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Kilowatt Cards: a store-of-value and a medium-of-exchange
Kilowatt Cards are gift cards which pay for 10 kilowatt-hours of electricity (including taxes and fees) in any consumer electricity account after the cards are redeemed though this web site. Electric companies do not accept Kilowatt Cards - we do - and then send cash payments to the electric companies in the amount that each company normally charges their retail customers for that quantity of electricity.

Because these gift cards may be redeemed by anyone to pay for electricity they can also be used to barter with anyone worldwide. Kilowatt Cards are issued by a non-profit corporation to demonstrate that financial liabilites denoted in kilowatt-hours represent an asset class having stable and universal value.

AUTHENTICATE - Verify that Kilowatt Cards are real and active by using the form below.

Enter the last six digits of the current serial number in the form. If the serial number is active, two new digits will be returned to you which should be written on the card, by hand, at the end of the old number, which defines a new six-digit serial number. Cross out the first two digits of the old number as shown below, since those first two digits have been canceled. This rolling process creates a new six-digit serial number each time a serial number is authenticated. The old number is canceled each time. This way nobody holding Kilowatt Cards can make effective copies of them since all copies have canceled serial numbers after any one of the copies has been authenticated.

These rolling serial numbers let anyone with access to the internet veryifty that the Kilowatt Cards are real even though they are printed on plain paper. If you are going to accept them as payment, authenticate them first.

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Paper backed by electricity

Energy is needed to produce or to use nearly all goods and services, so the ability to consume energy is a useful definition of wealth.

Kilowatt Cards demonstrate how a financial security can have fixed and stable value. Their value is fixed because 10 kilowatt-hours is a physical constant, a fixed amount of work (in the scientific sense) that one can evaluate intuitively:
10kWh = 10,000 Watt-hours which is enough electricity to run a 100 Watt light bulb for 100 hours (exactly), or drive a Toyota Prius about 30 kilometers.

Electricity can do work - expressed as light, heat, or fuel - using the principle of the conservation of energy (e.g., 10 kWh = 34,120 BTU).

The value of 10 KWh can be judged intuitively without reference to a cash price, like one kilogram of pure water.

Kilowatt Cards are gift cards not a currency. Because they can be redeemed by anyone to pay for electricity anywhere on earth they are useful for barter - and as a store of value - worth a fixed amount of energy regardless of local electricity prices.

While some people want gold and silver, everybody needs light, heat or transportation. Unlike notes backed by gold, Kilowatt Cards may be redeemed for a useful commodity.

While the price of electricity is not stable, its value to people as a source of light, heat and motion is stable. A given amount of electricity has objective value, because activites such as traveling by train or reading at night consume the same amounts of energy every time.

So no matter what its price in money, a fixed quantity of electricity has the same value to people because the amount of work it can do is constant.

The corporation behind Kilowatt Cards does not produce or deliver electricity - it pays for electricity - using national currencies obtained from investments such as rental properties, farm land, bonds, intellectual property, equipment leasing, and other equity holdings which fund payments for electricity as the notes are redeemed. Kilowatt Cards are backed by tangible assets to keep up with monetary inflation, not promises about economic growth.

Kilowatt Cards are issued in exchange for commodites (e.g. firewood, grains, gasoline) that can be stored and later sold to pay for electricity or to be invested more assets.

The system provides a store-of-value (the underlying assets) and medium-of-exchange (paper or electronic accounts of kWh liabilities) in a financial instrument that resists inflation. Kilowatt-hour liabilites are a new asset class that are safe to hold because the kWh is a scientific constant - not subject to currency inflation - provided that the system is run prudently.

The underlying assets are owned collectively by holders of the Kilowatt Cards, which pay no interest but do maintain a fixed value of 10 kWh and may be saved, sold, or loaned at interest. They are liquid assets which are easier to aquire than houses, land or equities (the traditional inflation hedges).

Capitalism works best when tangible assets can be monetized into something liquid and stable. Financial liabilities denominated in kilowatt-hours, if backed by tangible assets owned without debt could stabilize the boom-bust business cycle - by letting people avoid asset bubbles and just save honestly the value of their labors, commodities and wealth knowing that their savings cannot be simply distroyed by fiat currency growth and bubble collapse.

If electricity-backed notes remain redeemable at face value, one cannot loose wealth to monetary inflation.

You may doubt that wealth can be equated with electrical energy - or liken it to the illusion that wealth can be equated with gold - or feel that power grids are so vulnerable that financial capital should not depend on them. But most capital already depends on electricity - for example, nearly every building and business on earth. Name an asset of yours which does not require light, heat or motion to retain value.

Securities backed by a physical commodity such as gold must be issued in limited numbers, assuming the gold is owned and stored, or else the gold may be backed by futures contracts (promises).

In contrast, securites backed by kilowatt-hours are not based on promises to produce or deliver electricity. The issuer of kWh liabilites need only be able to pay for electricity produced by others.

As for evaluating our ability to pay for electicity one may look to (1) an issuer's total kWh liabilities, and (2) its total assets, thereby permitting ordinary financial analysis.

Get sample Kilowatt Cards almost FREE.

How much is 10 kWh worth?

At this time the maximum redemption price that the system will pay is 35 cents per kilowatt-hour (US $3.50/10 kWh).

The limit of 35 cents/kWh was chosen because that is the typical cost for residential electricity in highly populated but isolated places, such as Alaska, Puerto Rico or the Dominican Republic.

Average Electricity Costs for end use customers in the U.S.

