The idea of money was rooted in freedom1. When societies arrived at a standard commodity that served as a unit of account, a medium of exchange and a store of value, it enhanced personal freedoms to transact – with whom to transact, in which commodities to transact, when to transact, when to consume and the choice to accumulate.
Money facilitated exchange. It made possible the division of labour, drew out the human potential to excel and enabled humans to aspire to activities beyond the mundane. This democratised choices and enhanced freedoms to pursue elements that go into the creation of culture and civilization. Money expanded markets, enabled the construction of complex supply chains1 and laid the foundations of social and economic change.
At another level, money and division of labour amplified accumulation. With accumulation and private property came inequality, power and a hierarchy which sought to consolidate order, establish authority and maintain control. Thus money, which originated in freedoms soon mutated into an instrument of control and domination – an instrument of the libido dominandi or ‘the lust to dominate’ – what St Augustine described as the compulsive obsession ‘to secure the dependence of others’ .2
The history of money reflects this tension between the contending forces of liberation and control – both deeply grounded in human nature. It also reflects the shift of power from time to time between individuals, communities, business houses and corporates, and the state.
The present consensus is that money is a natural monopoly; that money is territorial and needs to be issued, controlled and regulated by the state; and that the institutional mechanism of the central bank is the best arrangement to ensure monetary stability for a fiat system of money.
Today, money is being reimagined from the physical to the digital form. Online scrips and open wallets have widened the window of discourse to contemplate the issuance of money by private players. At a more fundamental level, alternatives like cryptocurrencies and local currencies are contesting the idea of money being the prerogative of central bank, or indeed that of the sovereign/state.
The issues that arise are whether money should be a monopoly and whether it can it be issued by multiple agents? Are cryptocurrencies money in the traditional sense and can they coexist with official money? What are the implications of the emergence of alternative currencies on the developments on society? How do ideas of money impact human freedoms? As these ideas are being contested, a look at history can help put these matters into perspective.
Origins of Money
The origins of money are a subject of debate between economists on the one hand and anthropologists and sociologists on the other. The dominant narrative in the economic argument is that money evolved ‘spontaneously’. It evolved from the human desire to find an efficient and cost effective solution to their innate “propensity to truck, barter, and exchange”.
As societies developed, they typically settled on one commodity as a medium of exchange. Such commodities also served as a measure of value and a unit of account. Cattle, salt, grain, feathers, cowries and numerous commodities served as such a commodity and numeraire. Overtime, societies gravitated to metals as the standard commodity. Metals could be manufactured to uniform purity standards; they were divisible, durable and portable. Furthermore, precious metals possessed scarcity value. When an authority certificated a piece of metal for weight and fineness, it became a coin which served as a unit of value and a medium for transactions.
This narrative of the spontaneous evolution of money is based on the presumption that individuals rationally seek to arrive at the most efficient solution. This theory espoused by economists and cogently articulated by Karl Menger3 (1892) is contested by sociologists and anthropologists. Some contend that there is little evidence that pure barter economies existed4, while others argued that primitive societies based on reciprocity, redistribution and householding had little need of money, and what spurred its development was private property and accumulation5. While some espoused the need for a centralised authority in the form of a state as the critical factor in the origins of money6, still others contend that the unit of account function is anterior to the medium of exchange function and that money evolved as, and simply is, credit (Innes, 1914)7.
Reimagination of Money
Whether money evolved as debt, or spontaneously as a medium, or as a creature of the state, it has been reimagined on multiple occasions. Each re-envisioning has progressively alienated the idea of value from the medium of money. As the idea of money moved from the concrete to the abstract, it brought in its wake changes in the economic and social organisation of society.
Money as Coin: The Real
The system of money as coins rooted in ‘metallism’ originated around the 6th century BCE when coins were issued in Lydia, India and China. The invention of coinage grounded the idea of money in the intrinsic value of the medium, i.e., that of metal. For instance, karshapanas issued by the Maurian Empire circa 3rd century BCE were silver coins weighing 32 rattis (3.4 gms). Two thousand years later, it was no different: the Indian Coinage Act of 1835 defined the rupee to be a coin weighing 180 grains (1 tola or 11.66 gms) of 11/12th fine silver. Such coins were real – they could be seen, felt, weighed, assayed (for purity) and possessed intrinsic worth around which its exchange value typically gravitated
Standard coins provided a measure of value (unit of account), a means of payment, and a store of value. These three qualities established the monetization of economy, and facilitated the division of labour, spurring trade and commerce. It impacted society and increased the options available to individuals, made the rural economy more flexible, spurred urbanisation and shifted the balance of power to provide the mercantile community a seat at the table, while also allowing accumulation, creating inequality and increased opportunity for exploitation.
