Community Currencies
Loading...1-Stimulating local economies
2-Creating economic resilience
1-Community buy-in
2-Trust and legitimacy
3-Economic health
1-Wide aceptance
2-Scalability
POPULARIZED BY MICHAEL UNTERGUGGENBERGER
Community Currencies are local currencies designed to complement the national currency within a specific community or region. They aim to boost local economic activity, encourage spending within the community, and strengthen social ties. By circulating only within a defined area, these currencies help keep money within the community, support local businesses, and often promote sustainable and ethical economic practices.
Community Currencies are best suited for use by geographically or memetically local communities seeking to strengthen their local economies, support small businesses, and foster social cohesion. They are particularly beneficial in areas looking to enhance economic resilience, promote sustainable practices, and encourage community engagement. Community currencies can be valuable for DAOs towns, cities, and regions aiming to keep wealth circulating locally and reduce reliance on national currencies.
Launched in 2012, the Bristol Pound is a local currency designed to support independent businesses in Bristol. It can be used in physical and digital forms, promoting local spending and sustainability.
Introduced in 1991 in Ithaca, New York, Ithaca HOURS is one of the oldest and largest local currency systems in the U.S. One HOUR is valued at ten dollars, and the currency can be used for various goods and services within the community
Started in 2006 in the Berkshires region of Massachusetts, BerkShares are a local currency aimed at boosting the local economy. Businesses and residents can use BerkShares to support local enterprises, with over 400 businesses accepting them.
The success of a community currency hinges on the cooperation and participation of local businesses and consumers. From a game-theoretic perspective, individuals are incentivized to use the currency if they believe others will also participate. This creates a positive feedback loop where increased usage by some members encourages others to join, enhancing the overall utility and acceptance of the currency. The key to initiating this loop is ensuring enough initial buy-in and trust in the system’s value, akin to achieving a critical mass in a coordination game.
Trust and reciprocity are fundamental components in the game theory of Community Currencies. Participants must trust that the currency will be widely accepted and retain its value over time. This trust can be modeled as a repeated game, where ongoing interactions between participants foster mutual trust and cooperation. In such a setting, businesses and consumers engage in reciprocal behavior: businesses accept the currency, expecting customers to use it, and vice versa. Successful community currencies often employ strategies to build and maintain this trust, such as transparent governance, community involvement in decision-making, and backing the currency with tangible assets or services.
Community Currencies face potential free-rider problems, where some individuals might benefit from the system without actively participating or contributing. Establishing clear rules and ensuring consistent enforcement can help maintain the currency’s integrity and stability, creating a sustainable system where all participants benefit from mutual cooperation and contribution.