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Author Topic: using bitcoin for local/complementary currencies?  (Read 1062 times)
nereer
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May 09, 2011, 02:04:15 PM
 #1

Hi

I have read in a few discussions here that bitcoin was built with the idea of forking the project for other uses if the need arose in future.

I am wondering whether one could use the bitcoin codebase to back a complementary currency that was designed for a local region? The differences would have to be quite fundamental. For example:

  • thiscoin would have to divide the creation of coins between miners and a central authority of some kind (this authority would create currency to undertake local projects, and be able to receive payments in this currency to pay for local services)
  • thiscoin would have to have some kind of demurrage built into it to prevent hoarding/speculation.
  • thiscoin would float in price against bitcoins

That's all I can think of right now, but I am sure there are more differences. Has any discussion taken place along these lines? Is there any information out there I should be reading?

thanks

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hazek
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May 09, 2011, 02:24:36 PM
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Or you could just use Bitcoin?

Sorry that my response isn't more constructive but honestly I don't understand why anyone would give up all the great features that Bitcoin brings to the table and settle for some inferior centrally controlled local currency.

My personality type: INTJ - please forgive my weaknesses (Not naturally in tune with others feelings; may be insensitive at times, tend to respond to conflict with logic and reason, tend to believe I'm always right)

If however you enjoyed my post: 15j781DjuJeVsZgYbDVt2NZsGrWKRWFHpp
nereer
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May 09, 2011, 02:41:30 PM
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Or you could just use Bitcoin?

Unfortunately, no.

What I am describing is a scrip system. In a scrip system a local authority, for the sake of argument let's say a local government, issues scrip instead of the state currency as payment for services rendered. This scrip can only be spent in the local region, which promotes local trade, and can also be spent paying rents/taxes to the local government. By creating this closed loop, scrip systems aim to encourage trade and entrepreneurship locally without having to have the funds to back the projects. If they were to use bitcoin they would need to buy the bitcoin in the first place, meaning that issuing scrip would cost the equivalent amount of state currency and thus making the project pointless. Why not just use dollars instead?

You might also be interested in the wiki on complementary currencies.



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hazek
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May 09, 2011, 03:20:30 PM
 #4

As long as no one is forced to use them I don't care. I don't like it so I wouldn't use it. But if some else wants to by all means I wont stop them. But like I said I have a hard time seeing someone wanting to do so voluntarily.

My personality type: INTJ - please forgive my weaknesses (Not naturally in tune with others feelings; may be insensitive at times, tend to respond to conflict with logic and reason, tend to believe I'm always right)

If however you enjoyed my post: 15j781DjuJeVsZgYbDVt2NZsGrWKRWFHpp
nereer
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May 09, 2011, 03:54:29 PM
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As long as no one is forced to use them I don't care. I don't like it so I wouldn't use it. But if some else wants to by all means I wont stop them. But like I said I have a hard time seeing someone wanting to do so voluntarily.

No one will be forced to do anything.

Imagine you have a local government that is being starved of funds and therefore has to cut back on spending. There are local services that are going to be cut to the detriment of the local population and the local economy. As the spending dries up, so does the spending power of the local population, and this can trigger a negative-feedback-loop that can cause the local economy to spiral downwards.

So instead of cutting services/spending, the local govt instead pays workers for 3 days a week in state currency and two in scrip. As the scrip is spent locally, assets are allocated: the worker pays for food off the greencrocer with scrip, he pays the local farmer in scrip etc. and eventually the scrip is paid back to the local govt in taxes or rents. At that point the local government can decide to retire the currency or use it for further projects etc.

This actually works, and has had notable successes over the years, for example:

Quote
The village of Schwanenkirchen was confronted with massive unemployment when the local coalmine ceased operations in 1929 as result of the great depression. After two years, Max Hebecker, the owner of the coalmine, got a loan of 40.000 Reichsmark. He used the entire loan to buy Wära stamp scrip from the Wära Exchange Association and subsequently reopened the mine in 1931 (Greco 2001: 64). The miners reluctantly accepted to be paid for in Wära after guarantees that it could be spend at local stores or exchanged for a fixed amount of coal at the mine (Lietaer 1999: 125). Local stores were initially hesitant to accept a new type of currency as well. Nevertheless, the shopkeepers, confronted with the reality that merchandise was consequently bought at shops that did accept the new currency, eventually started to accept the currency too. Additionally, they simply had no choice than to accept Wära as customers didn’t have ordinary currency to spend (Fisher & Cohrssen 1933: Ch IV). With the monthly fee for holding Wära, miners and shopkeepers tried to quickly get rid of their salary. Everyone was eager either to spend or lend the Wära. It means that Wära passed from hand to hand much faster than ordinary Reichsmarks. Secondly, as spending Wära was restricted to local inhabitants and businesses only, Wära remained within the confines of the community. Ironically it was the success of the experiment that also caused its end. In October 1931, the German Government passed a law prohibiting the issuance of stamp scrip. The village of Schwanenkirchen consequently returned to economic stagnation.

There is also another great example from depression-era America but I can't find it right now.

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nereer
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May 09, 2011, 09:01:30 PM
 #6

What I really need to know is more about the codebase. Who can I talk to that might be able to answer some questions about using the bitcoin framework for other money systems?

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