Money as a Token: From the Real to the Symbolic
The idea of money as metallic coins lasted for over two thousand years – well into the 20th century. It so sedimented thought that it was difficult to imagine anything else. When Marco Polo described the system of paper money in China in the late 13th century, he did so with an exhortation to the reader to suspend her disbelief – that however incredible the story may sound, it was true: “For, tell it how I might, you never would be satisfied that I was keeping within truth and reason!” While he had little apprehensions that his travels to and from Cathay would stretch the readers’ imagination, the ‘perfect alchemy’ of the Khan’s Mint, narrated in the Chapter ‘How the Great Kaan causeth the bark of trees made into something like paper, to pass for money over all his country’, certainly did!
The Chinese experiment came to an end by the early 14th century due to over issue and resulted in economic chaos. Paper money was resurrected three hundred years later in Sweden in 1661, when the Stockholm’s Banco issued the first known notes in Europe. The idea gathered momentum around the early 18th century when private banks commenced issuing banknotes which promised to pay the bearer the sum of money the note represented.
Early banknotes were convertible into the current coins on demand, they were convenient to use and circulated amongst the public as money. Money thus came to be reimagined as a token representing the value of the underlying coin – a signifier which represented the signified –– taking the idea of money from the real coin to the symbolic token.
Banknotes issued by private banks disrupted the monopoly of the sovereign to issue the money in the form of coins. It shifted power from the state to private players. Banks only held a proportion (about 30 percent) of the value of issued notes as coins. This system of a fraction reserves allowed them to create money – virtually out of thin air, by issuing claims on themselves. This vested banks with the power to access real resources almost free of cost (similar to current accounts of today) and provided elasticity to the supply of money. (Indeed, in the late 18th century, when the loot and plunder of the East India Company had drained Bengal of its wealth resulting in an acute liquidity problem and a scarcity of coin, the economist and philosopher James Steuart suggested that money be created through the issuance of paper money by banks!sup>8)
The innovation of paper money brought with it privilege, profit and power. It impacted society. Being based on credit, it allowed leverage, liberated the forces of entrepreneurship, allowed for scale and industrialisation, and tilted the balance of power from the landed nobility to the entrepreneurial capitalist, thus redefining social hierarchies. The system of debt and leverage, while liberating, also greatly exacerbated inequalities leading to immiseration and poverty witnessed in the Industrial revolution in Britain.
The power to issue paper money gave banks access to interest-free money; moreover, the difference between the cost of issuing paper tokens and their face value was substantial. These constituted a source of seigniorage income. It was not long before Governments and their agents such as central banks sought to take over this function and establish a monopoly of note issue, on grounds that money was a public good and a natural monopoly; that seigniorage income was rightly the prerogative of the state; and that government authority would provide stability to note issue. Needless to say, these arguments have their votaries and detractors.
In India, the Paper Currency Act of 1861 brought to an end India’s free banking era (1770-1861), during which banks were free to issue notes that circulated as money, and conferred the monopoly of note issue with government of India. By the early 20th century most countries in the world had a system where paper money was issued by Governments and increasingly by the central banks9. While these developments withdrew the power of private banks to issue money in favour of a public monopoly, the principles of note issue remained rooted in convertibility.
Symbolic representative money such as banknotes was a physical derivative – it derived its value from the coin it represented. It liberated the idea of money from its physical form but not the idea of value which remained rooted in the intrinsic value of the metallic coin.
Money as Fiat: From the Symbolic to the Imaginary
A third reimagination of money came with the issuance of fiat money. No longer were the notes issued as convertible tokens; instead, they assumed value by government fiat (decree). The notes, as if by magic, became money because the Government deemed them to be money and because people accepted the notes as such. The term fiat meant that the money was good enough to defray debt and taxes. It was the interplay between authority, its credibility and social acceptance that invested fiat money with its value.
