Community Currency Goes Digital as the World Ditches Fiat
While most of us are content to pay attention to the likes of Bitcoin, Ripple, and Ethereum, something else is stirring- and in some cases fermenting- underneath the veneer of cryptocurrencies that are in the public eye. Sure, if you want to trade in any one of these modern giants, you can easily hop onto Bitvavo, figure out how to navigate the market, set up a secure wallet, and really dig into the nitty-gritty of day trading.
However, if you’re like one of the millions worldwide that are living in a world where fiat is becoming a less viable option, and the big hitters in crypto aren’t for you: there may be a more local, and much more attractive, option.
Rise of Digital Currencies
Perhaps hastened by the novel coronavirus, and perhaps just the result of the natural progression of technology, the world at large is moving farther and farther away from fiat systems. Whether this is because of the relative ease at which these filthy conduits of disease-riddled banknotes could reasonably extend our viral prisons, or whether digital currency is just more convenient and secure, is still up for debate.
What we do know for certain, is that in the past ten years slowly, and the past year rather quickly, people have been moving towards more total adoption of digital currencies. In the same way that we began to see traveler’s checks as a more secure way to carry our funds with us, debit cards have become vogue. Beyond that, the banks that back the plastic have also become more nebulous. With internet-based banking apps becoming a better option for those that trade beyond the borders of their own countries.
Cash, it seems, is no longer king, as we continue the steady march into digital currencies- whether they be crypto, regional, or even those supplied by central banks.
Community Currencies & CBDC’s
2020 brought us many things; wildfires, coronavirus, new presidents, new planets, new unions, new civil wars, old civil wars- and CBDCs, or Central Bank Digital Currencies. While that’s certainly not all the year brought to us, for the sake of brevity we’re going to gloss over everything but the CBDC’s. Which are arguably one of the biggest things to happen to both crypto and digital currencies in 2020. Central Bank Digital Currencies are essentially centralized cryptocurrencies that are created by central banking firms.
In fact, the race to create CBDCs got so hot that major global financial institution Deutsche Bank was reported as saying “Worldwide lockdowns and social distancing measures have only increased the use of cards over cash. To respond, companies and policymakers must design alternatives to credit cards and remove middleman fees… For now, the priority must be on regional digital payment systems. In the long term, central bank digital currencies will replace cash.”
Touting not only the need for CBDC minded infrastructure- but also the importance of regional currencies. Of which, many actually already exist. Multiple municipalities across the world- throughout Africa, Great Britain, Europe, North America, and others- already have community currency systems designed to pump money back into local economies- and crypto is proving to be a better platform. Community currency has been shown to be useful in a number of different use case scenarios and countries like Iceland, Poland, Greece, and Spain have all instituted different types of community-based cryptocurrencies with varying degrees of success.
Why Local Currencies, Why Now?
Perhaps the push for these community cryptos isn’t just because we are moving away from fiat at an alarming rate- but because in a world of rampant globalization, it can definitely help to incentivize the little guy. And with crypto, it’s not only easier but also in most cases- much cheaper. Making it simple for small local economies to go digital. More over- almost anything can be tokenized as a form of digital currency. Recently, Ethereum – one of the world’s most recognizable cryptocurrencies– came out with NFTs (Non-Fungible Tokens). These NFTs essentially were used to tokenize collectibles- like priceless works of art and highly sought-after sports trading cards.
Meaning that for local communities- the sky’s the limit. Where realistically, local economies could run on a platform that used both barter and trade as well as currency to fund community currency systems. Keeping their economy more stable and insular during times of economic or political instability. While using these systems in conjunction with more global forms of payment. Where we will go from here may not be clear, but where we can go- without fiat- is near infinite.