Tuesday, March 22, 2011



JOURNAL: Alternative Currencies

Spent some time talking with some smart folks working on alternative currencies in  SFO.  Here's the conclusions from this conversation.  Alternative currencies can do three things:
  1. Serve as a store of value.  Presumably, this currency holds value better than existing currencies.  In this way, it acts like an asset (land, etc) but is more fluid/granular to allow its use in transactions.  Think gold and commodity backed currencies.  A way to apply this approach to a resilient community is to combine it with a food reserve (a currency backed by food you can eat if things break down -- see the Mendo Credit Slip as an example of this).  
  2. Enable a loyalty program.  In short, these currencies entice people to do business with a favored group of individuals/companies.  Think local/regional currencies or commodity currencies backed by locally produced products.  This can be a powerful way to accelerate consumption of local goods (keep the supply limited, focus on superiority via quality/freshness, etc.)
  3. Jumpstart a local/virtual economy.  Full cycles of transactions from producer to buyer and back again.  This is very difficult to do.  A good example of success is Austria's depression era Worgl.  Why did it succeed?  It made the Worgl important to both producers/retail and consumers.  As in: the town that issued the Worgl accepted it as payment for taxes.  It then launched infrastructure projects that paid the employees partly in Worgls.  

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