Britain experimented with fiat money for a brief while between 1797 and 1821 when convertibility of the notes of the Bank of England was suspended. The move outraged society. Imagining money as a unit of pure value being backed by nothing stretched the limits of imagination. The idea found little acceptance apart from immediate pragmatism and the compulsions of war. It was viewed with suspicion and its proponents deemed to be “that arch class of quacks, who call themselves political economists”. Despite the outrage, the move to fiat money made no difference to its day-to-day functionality, though it did in the longer run spark the panic of 1825. This was deemed to be the first policy created economic crisis whose knock on effects were felt across the world including India. Unexpectedly, inconvertible money found support with some romantic poets who ‘privileged the imagination over canonical models’. To the romantics what was important was the idea of money and not the medium, and so, they pledged their troth squarely in favour of “the idea” – and in the view earlier propounded by Bishop George Berkley that money is an abstract concept, not necessarily grounded in concrete metal.
This period sparked heated debates around the idea of money where the views of ‘practical men’ prevailed. As a result money was once again anchored in the real metal. It took another 150 years for fiat money to come into its own. President Nixon’s announcement on August 15, 1971 suspending the convertibility of the dollar into gold under the Bretton Woods System finally brought down the curtains on money’s last link with metallism. Since then all money has essentially been fiat money.
Fiat money liberated the idea of money from the medium, making it an abstract concept. Policy makers enjoyed the discretion to calibrate the quantity of money necessary to meet the legitimate needs of fostering growth while maintaining stability, i.e., keeping inflation or deflation within acceptable limits. The value of money and its stability under a fiat system thus came to be underpinned by the credibility of the institutional arrangements to manage the economy.
Fiat money by its very nature is based on authority. The discretionary component on which fiat money rests has implications for shifting the balance of power and advantage in favour of the sovereign and of the constituencies it favours. While deposits of private banks also constitute a component of money, the total quantum of money can be calibrated by the central bank through the direct and indirect tools available to them. The institutional arrangement of central banks ‘free from political pressure’ was seen as a system where technocrats could check this shift of power to the state. 10 Events of the global financial crisis of 2008 where monetary policy was used to bail out banks suggest that such discretionary power was brought to work in favour of corporate interests rather than the common person. Fiat money thus has the potential to skew the balance of power in favour of any dominant class or constituency the state may decide to favour at a point of time.
From the Concrete to the Abstract
The ideas of Bishop George Berkley, the Bank of England’s suspension of convertibility of its notes between 1794 and 1821 and the defence of romantic poets such as Samuel Coleridge had expanded the windows of discourse to accept the unthinkable – that money could very well be a measure of abstract value.
While representative paper money had mutated the idea of money from the real to the symbolic, fiat money metamorphosed the idea squarely into the realm of the imaginary. Money thus transited from the concrete to the abstract – from the real coin to a symbolic token which derived its value from the coin it represented and thence to an imaginary concept – a unit of account that exists in the books of banks and the minds of men and women and derives its value from government authority and social acceptance.
The Quest for Alternatives: Money as it Should Be
This underlying philosophy anchoring money in abstract value inspired a host of initiatives to reimagine money, not the way it is but as it should be11. It inspired 19th century idealists such as Josiah Warren and Robert Owens to take the idea of money even further and issue notes based on labour time. Drawing upon the Labour Theory of Value, they felt that labour time was the true source as well as the just and equitable way of measuring value.
The note issues and monetary experiments of idealists in the early 19th century as well as the ideas of Silvio Gesell, a German-Argentinian entrepreneur ,,inspired the issuance of local currencies at Gosaba in Bengal (1920s) and Worgl in Austria (1932) and WIR in Switzerland (1934) amongst others with WIR enjoying a continuing existence today in a digital format!.12 More recently, in the 20th and 21st centuries, these have spawned a host of local community currencies and time bank initiatives whose purposes reflect the disparate views of its issuers.13
At one end of the spectrum are those that seek alternative ways of life based on community and on reciprocity, seeking the good, the gentle and the humane. These initiatives find expression in the form of local currencies. Such currencies are denominated either in the form of hours, such as Ithaca hours established in New York in 1991, or in the national currency such as the Brixton pound launched in 2008-09, or an abstract unit such as the Bangla Pesa (2013) issued in the poorer migrant community in Kenya.
