Sheng Songcheng says bitcoin does not have attributes needed of a currency that can meet modern economic development needs….
He also said that Chinese monetary authorities should study issuing a central bank virtual currency that it can regulate and run properly.Asia Times
In times of severe recession, cash can be hard to come by. To somewhat maintain their standard of living and avoid being further driven into poverty, some communities developed their own alternative currencies. These community currencies are parallel systems of exchange. They are growing in popularity in countries such as Greece, which are currently battling the failures of modern capitalism. This system, which is growing in popularity in Europe, could also be implemented in parts of the United States. The Rust Best states could benefit from the implementation of similar initiatives. We take a quick look at how….The Minskys
Often times, people’s economic ingenuity—outside and opposed to run-of-the-mill economic and political thought—is truly impressive.
Such is the case in a far corner of southern Italy, where “transactions in fake currency are not only accepted by local shopkeepers, they are positively encouraged.”This is both a complementary and complimentary currency. It complements the national currency and it is free (complimentary), distributed as part of a local voucher system.
Q1. What are Solar Dollars (SD)?
A1. Solar Dollars are currency vouchers that are issued into circulation by a local Electric Power Company in some limited proportion to the annual amount of energy from renewable sources that the company is selling to its customers.
Q2. How are Solar Dollars issued into circulation?
A2. Solar Dollars are spent into circulation by the utility as payment to suppliers and employees who are willing to accept them as partial payment for the goods and services they have rendered to the company.
Q3. Why would suppliers and employees want to accept SD instead of taking all that is owed to them in US dollars. What makes Solar Dollars valuable?
A3. SD are valuable because the company stands ready, willing, and able at all times to accept SD back as payment for the electric services it provides, or for any other payment owed to the company. SDs represent credit obligations of the issuing company that are solidly backed by the energy that it produces and/or sells.….
Technical note
The essence of a currency, its form of manifestation, and methods of transmittal are three separate things. This point must be thoroughly understood by anyone who contemplates the issuance of a currency.
- The essence of a currency is credit, it is the issuer’s i.o.u. or promise to reciprocate, i.e. to provide real value and accept his currency back as payment for whatever products or services he sells.
- A currency can manifest as a paper note, a number in a ledger (written or computerized), a smart card balance, etc.
- It can be transmitted hand to hand or electronically.
Of course, the same concept that has been articulated above for SD issuance could be applied to monetizing ANY locally produced goods or services, like locally grown organic farm produce, that we wish to promote and are in general demand.Beyond Money
“The crux of the argument of the book is that local currencies have far greater velocity or turnover than national currencies.”P2P Foundation
Russian authorities have issued warnings against using Bitcoin, saying the virtual currency could be used for money laundering or financing terrorism and that treating it as a parallel currency is illegal.
“Systems for anonymous payments and cyber currencies that have gained considerable circulation – including the most well-known, Bitcoin – are money substitutes and cannot be used by individuals or legal entities,” the Russian Prosecutor General’s Office said on February6.
It added that Russian law stipulates that the rouble is the sole official currency and that introducing any other monetary units or substitutes was illegal.
Hard to know where this is all going to lead. But one thing is clear– we have added a very interesting new chapter in the history of money.Where it is going is toward a more streamlined payments system that is more efficient by reducing transaction costs. No brainer.
Two points I want to jot down before I forget them.Dizzynomics
1) someone made a really good point today that society seems to be transferring trust away from banks and over to tech firms. This by definition suggests tech firms are as vulnerable to “trust” runs as banks.
2) a trust run should be particularly worrisome to a tech firm which draws power from its stock valuation more than its provable earnings.
Which made me think about acquisition currencies.
The cryptocurrencies are thus a more sophisticated version of stocks of companies trading in markets with no income and no office.The Case For Concerted Action
Meet Altcoins: The wannabe alternative currencies riding bitcoin’s coattails (via Pando Daily)In my last post, I argued that the fair price of a bitcoin as a monetary instrument is zero BTC; a bitcoin contains no promise in terms of income, in terms of convertibility, in terms of maturity, or any other. As a commodity, I have no idea what its fair price is. BOA says it is $1300. I will let those who find utility in the bitcoin payment system and speculators decide how much they are willing to pay in USD for a number credited on their screen in BTC. All I can tell you is: “money does not grow on trees.” Money is not a natural occurrence, it is a man-made financial devise. It looks like the bitcoin creator’s views on money were shaped by the old and erroneous idea that “gold is money.” Gold was at best a collateral embedded in a monetary instrument (gold coin), the metal itself was never money. In today’s blog, I will focus on three other issues with the bitcoin system that prevent it to work well as a monetary system. While I explain what ought to happen to make the bitcoins work properly as a monetary instrument, I am not sure it can be done.New Economic Perspectives
...This needs the vaccination of Chartalism: only a too-big-to-fail organization that wants its nominal debts to have value as a byproduct of accomplishing other purposes–like governing–can durably levitate the value of its fiat money above zeroWCEG — Washington Center for Equitable Growth
If you want to know what money is, don’t ask a banker. Take a leap of faith and start your own currencyAeon
Izabella Kaminska @izakaminskaThis is a very good article. Brett Scott has thought money through after experimenting with its various forms. Many keen insights.
Nice and very accessible piece by @Suitpossum on the nature of our modern monetary universe...
Chris Cook
Excellent article, Brett.
There is 'Value' which is subjective, and indefinable - or rather definable only in relative terms and priced by reference to a standard unit of measure of value or 'value standard'.
