goods in the sponconomy to match spondooly's, but there's essentially a fixed amount of spondooly's which means there has to be a fixed amount of goods. To make your assumption true, you have to either limit the value of goods at any one time or vary the amount of spondooly's.

The most feasible way is by varying the amount of spondooly's, but then you've to decide on a method to determine the amount which is where it would get complicated. You could do something like working it out on an expected value per member basis, for example you've worked out that a late 20's young male professional from dublin etc., on average, trades X value of goods on the site - so when a new member with the same stats signs up, you introduce X spondooly's into the economy. Essentially the actual value in the economy is the member, not the goods.

Then, even if you have a perfect plan for how many spondooly's there should be, there's another problem... how do you filter them into the economy? Central banks have their methods through money markets, but unless you have members setting up spondooly banks offering spondooly credit facilities to other members, you won't have that option.

If it did become a rip-roaring success it could be a great for experimenting with economic theories, but thats just me with my economics geek hat on.

Then again, I could be just over complicating things way to much and confusing myself, but it just strikes me that it's way too similar to making a whole new economy, and if we can't figure out how to use the one we've got, then a new one won't be that easy.

I'm not saying it can't be done, these systems can work and have done in the past, and if it can work in real life then all the Internet will change is to turbocharge it, I'm just having trouble getting over the organising.

Hi Gerry - I think you're right to suspect that the analysis here is over complicating things and is leading to some confusion.

Just to answer the first few points in one because they're based on the same wrong assumption. We are not saying that there will be equal value of goods to value of spondoolys. We are saying that there will be at least the same value of goods available as there are spondoolys floating around. This just assures members that there will always be something to take back out. In practice there will be a lot more in value of goods offered to trade than there is spondoolys in the economy but should for any reason everyone decide they no longer wished to offer any items for trade there will still be items there provided by ourselves to match the free spondoolys that were given out at the very beginning. Therefore the concept of maintaing ratios / having to introduce spondoolys and how to do this etc etc is not an issue.

That said we're not trying to make or operate a virtual economy. I know I've used the term economy myself but what we are doing here is a hell of a lot simpler than a full blown economy as we know it.

What we are offering is very simply a facillity to swap items. This facillity has introduced the concept of spondoolys for two reasons:
1) To get over the hurdle of traditional swapping sites that require people to find a direct match with each others wants / needs etc.
2) To allow for a difference in value between items to be reflected in the swapping transaction. Again in a traditional swap site you could find someone wanting what you have but their item is worth a lot more than yours so they won't swap with you.

Having members trade in spondoolys ( you can take spondoolys out and replace with points / credit etc whatever term you wish to use ) leads to an economic problem alright which you mentioned and that is somewhere along the lines somebody has to get credit to get the process flowing. At the same time we can't give credit out to people we don't know, with no assurance at all of that person ever "repaying" the credit given. Furthermore at that point you are bringing yourself into the area covered by the e-money directives. So what we have done in effect is taken the stock from Gamesnash and paid for it in spondoolys. This has introduced spondoolys into the process ( making a point here of not using the term economy ) which Gamesnash has then given away / is giving away to various people.

So we've basically jump started things in that we now have x amount of spondoolys in circulation and y amount of goods locked in and committed to the process with the value of Y being the same as the value of X. As other members began to offer items for trade the value of Y went up and the busier the site gets the more Y will continue to rise. It will never fall below the value of X though.

We set the value of 1 euro being worth 10 spondoolys to allow members to gauge a value to put on their items but other than these 2 factors or policies that's pretty much the extent of our "economy" and its policies. The real life economy is a hell of a lot more complex than that and contains factors like added value, wealth creation, inflation, currency speculation, credit etc etc. There is no manufacturing here, there is no combining various elements to make a profit, users wont be hording spondoolys to cash them out or make a profit on them etc. In reality spondooly.com is an extension of and is a part of the existing real life economy as are the other sites that have successfully implemented similar concepts before. It really wouldn't serve as a basis to try out economic theory at all.