These currencies, though issued nominally outside the purview of the state and the banking system, complement the national currencies. Their purposes are typically to mitigate the harsher aspects of capitalism by fostering the spirit of community, volunteering and self-help. They thus privilege an informal system of ‘generalised exchange’ – where what you get does not depend necessarily on what you provide – to a transactional system of ‘specific exchange’ embodied in official money. Money is thus seen as an instrument to incorporate the more desirable elements of primitive society into modernity.
At the other end of the spectrum are another set of forces. The late 20th century ushered in the digital transformation. These transformations do not just relate to replacing the physical medium such as paper notes with a digital medium such as electronic transfers, but go much further. For one, the 21st century has seen the recrudescence of money issued by private entities in the form of prepaid instruments, online scrips and open wallets. However, at an even more fundamental level there are a host of forces that seek an alternative space.
The issuance of bitcoins in 2009 heralded the era of cryptocurrencies.14 They too are anchored in the idea that money can be an abstract unit of value. Such currencies seek to substitute confidence anchored in the authority of the state with confidence arising from rule based issuance of money which is secured by cryptography to ensure that the money will sustain and retain value. This is in most cases ensured by predefining the number of units which will be issued into the programme.
The origins of cryptocurrencies are rooted in rugged individualism. Influenced by the cyberpunk and cypherpunk movements, these communities have a mistrust of governments, mega-corporations and authority and see cryptocurrencies as means in their quest for freedom, autonomy, privacy.
Cryptocurrencies such as bitcoins, Etherium, Litecoin, amongst others, are digital tokens (assets) which are used as a means of peer-to-peer payment. They are not based on any underlying asset and possess no intrinsic value and have no authority backing them. They are merely representations of abstract value and derive their value from confidence reposed in them to serve as a means of transaction and a store of value. They can be converted into the national currency through exchanges.15
The value of most cryptos is underpinned by the expectation that their number will be limited and will follow preannounced rules grounded in mathematical codes and encryption. Cryptocurrencies seek to replace the confidence provided by the institutional arrangement of a central bank by confidence in cryptographic security and that programmed ‘algorithmic scarcity’ will ensure that cryptos are not over-issued. ‘
The points of departure of cryptocurrencies stem from the nature of the assets (digital tokens), the manner in which they are created and issued (through breaking codes), the limits on the units issued (through predetermined algorithmic scarcity), the manner in which they are transferred and recorded (through the distributed ledger mechanism which is final, irreversible) and the governance structure (self-evolving and decentralised). The absence of the government and banking infrastructure in the payments and settlements mechanisms ensures that users have control over their funds without state control. This time money is imagined as memory – an immutable record which can be transferred from person to person.
The open-source peer-to-peer software and the decentralised network of user accounts (wallets) on sites across the world where units are stored, distribute technical power. By design, they are not governed by any one central authority, but rather by a network of participating individuals.16 The complex relationships in which stakeholders are entwined doesn’t result necessarily in democratic decision making- rather has the potential to shift agency and power to a small techno-elite.
Examining crypto currencies on the criteria of ‘moneyness’ is contentious – theoretically, they serve as a unit of account (albeit fluctuating against national currencies); they serve as a means of payment (albeit more inefficiently as compared to centralised systems); and can be a store of value (albeit with volatility and subject to transactional risk and the risk of being proscribed by governments). Cryptocurrencies, or for that matter any generic digital currencies, add another dimension to money –the element of data information and the audit chain. And, therein lies the rub!
Motivations, Means and Consequences
The motivations for seeking alternatives are disparate beliefs and desires. At the core of the endeavours for both local currencies as well as crypto currencies is the desire to be free – a romantic desire to be liberated. Alternative currencies could be seen as an act of constructive rebellion against the condition of life – ‘acts of will’,17 seeking liberation from what is seen by some as the domination of large corporations, from the intimidating arms of the state, from the subtly coercive dictates of the market, from ‘the tyranny of opinion’ or for that matter from the imposed conformity of society, culture and institutions. In short, these are grounded in a search for diversity – cherishing ‘individuality as one of the elements of well-being’18 and seeking liberation from the libido dominandi of others.
