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Author Topic: Local currencies + bitcoin  (Read 1298 times)
killer2021
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July 10, 2011, 08:22:53 AM
 #1

If you ask me, local currencies are going to have to be involved if we want bitcoin to go mainstream. People like to use cash to do day-to-day transactions and local currencies are an excellent way to accomplish that. How about if we get local currencies to be backed up by bitcoins?

If you look up examples of local currencies you can see that they are actually pretty smart in getting people to use them. Basically what they do is tell merchants to offer some sort of discount for people who pay in xyz local currency. If people want that discount then they have to use the local currency. The merchants accept the local currency because they know the consumer can only spend it at merchants who accept the local currency. So if you are a mom & pop store you want to be able to compete against wal-mart you can do that by accepting these local currencies. Likewise, if the local currency is widely used its much easier to get new businesses to accept them. Would you really want to open up a cafe and not accept the local currency when 90%+ of the town prefers to use them? That way there is an incentive for both consumers and businesses to use them. Consumers get a discount and businesses get a competitive advantage against businesses that don't accept them. Plus there is always the feel good benefit that people get when they, "support the local economy."

If you ask me bitcoin + local currency is the absolute perfect combination. Especially if you combine it with technology such as bitbills.

Also its important to mention that there are several widely used local currencies in the USA, which are: berkshares, and Ithaca hours. There are hundreds of actively used local currencies all over the world.

I say instead of reinventing the wheel lets go to these existing local currencies and tell them about how bitcoin can improve their local currency.

Here are some examples of local currency:

Ithaca hours. This note is worth about 10$ USD.


Berkshares used in berkshire region of Massachusetts.


Ukiah hours used in Ukiah, California


Disney Dollar, used at Disneyland or Walt Disney World


http://youtu.be/rYc1u8eqhiM

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July 10, 2011, 09:27:24 AM
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I like Bitcoin. I like local currencies too. But what's the advantage in combining them? I tend to think 'local' for local currencies and 'internet' for Bitcoin.
Max Stirner
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July 10, 2011, 09:46:52 AM
 #3

I like Bitcoin. I like local currencies too. But what's the advantage in combining them? I tend to think 'local' for local currencies and 'internet' for Bitcoin.

Think about a market in a small town. Let's imagine you want to buy 10 eggs from a farmer. How do you get farmers to accept an internet currency?
And imagine you are the lucky owner of 10000 Bitcoins, and you feel like a rich man. What happens when suddenly the dollar is gone. Are you gonna
be able to satisfy your basic needs with your 10000 Bitcoins?

 
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July 10, 2011, 10:02:36 AM
 #4

I like Bitcoin. I like local currencies too. But what's the advantage in combining them? I tend to think 'local' for local currencies and 'internet' for Bitcoin.

Think about a market in a small town. Let's imagine you want to buy 10 eggs from a farmer. How do you get farmers to accept an internet currency?
And imagine you are the lucky owner of 10000 Bitcoins, and you feel like a rich man. What happens when suddenly the dollar is gone. Are you gonna
be able to satisfy your basic needs with your 10000 Bitcoins?

 

Yes

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July 10, 2011, 10:05:37 AM
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Even farmers have computers and smartphones.

Still around.
killer2021
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July 10, 2011, 10:39:56 AM
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I like Bitcoin. I like local currencies too. But what's the advantage in combining them? I tend to think 'local' for local currencies and 'internet' for Bitcoin.

The main advantage is that you can do commerce with the people who aren't technically savvy. Someone may not want to use bitcoin (for whatever reason) but being able to hold some local currency in their hand and being able to buy/sell stuff with that currency would connect with them. Meanwhile they are indirectly holding bitcoins and gain the benefits of bitcoin (in this case, a stable store of value). Of course the preferred method is going to be doing btc to btc transactions but until then a bitcoin/local currency hybrid is the way to go.

The ideal currency would back their currency at its full value in equivalent btc. It would be similar to a demand note where you can take the note to the issuing authority and get the equivalent btc in full. Likewise, you could go to the issuing authority send btc and get the equivalent amount of notes.  It would be like the old gold and silver certificates. The issuing authority would make its money by transaction fees or no fees if donations are used instead (ie. non-profit model). A local merchant would probably donate if they got some advertising or something?

The whole idea here to allow more people to use bitcoin indirectly. Local currencies have been around for ages so the concept of a local currency resonates with people while bitcoin is more technical. For the most part the technical nature of bitcoin is where most people get issues with bitcoin (since they don't understand how it works). For all of us, we are all technical savvy so bitcoin works fantastic for us. Grandma, on the other hand, not so much.

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July 10, 2011, 01:18:19 PM
 #7

You would just need the issuers of the local paper currency to be able to show and prove backing for the paper currency in a publicly auditable fashion. This means the issuer(s) would have to put up the bitcoin first before issuing the local paper currency. The purchasing power of the local currency would fluctuate with the value of bitcoin unless you adjusted the amount of bitcoin backing regularly so that the local paper currency is always traded 1 to 1 with the US dollar.
elggawf
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July 10, 2011, 02:17:44 PM
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You would just need the issuers of the local paper currency to be able to show and prove backing for the paper currency in a publicly auditable fashion. This means the issuer(s) would have to put up the bitcoin first before issuing the local paper currency. The purchasing power of the local currency would fluctuate with the value of bitcoin unless you adjusted the amount of bitcoin backing regularly so that the local paper currency is always traded 1 to 1 with the US dollar.

This is the chief problem with this idea - until it becomes feasible to price shit directly in BTC, you're going to hard pressed to convince the non-internet-savvy to use it, which appears to be the chief goal of such an idea.

