Like the trillion-dollar platinum coin several months ago, Bitcoin has jumped from a technical curiosity to “mainstream” financial news. It has become an object of economic escapism—but the kind you can’t escape from. Whether it continues to grow as a phenomenon has yet to be seen, but the underlying curiosity tells us that there is growing skepticism about global financial systems’ long-term viability, and a correlated grassroots interest in returning to smaller scale, offline, more locally-focused systems of exchange.
Economic anthropologist Keith Hart, who gave us the phrase “informal sector,” maintains that the previously bold dividing line between “legitimate” formal economies (with their megabanks, registered brokers, middlemen, and recognized currencies) is blurring quickly due to worldwide economic stresses. In a talk last year in Barcelona, Hart pointed out that in ailing countries, such as Spain and Greece, the informal practices that have been in place all along have re-emerged as a new kind of “formal informal” market, recognized by many citizens as a valid option for work, earning and exchange. This formal-informal connection is being accelerated by simple uses of technology says Ken Banks, founder of a global initiative to promote economic self-sufficiency Means of Exchange. A much broader potential user base, with web and mobile access, can coordinate simple economic activities, such as time banking, bartering, and local economic action that brings buyers and sellers, or workers and employers, together simply—more like Craigslist, less like Amazon.
Bitcoin may be the digital canary in the coal mine at the moment, seen as a test case for “new money” by both economists and tech enthusiasts, but its not the only game in town. At the moment, these simpler systems of payment and exchange get far less press and attention from money bloggers, but if we’re lucky, they will succeed without this attention—perhaps precisely because no one is looking.
Physical alternative currencies
While we fret about block chains, and coin mining, new analog currencies are taking root in the world. There have been various alternative currencies kicking around developed countries like Britain and the US for years, but the global recession has spurred increased interest in setting up small local systems of payment using money designed around local needs. These range from the Brixton Pound, set up in 2009 the South London neighborhood that gave it its name, to Bavaria’s Chiemgauer, a currency that started in a school and has spread to wider use, and the Credito, used by the Damanhur eco-community in Northern Italy. Most of these currencies “light touch” technology, (the Brixton Pound does offer a mobile version) but unlike Bitcoin, function physically, putting them in reach of even the unwired, which is critical to making these currencies accessible.
None promise to become the euro, nor even replace its various national antecedents. They are designed for and serve local structural interests, mapped closely to the economic patterns of its users, rather than a distant abstraction. Most authorities, who don’t see these local currency “startups,” as a threat, have stayed back, which encouraged others to try as well. The latest to come onto the scene is being created by the BilboDiru project, a group in Spain’s Basque country, to serve that region. According to a recent interview with the group (Spanish), the currency is so new it doesn’t have a name, though a poll has put hazi, “seed” in Basque, and bertoko, “local,”in the running.
A better means of exchange
Why is all of this happening now? According to Banks, a growing number of people worldwide have grown tired of being burned by globalization and just want to get back to functioning within sustainable local systems.
“Because of the way our globalised world works (great when it does, rubbish when it doesn’t), hard-working people, and communities, are being destroyed by financial meltdown in distant places,” Banks wrote me in an email. “Globalisation has eroded our incentives, and ability, to play well together as local communities, meaning we’re now less resilient to shocks of all kinds than we used to be.”
Banks, who knows technology from his experience designing FrontlineSMS, a platform that uses mobile short-message service to enable community engagement, believes that while projects like Bitcoin are interesting, they set too high a bar for the average person.
“Most of the action I see is around software development—people getting excited by local currency platforms, or virtual currencies,” Banks wrote. “The problem here is that these are generally being run by techies, and we need to lead with the problem we’re trying to solve, not a cool technology. Most of the software being developed is unusable unless you have a degree in computing, or a server that costs about the same as a small car, and is hard to understand.”
This doesn’t mean technology should be thrown out completely though, but rather used where appropriate to the task. For Banks, and a growing cadre of others looking at the issue, this means using technology as a simple underlying platform to bring various systems together.
“In terms of software and tools development, I’m fascinated by what we might be able to do if we can build a brand around local economic empowerment that resonates with a wide range of people, including younger people,” Banks said. “What we need is a platform—yes, I’d go that far – which can capture the whole range of behaviours and activities which make up a better locally-engaged citizen. Right now we don’t have that, and it’s problematic, and confusing.”