Local currencies seek to create geographical enclaves where the relations between the state, large corporations, the community and the individual are gently fine-tuned through providing a complementary means of exchange. Such money allows individuals to transact with each other on principles that privilege reciprocity and community over those of the market or conventional wisdom. The complementary means of exchange provide the freedom to pursue an alternative modus vivendi alongside the official structures – a soft alternative grounded in a constrained optimisation solution.
On the other hand, the cryptocurrency movement championed by rugged individualists seek to radically restructure the relationship between individuals, corporations and the state. As early as 1988, Timothy May’s The Crypto Anarchist Manifesto suggested that developments in cryptography would ‘alter completely the nature of government regulation, the ability to tax and control economic interactions, the ability to keep information secret, and will even alter the nature of trust and reputation’.19
Thirty years down the line, in an age increasingly characterised by a surveillance mindset, this strand of thought prompted the crypto-currency movement. Bruce Fenton, a director of the Bitcoin Foundation described the movement a bit exuberantly as “… the decentralised revolution in individual freedom and financial sovereignty leading to a restructuring of global economics and power, and a shift in favour of the people, rights, peace and liberty the likes of which the world has never imagined.”20
Today, cryptocurrencies are no longer the domain of libertarian geeks and have found acceptance as an asset class amongst fund managers. The investor profile of cryptocurrency holders21 suggests that today the motives of participants are driven more by the returns such currencies can generate and less by romantic notions or acts of rebellion seeking the beautiful.
The attraction of cryptocurrencies is that they allow for secure peer to peer payments without an intermediary such as banks; they do not need conversions across borders, nor permissions from authorities to effect the transaction; and provide for anonymity and hence freedom. They add to diversity, challenge conventions and allow for innovation.
The downside of cryptos is that the transactions are inefficient in time and costs and their mining is energy intensive. Though designed as a currency, they today find expression as speculative assets. The decentralised design provides no recourse in case of loss or for transactions which go wrong. Their price volatility hinders their adoption as a measure of value and the principles of their issuance are rigid without any discretion to fine tune them to the requirements of the real economy (a strength as well as weakness). Their ability to bypass borders and escape the surveillance mechanisms of the state machinery makes them the target of regulatory concern in matters of money laundering and crime. The rubric of the US Security and Exchange Commission’s ‘Statement on Potentially Unlawful Online Platforms for Trading Digital Assets’ cogently describes the regulatory outlook towards cryptocurrencies22 and their future itself depends on regulatory forbearance.
These developments, where multiple private entities issue money in the form of local currencies or cryptocurrencies, pose challenges to the generally accepted notion of money as central bank liability, to monetary sovereignty, to the role of central banks and their ability to influence monetary policy (inject or withdraw liquidity to ride business cycles or a crisis); to the financial intermediation model and for the potential risk unregulated private networks (including their vulnerability to hacks) pose to financial stability.
Central Banks and the New Money
With multiple players claiming their turf, central banks are responding to this challenge. They are seeking to issue their own digital currencies – generically termed Central Bank Digital Currencies or CBDCs. Defined as ‘a central bank liability, denominated in an existing unit of
account, which serves both as a medium of exchange and a store of value’,23 these currencies would be denominated in the national currency, their issuance would be controlled by the central bank and they would have the status of legal tender, i.e., good to discharge debt and taxes.
CBDCs essentially seek to capture the convenience of the digital medium while retaining the value of physical currency and the backing of state authority. They keep the principles of issue largely unaltered (as a central bank liability) and provide a sense of continuity, offering the institutional credibility central banks have built over the years. They provide a free, safe and instant means of payment. Their programmable nature allows them to amplify the instruments of monetary policy to allow negative nominal interest rates or, for that matter, provide specific purpose money to direct consumption to enhance welfare, thus serving as a direct instrument of monetary transmission.
China has already issued its own digital yuan and others are looking to follow. These currencies could follow two variants – they could follow the centralised Chinese model where individuals directly hold an account with the central bank, using an interface such as an app or digital wallet. Alternatively, CBDCs could take the form of digital tokens which could be transferred peer to peer between wallets without going through the account of an intermediary such as a bank or the central bank. Such tokens would be based on blockchains and the distributed ledger and could allow for greater anonymity.