Then there is utility, which is objective, being the use value over time of three sources of value: location (3D space); energy (material/static and immaterial/dynamic) and intellectual (subjective 'knowhow' and objective 'knowledge').
Note that you can no more run out of a standard unit of measure of value (also known as a unit of account, or numeraire) than you can run out of standard units of measure for weight (kilogrammes) or length (metres) and so on.
The problem is that the units of measure we use are 'deficit-based' being the units of currency which are created ex nihilo by credit intermediaries (mainly private banks, but the alternative is Treasuries and Central Banks).
In my view the only absolute unit is a unit of energy, and we should therefore use such a unit to 'keep score' of transactions. The quantum of that unit should be such that people can relate to it - you don't measure a room in light years or angstrom units for instance.
So some propose the energy equivalent of 10 Kilo Watt Hours of electricity and others the energy released from burning a litre of n-octane at 20 degrees C, and still others 1 MMbtu of heat.
Note that such an 'energy standard' is distinct from units of energy currency, such as a credit returnable in payment for 10 KwH or a unit returnable in payment for 1 litre of gasoline; or a unit returnable in payment for 1MMbtu of heat.
What's the difference? Simply put, relative location. Energy must be moved from the location of the currency issuer to the location of the currency user.
I believe that energy currency will be the global reserve currency of the future, and that we shall see energy currencies exchanged for other currencies by reference to an energy standard. Indeed we shall see existing currencies becoming fixed against an energy standard in the same way that the Euro adopters fixed their currencies against the new (abstract) €.
Most money in existence came about through mortgage loans by banks. I think of it as 'deficit-based' (because created and issued by banks) but land-backed, by a claim over the capitalised future use value of location/land.
The point here is that location, and the energy and other value - intellectual value - embedded in the location, has utility, or use value over time.
So that a unit returnable in payment for (say) £1.00's worth of rental value is valuable in exchange, and most people would accept it because they would know they could return it against use of land/location.
Not a new idea: John Law proposed a land-backed (centrally issued) currency for Scotland in 1705.
I am therefore engaged on community land projects, for instance a Market Hall in Perth, Scotland, where one of the outcomes of the investment in (say) 20 years' worth of rentals sold at a discount will also be the creation of a Perth land-based currency returnable in payment for rentals, and hence acceptable by market retailers. The above currencies are 'asset based' being based upon the (subjectively priced) objective utility of location and energy.
As for people-based credit, there is in fact no need for a currency at all, but there is a need for a mutual credit clearing system incorporating - within a mutual guarantee agreement - a unit of account, a guarantee management system, and a 'chain' settlement system A>B>C>D>E>A in addition to settlement of open people-based credit with asset-based currency described above.
In reality we don't need the existing system at all. What is needed is an accounting system; a messaging system; an energy unit of account to 'keep score'; and suitable protocols or 'social contracts' bringing these elements together with the people who use them. http://www.slideshare.net/Chri... http://www.slideshare.net/Chri...
So in a nutshell, we will IMHO see bottom up local land-based currency and energy currencies acceptable across locations and borders, with people-based credit serving increasingly mobile populations on mobile platforms such as http://mobino.com/mobino-for-e... (for a general platform) or http://evr.gr/ (for a local platform)
Brett Scott Fascinating Chris - I need some more time to look over all these ideas, but I'm very intrigued. Will let you know once I've looked further at itHowever, it doesn't appear that Scott groks Chartalism.
Javi Javierez Alipro Money is not based in confidence. You need money to pay you taxes, thats an obligation that drives the demand for that money. Since 5000 yers ago we use money (currency is only 2700 years old) based in debt. In our modern society the new money is created by banks or by the goverment, etc...... You dont mention all this staff. ( i apoligize for my english)
Brett Scott Well, as my example of Zimbabwe (and any other case of hyperinflation) suggests, governments cannot order people to believe in money - legal requirement to use it of course increases the incentive to believe in it though. This argument about money being given value by its requirement in taxes is often given, but it's worth asking yourself why the government wants taxes - the government wants taxes so that it can then go out and buy things from society, in which case the government relies of society for its tax money to be worth anything, just as much as society relies on government. I understand the point about the legal obligation giving you an incentive to use money, but it doesn't fully explain why we value money
On the point of money creation, I do mention that central banks create base money which is then amplified by private banks via the fractional reserve
Bitcoin, the alternative digital currency that dates back to 2008, has caught on around the world, from Argentina to sub-Saharan Africa. Completely free of any privately-held financial institution or government central bank, users with access to the bitcoin exchange the currency via an encrypted peer-to-peer software system over the web or by mobile telephony. The system has its hitches. First, the currency’s exchange rate was volatile for much of the year. Bitcoin’s instability, therefore, has attracted its fair share of critics; others have slammed the system as a means to fund illegal drugs and gambling (true of any currency, of course). Nevertheless, more businesses, merchants and individuals embrace the currency. Some pubs in Britain accept bitcoins; Argentines weary of inflation and the country’s dodgy banking system are warming up to the currency, too. In Africa, one in three Kenyans and one in nine Tanzanians have a “bitcoin wallet.”
Now Safaricom’s M-Pesa, operators of a mobile phone payment platform in Kenya that has transformed the country’s financial system, announced it will integrate a bitcoin service within its system. So what does this mean for the “unbanked” population in Africa, South Asia and around the world?Triple Pundit
Licensing is required for money transmissions in-state; Bitcoin denies such activity.ArsTecnica
