I have been thinking a lot lately about why most complementary currency schemes do not work very well. I think I have some ideas.
Most projects start off with lots of inspiration, commitment and excitement. There are often some very charismatic project leaders and lots of volunteer efforts and loads of idealism. The community gets instigated to participate, accounts get opened, talks about the downsides and ugly sides of the current economies happen on and on, and a new way of doing things is propagated. Great.
Then after some time hits reality. There’s not really a lot going on through the chosen platform. People post their skills, and sometimes, a few needs. Maybe a few trades happen, notably by the most engaged in the project. Maybe a bit more. But no world changing movements.
Well, a reason may be that those currencies maybe even would work well. They are designed to strictly work locally. But our reality today is global.
So while it sounds marvellous, as soon as I have to pay the rent, as I have to ponder how to buy a new computer, how to buy a smart phone, etc. my local units do not apply. Thus faith in the system starts to fade away…
Can we do something about it?
Well, I have been thinking: even a small country can have its own currency. See Switzerland. Or Iceland, with 320’000 souls living there. In a way, that is also a local currency. So why does the official currency work that way?
The answer should be convertibility. You can convert those (notably intrinsically worthless fiat currency) units into something else – Dollars, Yen, Euros.
Could we do that as well with local currencies?
It would be difficult to agree on something which would be of value in all communities working with local currencies. Mutual credit can help but does not scale that much.
Something we all need though is energy. Lots of people are talking about energy backed currencies right now, notably Chris Cook has published ideas. However, often energy is a thing which is not in our hands. Some big companies produce energy.
What if local decentralized energy feeds would be actually the issuer of currency? This would mean that for every kWh of energy generated, the correspondent amount of currency unit would be emitted. This would be circulating in the community as money, and could be redeemed for actual energy by the local producers! The nice thing about this is that most of decentralized energy production is green clean energy – solar, wind, biomass, etc. This could encourage and actually fire up quite some wave of innovation and local entrepreneurship, as there are advantages in being the issuer of currency.
Thinking the idea further, some VISA kind of network could be setup, ideally with strong participation by Transition Town movements and the like, which would ensure convertibility. Thus the Totnes pound, being backed by kWh, could be spent in the São Paolo transition movement because there they participate as well in the network and their local currency is also backed by energy.
To ensure playing fair, we could even think of some sophisticated electronic support on top of exchange and such. For example, each generating facility yes, can emit currency, but it would need to have its units electronically signed, in order for counter-parties to trust those units. The signing authority would be a chaordic-commons-kind of organization with open and transparent participation, its sole role would be to ensure units signing. This might be accomplished by get sneak-peaks from bitcoins and get some ideas there.
Nevertheless I can’t see an energy backed currency to be the only currency. I still believe that the future is full of a plethora of currencies. Bitcoins, with derivates and similar designs, could play huge role for virtual commerces on the Internet. Local currencies, backed by energy, or land use, as Chris Cook suggests, would still me geared towards local use. This gives us choice. If we want to stay only local, we might concentrate on acquiring local units. If we interact a lot globally, we’d need to engage with virtual communities in order to acquire those units.
These are just a few ideas I throw out there. I have no idea how much they are worth, but as I believe in collective intelligence, maybe they lead to somewhere, or maybe not. For example a unit being backed by energy produced means that growth is reflected with some real value. And it is boundless, abundance based. There is no limit on the amount of energy we create. I confess I am not sure though if that would have some serious implications (I am not an economist!). Would we get inflation, with too many units created after some time? Not sure about these things, and I am open to critique and comments ( 🙂 ).
But these words are more worth wasting a few bits on a blog than staying forever in my head.