CBDCs are seen as the logical continuum of the ‘War on Cash’ which found its expression in the Better than Cash Alliance established in 2012 under the auspices of the United Nations and supported by banks, fintech companies, governments and some international organisations. They are seen as ‘safe, trusted and widely accessible digital means of payment’24, are expected to reduce the cost of supplying money, prevent illegal activities and provide efficient solutions for financial inclusion.
CBDC, however, give rise to two possible sets of concerns. For one, CBDCs, could compete with bank deposits, spur disintermediation and raise the cost of funds to banks. In a crisis CBDCs could amplify a run to safety away from bank deposits generating instability. The direct involvement of the central bank in normal transactions and a programmable currency could increase the window for state interference. Specific purpose programmable money could allow embedding political objectives in monetary decisions, curtailing the freedoms currently implicit in general purpose currencies. Official digital currencies which is both programmable and traceable bring with them the concern of privacy and surveillance on an unprecedented scale. The loss of an individual’s control over her own personal information diminishes the individual’s agency and the loss of anonymity transmutes into a loss of liberty.
Money is meaningless in isolation. It is a social construct which mediates individuals and their socio-economic ecosystem. It relates to human choice and the personal freedom to transact. The risks of centrally controlled money along with a system of social credits controlled by artificial intelligence shifts power dramatically away from individuals to the state.
The reimagining of money has the potential not only to disrupt finance and banking but life and social interactions on a scale never seen before. The data component in any digital money has the potential to transmute money into an instrument of control over every aspect of human life, thus transfixing our lives into a “financial panopticon”.
Governments and policy makers typically highlight the efficiency gains that changes they propose will bring. The job of civil society is to highlight the possible consequences of these changes and whether the risks are acceptable. In such a scenario, the question is whether the case for the coexistence of multiple forms of money – competing complementary currencies circulating in the same time and space – could well rest on mitigating the risks of a likely concentration of power in the state – and on how they could be positioned to balance this shift of power and indeed, as some argue, improve resilience and foster sustainability?25
The future of money is thus intimately intertwined with the agency of the holder and consequently human freedoms and human dignity. The contest is essentially one between those such as governments and corporates who seek efficiency and those such as people who cherish freedoms, individuality and diversity – the contest is essentially about whether society will be comfortable to see money seen as an instrument of liberation or control.
1 Simmel, Georg. 2004 [1900]. The Philosophy of Money (3rd ed.), edited by D. Frisby. London: Routledge
2 Brown Peter (1965) “Saint Augustine” in Beryl Smalley (ed.) Trends in Medieval Political Thought. Oxford: Blackwell & Mott, 1965
3 Menger, K. (1892). On the Origin of Money. The Economic Journal, 2(6), 239-255. doi:10.2307/2956146
4 Humphrey, C. (1985). Barter and Economic Disintegration. Man, 20(1), new series, 48-72. doi:10.2307/2802221
5 Heinsohn, Gunnar, and Otto Steiger.1989. “The Veil of Barter: The Solution to the ‘Task of Obtaining Representations of an Economy in which Money is Essential’.” Inflation and Income Distribution in Capitalist. Crisis: Essays in Memory of Sidnev Weintraub, edited by J.A. Kregel. Washington Square, New York: New York University Press
6 Knapp, Georg F, (1924). The State Theory of Money. London: Macmillan & Company Limited.
7 Innes, Mitchell A. (1914). ‘The Credit Theory of Money’ The Banking Law Journal, Vol. 31 (1914), Dec./Jan., Pages 151-16 retrieved from https://modernmoneynetwork.org/sites/default/files/biblio/the_credit_theory_of_money.pdf
8 . Steuart James (1773) The Principles of Money Applied to the Present State of the Coin of Bengal
9 The International Financial Conference convened by the new League of Nations and held in Brussels from 24 September to 8 October 1920 advocated the establishment of central banks which were free from political pressure and managed on ‘principles of prudent finance’. (https://biblio-archive.unog.ch/Dateien/CouncilMSD/C-10-M-7-1923-II_EN.pdf retrieved on 30 April, 2021)
10 The advocacy of central banks and central bank cooperation in the recommendations of the International Financial Conference (Brussels Conference) in 1920 was intended to substitute the amount of gold held as reserves by high quality bills foreign exchange bills or currency thus augmenting international liquidity. To guard against over-issue in the transition from physical gold to promissory notes in the form of foreign bills, it was felt that the institutional mechanism of an independent central bank which could resist government pressure would help ensure monetary stability. This monetary policy would replace the checks and balances earlier provided by gold while providing flexibility and an elastic currency. (https://biblio-archive.unog.ch/Dateien/CouncilMSD/C-10-M-7-1923-II_EN.pdf retrieved on 30 April, 2021)
11 Gesell Silvio (1918) The Natural Economic Order retrieved from https://www.community-exchange.org/docs/Gesell/en/neo/ on April 30, 2021
