The intentions & practicalities of local currencies

[bits4coins]

I've been reading the back and forth between arguments for local currencies and against. And I am hoping for some input from all of you.

Am I right to say that the intention to have a local currency is to encourage to keep locally generated wealth local?

If so I am wondering what would a real world implementation look like?

What would encourage the use of a local currency?
How would people buy in?
How could people cash out?

If the local currency is pegged to some agreed upon purchasing power to keep it stable or a demurrage system is used then why wouldn't people just switch to bitcoin, use it, and as a side effect have they wealth increased due to bitcoin scarcity?

Local currencies have worked well when the national currency was subject to dramatic inflation. It protected groups of individuals from losing purchasing power due to devaluation. Why would people use a local currency instead of bitcoins, which are deflationary by nature? With bitcoin people wouldn't lose purchasing power, they are more likely to gain purchasing power. So the only other purpose of having an alternative to bitcoin is to give incentives to keep generated wealth local. Can and should that be done by forcing people into such a system or should it be left to the local community and if they want to keep money local they can act accordingly and if not, who is in a position to force them in doing so?

I really hope for some constructive input.

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[1715555820]

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[herzmeister]

Imagine a primitive (agrarian) island without any special resources. They can sustain themselves, but their means are too primitive to produce anything the world market wants. So they can't export anything. They can't get euro, dollars, gold, silver, or bitcoins. Should they starve because of that? No, they can barter among themselves. Someone produces food, someone else clothes. Such a barter system is effectively a local currency.

Greece is comparable to this situation, just to a lesser extent.

Another option the island has is to sell their workforce to multinational corporations in sweatshops, but they should have a choice, right?

[nestor]

That's actually one of the most neglected potential benefits of Bitcoin technology. Take the most important part of the ecosystem - the block chain and the time stamping - and mine a local currency unit only when a local commodity basket gets filled up with additional assets.  Whether the mining happens P2P or centralised is another question and naturally trust has to be taken into account.

But the interesting fact is that Bitcoin technology is usable for local currencies is available immediately, today. To create a trusted mining node network delivering it's services for local currency institutions and then use the same technology to design and implement the many, many local asset currencies exchangeable via the global Bitcoin currency is an interesting challenge to redesign money.

[bits4coins]

Imagine a primitive (agrarian) island without any special resources. They can sustain themselves, but their means are too primitive to produce anything the world market wants. So they can't export anything. They can't get euro, dollars, gold, silver, or bitcoins. Should they starve because of that? No, they can barter among themselves. Someone produces food, someone else clothes. Such a barter system is effectively a local currency.

Greece is comparable to this situation, just to a lesser extent.

Another option the island has is to sell their workforce to multinational corporations in sweatshops, but they should have a choice, right?

Great example and they really should stay away from selling their souls to multinationals and keep their economy local. But what about those others that have the potential to travel/migrate, internet access, modes of transportation, and such?

Hypothetically what would the benefit be for a small town in the US or Europe?

Just to clarify I want to know if typical small town in the US or Europe has any reason not to switch to bitcoins but create XYZcoins instead. They could create their own local version of a consumer price index, peg their BTC prices to that and have the strength of the entire bitcoin network behind them. In this scenario they can't avoid volatility as they could with XYZcoins but they have the added benefit of a global currency that they can exchange anywhere, anytime, zero development costs, and the security of the entire bitcoin network behind them.

So bitcoins or their own XYZcoins for small towns?

[yucca]

...So bitcoins or their own XYZcoins for small towns?

I say bitcoins, a free market allowing local produce/labour to vary in BTC value, I can't think of any arguments to support local currencies.

It would also be better for us all to speak a global language (i would be willing to relearn) and have no borders or centralised governments, and fully interbreed until race is indistinguishable, genetically that is the optimal solution if we wish to explore the cosmos, but that's a silly utopian dream of mine, as is the dream of a shared currency so it probably wont happen. Also it's in the interest of a few to keep everyone seperated.