Record of All Redemptions

If Kilowatt Cards are redeemed to pay for electricity in places with above-average prices, such as Barrow, Alaska, where electricity costs about $1.10 per kWh (10 times the U.S. national average), they will not be redeemed at face value but instead recieve the existing redemption limit price (today 35 cents/kWh).

Most retail customers pay 11 to 28 cents per kWh. For them Kilowatt Cards are probably worth more to barter with or to save than to redeem for current electricity consumption.

Maintaining a relatively high redemption price limit (e.g., 35 cents/kWh) maintains the barter value of Kilowatt Cards, because consumers who pay relatively high prices for their electicity should be willing to buy and redeem Kilowatt Cards if the cash price drops much below their own cost for electricity (arbitrage).

Eventually the cash price for Kilowatt Cards may be determined on a public exchange for trading kWh notes against national currencies and kWh liabilities from other issuers, Until then Kilowatt Cards must be priced on fundamentals.

The fact that electricity rates are often less than US $3.50/10kWh affects the barter value of Kilowatt Cards but not very much.

To see why, imagine having a used Japanese car for sale in Detroit, MI, where Japanese cars are unpopular. If the national price for the car were $10,000, but your best offer in Detroit was $5,000, that would not mean that your car was worth $5,000. Instead it would be worth $10,000 minus your personal cost to move and sell the car elsewhere.

Using the top redemption price of $3.50/W10, one may discount the cash value of Kilowatt Cards by considering one's own ability to trade the cards elsewhere.

Kilowatt Cards probably have some barter value everywhere - even places without electricity - provided they could eventually be traded to someone who buys elecricity. .

One gallon of gasoline (US, no alcohol) contains 36.6 kWh of energy or about 30 kWh as heat (at 80% conversion efficency) and so might trade for W30 Kilowatt Cards.

As the cost of electricity rises, Kilowatt Cards should become more precious. Will the underlying assets hold value in the usual way of 2 - 10% annual inflation? They probably will if the assets are truly diversified.

As costs rise, will most electricity grids still serve the developed world 24 x 7, or will people come to rely mosly on private generators? Private generators will certianly become more important than they are today. But a delocalized, universal financial instrument might do quite well in that environment since it would still be redeemable by retail electricy consumers, even if that group did not include so many people anymore.

Some Kilowatt Cards are FREE but for postage and handling.

Socialized Capital

It is a truth universally acknowledged that a shrinking economy must be in want of more credit.

Kilowatt Cards demonstrate a way to monetize assets and to extend credit against collateral.

The Kilowatt-Hour Card Corporation is a not-for-profit entity without owners, except for the holders of the circulating Kilowatt Cards. Trustees and employess manage operations but there are no shareholders extracting profits from operations.

Our approach is like that of a mutual insurance company owned by its policy holders so that all of the assets funding the kilowatt-hour libilities can be run prudently, to maintain value, rather than being run for economic growth.

Rents are used for maintaining the underlying assets to a decent standard. While the economic surplus is not high the absence of shareholders extracting profit makes the economic surplus avilable for reinvestment in the underlying assets, providing jobs, while protecting the value of the kWh liablities issued to finance those assets.

The value of the underlying assets should rise with inflation, while the reinvested profits should build a cushion against rising energy prices.

The Kilowatt Cards in circulation thus represent collective ownership of the underlying assets (capital) in liquid form.

The underlying assets need not be limited to real estate and might include capital equipment, business inventories, commodities, soverign debt or any other collateral that might be financed by a bank, asssuming that there were enough demand for the kWh paper.

One goal of the project is to demonstrate how one might finance housing, farms, and other enterprises without promising economic growth. Collective ownership of the underlying assets can serve to avoid usury if desired.

The profits saved by this mutual ownership structure are available to be reinvested in the system, providing the value to pay for rising electricity prices and making it a very safe investment vehicle.

Another goal of this project is to provide a way for people to save money without buying equities or oversized houses.

Kilowatt Cards can democratize credit allocation and smooth out the boom/bust cycles of capitalism since almost any asset can be monetized as kilowatt-hour liabilites without the participaion of a bank.

Just as Kilowatt Cards do not depend on any particular investment style, they do not depend on any particular electricity supplier.

In princiopal an individual electric company could issue its own redeemable coupons, but the risk of failure due to war or fuel shortage would be high.

The delocalized approach used by Kilowatt Cards transforms the risk into a simple financial question that can be analyzed on the basis of earnings and balance sheets.

This approach to finance may be viewed as a type of mutual insurance society. Instead of pooling money to insure against physical losses, it pools land, tangibles, and perhaps soverign debt to guard against currency depreciation and credit contraction.

As with any risk pool it's important not to have too many claims (redemptions for electricity) at one time. Kilowatt Cards have been redeemed at a rate of about 1% of the total in circulation per year since July 2007.

Another use for kilowatt-hour paper is Islamic finance, since one can lend at 0% interest when the medium-of-exchange has fixed and stable value.

Since fiat currencies are depreciating always, the prohibition against paying interest means that Islamic investments are really for equity, not loans. Lending in kilowatt-hours could enable Islamic finace to actually function in the way that it claims to function.

That is, one might lend kilowatt-hour notes to a borrower who could trade them for cash (or something productive), and who will eventually repay the debt by buying that same number of kilowatt-hours on the market. That later purchase of kWh's might cost more money than was originally obtained by selling the loaned kilowatt-hours, but it would represent repayment of the same energy debt.

While Islam forbids payment of interest on debt, it might allow payment of money to cover currency inflation if the debt itself had been defined in terms of energy.

Samples of Kilowatt Cards are available FREE in limited amounts.

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