12 The WIR has been designated the currency code CHW under the ISO 4217 standard.
13 Some local currencies seek draw out the latent potential of the region by creating community infrastructure and services such as the Gosaba notes. Others augment liquidity in times of adversity and provide interest free or low income credit to informal businesses. The Worgl notes and WIR were examples which successfully helped address unemployment and spurred the local economy. Others such as the Stonehouse Time Bank, UK seek to foster social and cultural inclusion. Community inclusion currencies make available services unaffordable in the market system to those with low incomes and some, such as Sarafu in Kenya empower communities to enhance livelihoods based on local goods and regional markets. These currencies reflect the objects and purposes of the issuer – most grounded in the idea of community and empowerment
14 There were a number of initiatives prior to Bitcoins notably those by David Chaum’s DigiCash which pioneered electronic cash payment over computer networks in 1994. DigiCash, however, filed for bankruptcy in 1998 just as electronic payments were gathering momentum. E-gold established in 1996 was the first to gain a critical user base and merchant adoption. Its operations were suspended around 2007 and subsequently shut down through regulatory intervention.
15 These cryptocurrencies are designed as a mathematical code— information embedded in a blockchain, which is a data structure holding transactional records. These data structures or information ledgers are secured through encryption. All data stored on a blockchain are transparent (have a common history available for all network participants) and are distributed (they are public and decentralized). The records can be transferred by creating a block containing information such as a digital signature, timestamp and the receiver’s public key. This information is broadcast through the network. Once its authenticity is confirmed by a given number of other ledger keepers, it is added to a unified ledger, copies of which are distributed and updated across the peer-to-peer network. Thus every transaction becomes an immutable memory block visible to all participants of the network.
16 The stake holders in the system are the users who transact, the miners who mine new coins and verify transactions, the developers who create and update the system and external stakeholders such as exchanges and non-profit foundations. While the structure of prewritten rules embedded in the codes seeks to minimise non-technical governance, decisions such as updating the code have to be taken by participating members.
17 ‘It is not an order which arises spontaneously as a natural product. Such an order does not, indeed, exist, for the order which we impose upon ourselves is always an act, an act consciously willed.’ Silvio Gesell (1918) The Natural Economic Order retrieved from https://www.community-exchange.org/docs/Gesell/en/neo/preface.htm
18 Mill, John Stuart (1859) On Liberty retrieved from https://eet.pixel-online.org/files/etranslation/original/Mill,%20On%20Liberty.pdf on April 30, 2021.
19 Retrieved form https://nakamotoinstitute.org/crypto-anarchist-manifesto/ on April 20, 2021
20 Tweet of Jan 5, 2018 retrieved from https://twitter.com/brucefenton/status/949062861493596161?lang=en on April 30, 2021.
21 Lammer, Dominique Marcel; Hanspal, Tobin; Hackethal, Andreas (2020) ‘Who are the Bitcoin investors? Evidence from indirect cryptocurrency investments’, SAFEWorking Paper, No. 277, Leibniz Institute for Financial Research SAFE, Frankfurt a. M.,http://dx.doi.org/10.2139/ssrn.3501549
23 Committee on Payments and Market Infrastructures, Markets Committee. (2018) Central bank digital currencies, Bank for International Settlements, March 2018
24 BIS Annual Economic Report 2020, Bank for International Settlements, Basle, p.67
25 Douthwaite, Richard (1999), The Ecology of Money, Schumacher Briefing Nº 4, Green Books, UK see also Gómez Georgina M. (ed) (2020) Monetary Plurality in Local, Regional and Global Economies Routledge
