Of all things, local British Pounds carry lessons for crypto and the circular economy

If you’re wondering what a local British Pound is, you’re not alone. I was like that too, before my friend pointed them out to me. After a little more research, I found that these are called complementary currencies and they are by no means new or rare. Just peculiar. Here’s what they actually are:

A “complementary” currency is a type of quasi-monetary exchange medium that is intended to function as a complement to (rather than an alternative to) standard national currencies. (Costanza, Robert et al., “Complementary Currencies as a Method to Improve Local Sustainable Economic Welfare”, University of Vermont, Draft, 12 December 2003.)

For those who still don’t understand what they are, complementary currencies are like baseball cards or game tokens. They are valuable and tradable in certain mediums and within a certain group – be it interest-based or medium-based. If you try and trade them outside of the system, they are not valuable, but can be converted to more traditional currency, when in contact with the right buyer.

In some case, the buyer can be the issuing authority, in others it can be another community member or someone who would like to gain access to the community and would like to pay their way in.

In 2004, according to the same source I quoted the definition from, there were about 500 complementary currencies in circulation and historically there have been about 4000 issued to that date. If they were to redo the study today, they would find that cryptocurrencies and tokens fit this description to a large extent.

These complementary currencies have the following interesting and relevant characteristics to the blockchain world:

  • Convertibility: while they are sometimes tradable for national currency (fiat), this exposes them to the risk of run on the bank, but this feature increases adoption.
  • Commodity-backed: increases security, but reduces participation due to lack of convertibility.
  • Acceptance: it is increased if people can buy goods and services they need with the said currency – like taxes, food, beverages, rent etc. Pretty much like the circular economy I described in an earlier post.
  • Operational costs: some of these currencies carry a fee for the issuer, to cover operational costs, like printing and securing, network operations etc.
  • Taxing: here some have been deemed taxable, some not, by design. Up to each state and community to decide.

 

Complementary currencies were introduced as a means of storing and increasing the value and wealth of a certain community. This resembles what the crypto community is trying to achieve with utility tokens and it struck me that not once have I heard a comparison of this system to what ICOs / Token Sales are trying to achieve. While there is less geographical limitation today, compared to the attempts in previous centuries, the abstract characteristics of the currencies remain surprisingly similar.

What’s even more surprising is the lack of information at the very top of political decision making, where no lobbyists or politicians have compared crypto to these complementary currencies. They have chosen, consciously or unconsciously, to see them as competing currencies, not as complementary. That presumably makes them an easier target for stronger regulations.

Both cryptocurrencies and complementary currencies as a greater category face the following barriers for adoption:

  1. Lack of acceptance (catch 22)
  2. Lack of credibility (issuer)
  3. High transaction costs (issuer)
  4. Unsustainable operational cost (issuer / community)

 

The problems we’re facing in the crypto world today are not new. We just have to read more, understand more and find precedents where others made it work, show them to the world, apply them and use them in conversations with the ever-present nay-sayers.

I’ll leave you at the end with this study on British local pounds.

Those who want the EU to fall apart are idiots

I have travelled in almost all the European Union countries and have worked so far in 2 of them. Either for pleasure or for business, every trip was natural and easy to do, borders are open to us with a simple passport or national ID card. It’s fast and it’s cheap to do it.

Romania, my home country, only acceded as a member on January 1st 2007, after a long and arduous journey, missed deadlines, disappointment and defeat. I was the unlucky local generation, the last to graduate from high school without being able to travel freely in Europe. We had no idea and no means to think about studying abroad and for travels you’d have had to deal with embassies and consulates, pay visa fees and queue at the other travellers gates. It made vacationing abroad a rare exception, reserved for the wealthy few – some economic criminals, them and their entire families – as it was to be proven in the next 7-8 years.

793px-Romania_EU.svg

 

photo credits: Wikimedia.com

For each country that acceded, the EU brought three things: a foreseeable end for corruption, economic growth via aid – EU funding on strategic verticals and horizontals and foreign direct investment. What’s more, at least now, from empiric observations, I can see that we do not hate each other as much as we did after WWII (understandable, as you were expected to kill or be killed).

It’s now easier than ever to roam around the continent, do business and relocate altogether in other countries, a mix of opportunities that only broaden ones perspectives and make them inevitably more tolerant, open, progressive and kind. You simply cannot wage war against a country where you have friends and you can collute with them once your ruling regimes become antagonizing in order to stop them (street protests, social media, advocacy, lobby, activism).

The EU is the best mechanism found so far to keep countries like Germany, France, Britain or the nordics from trying to claim power with the use of force. Sure, they now play the economic and social game, but that’s at least without bloodshed. Just imagine how easy it would be to conquer or influence easter countries to fall under Soviet rule again or under any kind of promise of a belonging without the EU. Imagine trade with permits and taxes and hurdles that add 30-50% to the prices, what that would do to inflation, to standards of living. Maybe inflation is the endgame for some, but i consider them irresponsible, throwing an entire continent into a death-spin to align their charts and forecasts.

We are living the european dream right now and more and more countries, starting with the UK and their irresponsible politicians, are threatening to wake us up in the most brutal manner: by dismantling what our grandparents fought for – peace and unity.

Painful democracy

IMG_8545This weekend, just like two weeks before, I waited patiently for hours to vote, a right our parents fought for 25 years ago. In London tens of thousands of people, most of them calm, smiling, queued with us in the hope of a better future back home, where they still have family members, friends, businesses. I didn’t get the chance to do it though, unfortunately, after waiting for 10 hours.

When is the last time you queued for 10 hours to exercise your right?

This sad, sad moment reminded me of a story about communism that my parents and grandparents used to tell me. I was born in 87, when times were very hard. They told me that they used to go and queue to get food – eggs, milk, meat (which was a rare treat). Electricity and hot water were scarce and we used the stove to keep warm when heating was cut too. That was painful communism.

Today we don’t have to queue for food anymore, but for something else. We have to queue for the power to change a system that has driven us out of our hometowns, out of our country in search of a better future. Why would a democratic system cause its citizens so much pain, so many hours wasted for tens of thousands of people.

We switched the painful communism with painful democracy – a pain to vote, a pain to travel, to do business and to be happy. I hope this weekend is a step to put an end to this. And i hope the next MCV report will reflect the poor state of the nation and its institutions. Events like this, voting queues, should not be possible in 2014, European Union.

Along side the poor deployment from the organizers(Government), there is one more notable mention. I am ashamed that some people who call themselves patriots and Romanians disrupted the peace and quiet of Kensington and resorted to shouting, verbal violence and raised the tension in the peaceful queue. There were agitators, people that were there just to anger the others, not to vote or anything else. They are the representation on the uncivilised side of Romania and none of us should ever encourage them.

I distance myself from these agitators and disrupters and I ask you, the non-Romanian reader, to see beyond this uncivilized representation of nationalism and take a good look at us, the silent, numerous and mannered group that are part of your communities in the EU and all over the world. We are the victims of the painful democracy back home.