local currencies, crypto, and web3
local currencies, crypto, and web3
the present isn't so distinct from the past
This is essay 1 of 7 essays for The Tech Progressive Writing Challenge. Join the conversation in the build_ Discord.
What does the small town of Wörgl in Austria have in common with the British cities of Hull and Bristol? The answer: they have all launched their own local currencies.
Many think that the emergence of cryptocurrencies represents the first shift from state fiat. The reality is that there have been complementary, community currencies for centuries.
The town of Wörgl is renowned for issuing its own local currency. In 1932, during the depression, the Wörgl government printed 32,000 schillings in their own local currency, paying 30% to government workers. These could be redeemed for state currency at a 2% fee, and also had 1% rate of monthly deflation.
The result? A 61% government revenue increase, reduced arrears & unemployment, and a 100x increase in monetary velocity. However, the Austrian National Government terminated the experiment in 1933.
Alternative currencies barely progressed until the development of LETS (Local Exchange Trading Systems) in the 1980s. LETS is a form of community credit, allowing people to earn credits by offering a service, and then spending credits on the scheme. In the UK, over 50,000 signed up for LETS exchanges at its peak in the 1990s, but it has declined since. Japan, though, has found a specific niche for time credits via "Fureai Kippu". This initiative allows volunteers to receive a hybrid of time-credits and cash after supporting old age pensioners. Over 400 organisations participate in Fureai Kippu, though its impact has been debated.
Since the 2000s, there have been more attempts at local currencies. HullCoin was a hybrid local currency and social impact bond for the city of Hull that would award tokens to active participants in community support initiatives. These tokens would provide discount for goods from local businesses. The project sought to leverage blockchain to scale from hundreds of active businesses to thousands in 2018, but was unsuccessful at raising further funding.
Bristol also launched a community currency which eventually accounted for ~2% of the city's turnover, with > 1000 active business participants accepting Bristol Pounds. This cash-centric project shut down in 2020, but has plans to relaunch on new digital payment rails. The vision is to add tokens to reward local community participation.
When we think about what web3 we want build, we must consider the community economies that have existed for centuries. Alternative currencies with monetary policies that differ from the state? Check. Benefits for specific communities that engage with the currency? Check. Bounties for people that offer a good or service in demand? Check.
Web3 is portrayed as a break from the present, but the reality is that it is a continuity of prior experiments. The difference is that we now have the technology to scale. We must shift away from the monetary crypto - the 10,000% APRs - and toward the community economics and incentives that can revitalise local economies. Instead of focusing on the existing web3 community, there's a ton of value that crypto can bring to the thousands of existing businesses within the "community currency" ecosystem, catalysing the adoption of tokenomics in local communities.
Further reading: