Latest News in the World of Complementary Currencies
Blockchain has become one of those buzzwords that commands attention and carries a powerful social glow, yet in the likes of similar buzzwords that have attained such a prized status, it has lost much of its meaning. Blockchain has become a catchall term for just about any digital ledger system regardless of crucial variations in its design. With so many blockchain projects ranging from social impact initiatives to opportunistic marketing ploys, it can be difficult to discern which projects hold real potential.
This article was originally published in the Spanish newspaper EL MUNDO in February 2018. It is by Carlos Arenillas, economist, former vice president of the CNMV (Spanish Securities Supervisor), and former member of the board of the bank of Spain. A friend of mine asked me that a few months ago after the crisis – […]
The post Why can’t I open a current account in my Central Bank? by Carlos Arenillas appeared first on International Movement for Money Reform.read more
Eyal Herzog learned a hard lesson when his world-beating online video site was overtaken by Youtube. He learned that the internet, by lowering the barrier to entry, enables a ‘long tail’. In other words if you want to own a sector, you shouldn’t worry about the leaders in that sector, as much as supporting the 99% of others who want to be in that space. Eyal and his team understood that if the kind of democratisation that YouTube brought to video happened to money, then there need never be a scarcity of money again.
So throughout 2013-15, Eyal and his team developed AppCoin, a marketplace for complementary currencies. They invited two networks in their country, each with around 20,000 members: Mamazone was changing the lives of stressed-out mothers who had started helping each other and recognising each other using ‘heart’ tokens. O-Share was a sort of timebank which emerged from a protest movement using a time token called Shefa (happiness).
The AppCoin team invested hugely in developing software with and for these groups, but especially the marketplace section. Hearts became more valuable when they could be used to buy durable goods, put there using investment capital.
The platform received a staggering valuation on the basis of its very high user engagement but they couldn’t find the right business model:
- Financiers wanted a financial return on transactions in currencies that weren’t convertible to dollars.
- It also wasn’t possible to scale massively because existing communities needed a lot of work to change the culture.
- Finally there wasn’t hearts/dollar trade to have a stable exchange rate without backing hearts by dollars, which would have defeated the point. (See Impossible Trinity)
Eventually, the main investor pulled the rug from underneath the project.
So the Bancor Protocol was later conceived as a way for local and complementary currencies trading low volume to be able to exchange with other currencies. A smart contract manages a portfolio of currencies and is available to buy or sell in any currency exchange. In other words it manages a pool of assets and provides liquidity between a small currency and a larger one, thus enabling the small currency to have a more consistent value compared to say, the dollar. They imagined a wallet which could spend any currency, by buying it automatically and with no transaction charge the moment the payment was made
This simple idea, backed by some technology sector expertise, the support of Bernard Lietaer, and a handful of other complementary currency enthusiasts helping out with the communications (including myself) presented at just the right moment last year, raised an unprecedented $50m last year right at the start of a boom in unregulated ‘Initial coin offerings’.
But as the team set about building their multicurrency wallet, they spotted an emerging use case to provide liquidity between the tokens of all the other ICOs. Its possible to trade these tokens on a normal exchange like Bittrex where you pay commission twice as you go via Ethereum tokens or bitcoin. But the Bancor Protocol provided another way, and now handles over half of all the volume of all the decentralised exchanges.
This has been great for business and establishing their reputation but a non-profit with lots of money to spend, they still plan to get to back to complementary currencies and to save the world!
But for me the outstanding question is how many complementary currency projects are looking for this kind of convertibility into anything, or are most of them intentionally non-convertible?
- Currencies which hitherto have been backed by and convertible to national currencies, which want to be used in the high street probably don’t need Bancor convertability because they have a fixed price and 100% backing.
- Currencies like Hearts and Shefa and LETS and timebanks which build community do NOT want to be bought and sold for money convertible to fiat.
- One possibility comes to mind, Faircoin, although its relationships with the free market is ambiguous. Faircoin has hacked capitalism with a free-floating token whose price has increased considerably, certainly in part because of speculative purchases. When Faircoop refused to give their financial credentials to the only serious exchange where it was listed, Bittrex, the coin was delisted at the end of March, and the free market price took a hit. But some elements in Faircoop belive that the free market is bad for the coin, because it causes volatility and traders want stability. They already have a reserve which they use to stabilise the value of the coin.
My impression is that the Bancor team want to empower communities with the ability to make their own high-street money out of nothing. Anyone can issue some tokens, tell a story about why they are valuable, and Bancor will provide a market for these tokens to be convertible to money at whatever price people are prepared to pay. On the one hand this is great because it allows for the creation of new liquidity in a depressed economy. On the other hand it is the opposite of what many community currencies are trying to do, which is to cut from the money system and exchange amongst themselves with different values.
Paul Bolte, Scott Whitmer, Annette Riggs, Jay Greenless, and Ron Whitney Rolf Wilkin, Beth Anne Dresselread more
Last November, I joined an international delegation to speak at the Sharing Economy Association of Japan’s (SEAJ) annual Share Summit in Tokyo and explore sharing in Japan. Thanks to the incredible hospitality of SEAJ (which I advise), it was one of the most rewarding learning experiences of my life. In the following photo essay, Pieter van de Glind of ShareNL and I share just some of the highlights of our experience in pictures. Why do this together?
The energy infrastructure that we inherited from the 20th century is one dominated by fossil fuels and uranium, mined in relatively few localities in the world. The distribution and refining of these fuels is tightly held by a few large corporations. Electricity generation typically occurs in plants that hold local or regional monopolies, with vast profit potential. While gasoline is burned in millions of vehicles, the distribution system remains within the control of a few corporations, which often have regional or national oligopoly or monopoly control.
We are honored to announce that the first Community Currency Design Course is now available for free on the Grassroots Economics website. The quality of the course is surely granted by the extraordinary experience and knowledge of Dr. William O. Ruddick and his staff behind the Grassroots Economics organization. The course is divided into 5 modules, […]read more
[Call for an International Roundtable] Cooperation for Open-Source ICT development for Solidarity Economy and Community Currency Systems
Call for an International Roundtable: Cooperation for Open-Source ICT development for Solidarity Economy and Community Currency Systems. The more Solidarity Economy is growing the more is the need of ICT tools to support it. Platforms to manage a new economy, new monetary and financial structures, which reflect a new way of living are urgently necessary. In […]read more
New technologies, anti-labor trade liberalization, and economic instability have led to the volatile employment environment we have today. The shift to freelancing and portfolio-driven careers enabled by peer-to-peer platforms is offering extreme flexibility and an almost infinite choice to entrepreneurs who sell their services within a global marketplace. Notwithstanding that these digital service exchanges provide a lifeline to many underemployed workers, they provide little with regard to worker protection, health insurance, or even stable cash flow.