Community Currency is a form of paper (money) issued at the county, town or community level only for use at local participating businesses to help boost the companies’ sales. Business owners that accept community currencies may be obligated to create separate accounting methods in order to deal with different taxation guidelines.
Money is actually a concept that is subsumed under the higher-level concept of exchange. There is no history of money separate from the history of exchange, in the same way that there is no history of oil separate from the history of energy. Exchange is not a consequence of money. There are various modes of exchange that humans can use when engaging in exchange. Some are more suited for situations where the parties are known to each other, others for exchange between strangers. As societies become more complex, modes of exchange that deal more effectively with complexity are adopted. Each society is characterised by the combination of these modes and by which is dominant.
There are two types of exchanges:
- Reciprocal exchange (gifting) is dominant in simpler societies but still operates on the margins in more complex societies. Sharing or pooling, which involves distribution and redistribution was predominant in the ancient empires but is still evident in modern industrial societies;
- Exchange mediated with commodities or issued, circulating currencies (market exchange) have been used throughout history, and is the predominant mode in the world today; exchange facilitated by record keeping has likewise been in use since the beginning of history but will be the predominant mode in our connected world. There is much that can be said about each of these, but let’s keep it at that for now.
The means of exchange are the actual tools and mechanisms that are used to effect and facilitate exchange.
Exchange systems evolve with the social groupings to which they apply. As the population increases and the society becomes more complex, different exchange methods need to be used. Where everyone knows or is related to everyone else the relations of exchange are simple and this is reflected in the use of simpler recording mechanisms that do not require much accuracy. But when societies become more complex, more involved recording mechanisms are required. And cryptocurrency appears to be a suitable solution:
• Cryptocurrency as a means to facilitate low-cost remittances for those seeking to transfer small amounts of money internationally
• Cryptocurrency as a means for an otherwise excluded individual to have a decentralized global bank account, accessible simply by downloading an open source wallet from the internet, rather than having to set up with a formal financial institution
• Cryptocurrency subsequently providing the basis for a richer set of financial services
Cryptocurrrency has the potential to be used as an intermediary currency between other, more dominant, currencies, and thus may be useful for remittances. For example, rather than using companies like Western Union, a Filipino worker in New York might use a service that transfers US dollars into bitcoins and enables a family member in the Philippines to “withdraw” pesos on the other side. In order to make this work, there needs to be a liquid market for the local community currencies.
Bancor protocol enables anyone to create a new type of cryptocurrency called a smart token, which can hold (and trade) other cryptocurrencies. This allows the smart token’s contract to serve as its own market maker, automatically discovering its own price(s) and providing liquidity to other currencies, thereby removing the need for a second party in cryptocurrency trades. Every smart token is always liquid at some price point.
Bancor protocol enables anyone to create a new type of cryptocurrency called a smart token, which can hold (and trade) other cryptocurrencies. This allows the smart token’s contract to serve as its own market maker, automatically discovering its own price(s) and providing liquidity to other currencies, thereby removing the need for a second party in cryptocurrency trades. Every smart token is always liquid at some price point.
The Bancor protocol enables smart tokens to be continuously liquid through their smart contract (exchangeable for their reserve currency at an algorithmically calculated price) and thus do not rely on exchanges for liquidity or price discovery. Smart tokens are purchased directly from their smart contracts, not from sellers, and are liquidated through their smart contracts, rather than through buyers.
This article come to a conclusion, provided that property and contract are well protected, community cryptocurrency will help lift people out of poverty, bringing forth the hidden value of informal economies.