Graham

OK, going back to my original devils advocate statement;

I've got 50'000 small frozen fish that I'd like to sell for 5,000 Spondooleys.

As a market-maker, buying from sellers until a buyer appears. Where would you like me to deliver the 50,000 small frozen fish.

While you're arranging cold storage, I'd like to use the proceeds of my small frozen fish sale to buy 50,000 Spondooleys worth of computer games.

If I have to wait for a buyer to decide that my small frozen fish are worth 5,000 Spondooleys, what makes Spondooley any different to every other 2nd hand/auction site (other than the obvious I can never take real money out of Spondooley)?

I am deliberately asking difficult questions here because I think you may be half way to a fantastic idea.

Gamesnash.ie: Pat

Graham wrote: »

OK, going back to my original devils advocate statement;

I've got 50'000 small frozen fish that I'd like to sell for 5,000 Spondooleys.

As a market-maker, buying from sellers until a buyer appears. Where would you like me to deliver the 50,000 small frozen fish.

While you're arranging cold storage, I'd like to use the proceeds of my small frozen fish sale to buy 50,000 Spondooleys worth of computer games.

If I have to wait for a buyer to decide that my small frozen fish are worth 5,000 Spondooleys, what makes Spondooley any different to every other 2nd hand/auction site (other than the obvious I can never take real money out of Spondooley)?

I am deliberately asking difficult questions here because I think you may be half way to a fantastic idea.

Hi Graham,

I don't mind the difficult questions at all !

"As a market-maker, buying from sellers until a buyer appears. Where would you like me to deliver the 50,000 small frozen fish."

That's not really what it's about. In practice you list your items - in this case fish, and hopefully a buyer will come along and buy them off you. You would then use the funds generated to buy the computer games you wanted. The only time that spondooly.com would act in the manner you describe would be at the start as a way of getting spondoolys flowing. In this case we would buy the item in and relist it to go back out. This would not be practical with fish.

What makes spondooly.com different is that

• There are no fees. Of course there are no fees listings in some other second hand autction / selling sites but the biggest marketplace in the world eBay charges significant fees.
• You don't have to expose your financial information. There is no need to register credit cards, you don't have to provide your paypal details or provide your address to users you sell to.
• The structure of the site is far more user friendly. The theory being that assuming you have a particular item to sell - for handyness sake I will say it's a video game - Gears Of War 2. When you go to list this item you can search for gears of war 2. What comes up is a pre programmed description and image of the item ready for you to change as you see fit. On top of that there are statistics available to tell you the average selling price, how many are listed at the moment, how many have sold etc. The way members can set prices but still accept or reject bids is unique.
• For some people the fact that you are not getting cash for your items is a deal breaker. However in the current economic environment for an awful lot of people there is no spare cash to buy items. And this is a way to trade without cash.
• On top of that because cash is tight the sale price of pre owned goods tends to be undervalued. ( Now the economists among you will be jumping up to shout that the sale price is a reflection of the market value but that doesnt mean the sale price is a true reflection of the value of the item to the buyer - take the multitude of listings on ebay that sell for less than a euro )
• Yes there are auction sites / listings pages out there but there are also thousands of swappng sites too. They are 2 different aspects of the same pre owned goods market. What we're doing is blending the two of them together.
• From a gamers point of view the involvement of gamesnash opens up a lot of possibillities in how to fund their games purchases. Trade ins can effectively be made with any unwanted items to pay for games. This is unique. We'd plan to tie up with other retailers in different sectors who trade in pre owned items like dvds and cds etc who could trade on the site under the same circumstances.

As things stand trading on Spondooly.com isn't that viable a proposition for business users, it would need a system like the mentioned bartercard to be implemented for businesses so I suppose in terms of business trading feedback I'm more asking about the theory rather than the practical applicationt thats there at the moment.