IMHO local currencies don't need Bitcoin - in exactly the same way that Bitcoin doesn't need any backing, local currencies do not either.

Bitcoin also does not need local currencies right now, or more specifically it doesn't really stand to benefit from them. A local paper currency backed with Bitcoin essentially undoes everything that's attractive about Bitcoin, which coupled with the price instability of BTC just makes the whole idea unworkable at the present time.

Bitcoin makes a fine bridge for things like ripple networks, because the actual worth of each currency can be compared, decided, and agreed upon at the time of the transaction. Giving out a paper note that has a wildly fluctuating value will turn the very people you're trying to attract off the idea, possibly permanently.

^_^
tymothy
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July 10, 2011, 02:19:43 PM
 #9

I like Bitcoin. I like local currencies too. But what's the advantage in combining them? I tend to think 'local' for local currencies and 'internet' for Bitcoin.

I like Bitcoin. I like local currencies too. But what's the advantage in combining them? I tend to think 'local' for local currencies and 'world-wide' for the world-wide web currency Bitcoin.

Fixed.
killer2021
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July 10, 2011, 02:27:28 PM
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You would just need the issuers of the local paper currency to be able to show and prove backing for the paper currency in a publicly auditable fashion. This means the issuer(s) would have to put up the bitcoin first before issuing the local paper currency. The purchasing power of the local currency would fluctuate with the value of bitcoin unless you adjusted the amount of bitcoin backing regularly so that the local paper currency is always traded 1 to 1 with the US dollar.

This is the chief problem with this idea - until it becomes feasible to price shit directly in BTC, you're going to hard pressed to convince the non-internet-savvy to use it, which appears to be the chief goal of such an idea.

IMHO local currencies don't need Bitcoin - in exactly the same way that Bitcoin doesn't need any backing, local currencies do not either.

Bitcoin also does not need local currencies right now, or more specifically it doesn't really stand to benefit from them. A local paper currency backed with Bitcoin essentially undoes everything that's attractive about Bitcoin, which coupled with the price instability of BTC just makes the whole idea unworkable at the present time.

Bitcoin makes a fine bridge for things like ripple networks, because the actual worth of each currency can be compared, decided, and agreed upon at the time of the transaction. Giving out a paper note that has a wildly fluctuating value will turn the very people you're trying to attract off the idea, possibly permanently.

It may not be suitable in the immediate term but will eventually be suitable. Eventually btc is going to stay stable as the market matures out. Plus all fiat currencies currently fluctuate but most don't don't realize it. Instead they blame it on, "greedy oil companies" or, "greedy corporations." for the rising prices. Price fluctuation is no excuse. If you ask me, btc is actually pretty stable and will only get more stable in the future. Eventually I could see a price change of only a few cents each day.

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elggawf
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July 10, 2011, 02:52:56 PM
 #11

Yeah, but even so... 1) Price instability is the USD is not a big deal, because we only really see it in our prices and don't associate it like that. Having USD prices and BTC prices right next to each other is going to illustrate the fluctuations really well, and given that your whole idea here is marking to people who really don't "get" Bitcoin, do you honestly think they're going to see that as normal and okay? No, they're going to see the USD as stable and Bitcoin as wildly fluctuating.

2) You completely disregarded the point about how a paper currency with a central issuer undoes everything good about Bitcoin anyway.

Again, JMHO, but I think the two ideas need each other like I need a hole in my head. Better to leave the Bitcoin transactions to Bitcoin-aware people with smartphones - when you set up your stand in a market in a really techno-libertarian area with your little "We accept Bitcoin" sign, and the other guys see you making bank sales using mobile phones and your laptop, they'll start asking questions.

Anything else is just a hammer looking for a nail.

P.S. If I may digress on that last line for a second, we as a community really need to stop doing this - having a hammer and wanting desperately to find a nail. An example in the other thread, about convincing Blizzard to accept Bitcoins: the people pointing this out were labelled trolls, but they're right. There's almost nothing in it for Blizzard to accept Bitcoin, you're starting at the wrong end of the spectrum. We need to build an economy based on small businesses who do have something to gain from switching. Blizzard probably don't give a shit about credit card fees or the retailer markup of their game cards - it's factored into their business and they're doing well from it.

A mom and pop merchant who gets one chargeback and it puts them in the hole until the rest of the week, those are the people with something to gain. They're the ones you should be working on.

^_^
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July 10, 2011, 03:14:04 PM
 #12

Local currencies and bitcoin don't need each other but they can complement each other.

Consider a scenario where government-controlled fiat currencies aren't available or desirable anymore.

For small transactions at a store or a market stand bitcoin is still and IMHO will always be somewhat awkward. You need to have a smartphone/small computer and an Internet connection. Plus a transaction still can take 10 minutes just to get "0/unconfirmed". Is the cashier really going to make the customer wait for 10 minutes until the first block has been processed? I don't think so. It's much easier to simply hand over some bills. That's where a local currency would be most useful.

Yes, Bitbills would also be possible but are they going to be available in large enough numbers? Plus there is also the problem with the constant deflation of bitcoin. You would continually need new bill types of smaller denominations.

For large or interregional transactions or buying over the Internet bitcoin is of course more useful.

So you would have a system of currencies that is entirely independent of government.

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kloinko1n
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July 10, 2011, 06:16:51 PM
 #13

Even farmers have computers and smartphones.
Don't patronise the farmers.
They are the only people who will be able to keep you out of the hands of the doctors.
If you support them enough to fight off the likes of Monsanto, Syngenta etc...

Let your food be your medicine and your medicine your food (Hypocrates)
And man, he was spot on!
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