Building a world of
resilient communities.



The Future of Money

Money is a fascinating topic. It can be exchanged for goods and services. It carries cultural and historical significance — for example, the Confederate currency of the U.S. Civil War era. Money can be a symbol of political dominance, as is the U.S. dollar worldwide. Money is often tied to feelings of national and political identity: witness the U.K.'s reluctance to adopt the Euro. Money is even collected for its intrinsic worth. How many of us have a jar of coins from our travels? But the role and nature of money is undergoing profound changes as a result of the confluence of information technologies, virtual communities, and mobile access.

The Root of All Money

Any currency that can maintain its value among its users can function. Historically, many alternative, or local, currencies have worked and many still do. Ithaca Hours, for example, is a local alternative currency that is still in use in the U.S. today ( and As long as buyers will use a currency and sellers will accept it, you have an exchange potential, and thus a market. Furthermore, once you remove the connection between a currency and a commodity, such as gold or pounds sterling, then the currency is based on fiat, or faith. As long as the backer of the currency has fiat, which even governments occasionally don’t, then the currency can hold its value. Because of the move to fiat though, today a Bill Gates "dollar" would work just as well as U.S. dollars. There is no inherent reason for fiat to be held by a single individual, however. Fiat could just as easily be distributed across a community, so for example we could have Linux "dollars."

Kropotkin wrote about "mutual aid societies" and now we see TeleCommunities like Solari, social networks of people helping each other, trusting each other, empowered by the tools of the digital revolution. Having a shared currency is another way that these communities will be able to strengthen their ties and keep their community interacting. We already know from observing small village "banks" in developing countries that members of communities with strong social ties have higher incentives to pay back loans, for instance.

The most widely used alternative currency model is called LETS (Local Economy Trading Schemes). The LETS system is in use in Canada, Switzerland, Denmark, Sweden, and elsewhere. Interestingly, LETS is an interest-free monetary system, as is NeuMoNe (The Neutral Money Network). Combine a LETS currency with social fiat and you get something like Openmoney: "a means of exchange freely available to all." Openmoney stands in opposition to centralized currency because a government-monopolized currency is "from ‘them’, not ‘us’." Openmoney is basically creating an internet-enabled version of LETS, including a transaction kernel and software for administration.

The Distance to Here

Still, simply because the possibility for new forms of exchange exists does not mean that we will succeed in implementing them. There are a number of challenges we must overcome in the realization of community currencies. We have to overcome old ways of thinking about money, and look to new ways of realizing exchange potentials.

First, the single most important obstacle is that governments still retain a monopoly on the establishment and maintenance of "real" money by law. As long as governments do not see alternative currencies as competing currencies, they are not likely to intervene. But if alternative currencies become widespread enough to threaten government currencies, then we may see a clash of financial systems.

Second, we have to learn to make a distinction between what the word "local" used to mean, and what it can mean today. "Local" currencies in the past were local in geographic space, but today virtual currencies are "local" in a user space. Technically, alternative currencies were always "local" to their community of users, but thanks to mobile communication technologies geographical limitations are disappearing.

For the present, though, a lot of changes are proceeding apace. The BBC reported that the online world of Everquest was the 77th richest country in the world, calling it a "Virtual kingdom richer than Bulgaria." And when you consider that of the 100 largest economies in the world 51 are corporations and only 49 are nations, the distance to online communities as economies with their own currencies is trivial. Air miles are already the world’s second largest currency, a private currency.

Evolving Into The New Economy

The first thing you see in an economy are primary exchanges, both barter and money-for-commodity exchanges. The first thing we saw in online local economies were people exchanging "real" money for virtual commodities. Gamers were buying virtual objects (magic swords and the like) on eBay for "real" money. An important evolution occurred when people started using their virtual currencies to buy real objects. One gamer had acquired various real-world discount cards for a particular game, which he sold for virtual money inside the game environment, and then snail-mailed the discount cards out to the buyers.

As these alternative economies evolve, you see the development of second-order financial services: banks, currency exchanges, and the like. We already see this online. For instance, advertises itself as " the smartest way to trade your game currencies." Virtual cash exchange markets have all of the same problems as “real” money markets: money supply, inflation, speculation, financial bubbles, even counterfeiting and fraud.

The Mobile Explosion

There is a big push right now to more adequately integrate mobile and financial services, an initiative sometimes called "mobile commerce." For example, MobeyForum is dedicated to "open, non-proprietary technology standards" whereas groups like the Mobile Payment Forum have made no such commitment. The European Commission views mobile payment as an opportunity for a pan-European initiative.

So, here’s a scenario for the future. You go to a rock concert, and you’ve never seen the opening band before. You like their music, so you get on your mobile device (PDA, cell phone, etc.) and hit the band’s "mobile commerce" exchange. Your software negotiates with their software to determine what currencies they accept and what currencies your various bank accounts carry, including automatically getting you the best currency exchange rate at that instant. The system discovers that because they are opening for a major musician who has his own currency based on his popularity, the opening band has agreed to accept the headliner’s currency for the duration of the show for people who are actually at the concert. You verify that you are there using some kind of brokered authentication (GPS or a ticket number); the two systems complete the transaction for you, and you have access to the music.

Enabling the back-end for a truly decentralized marketplace with buyers, sellers, traders, and sharers is the open-source "killer app" of the next century. PayCircle is a non-profit organization that is working towards open APIs for payment systems based on XML, SOAP, Java, etc. Also, MusicForward is making the first steps toward the scenario above by developing a system that allows for music communities to create and use their own currencies in a virtual music market. There’s even a Yahoo Group (IJCCR) for the discussion of the "emerging array of community currencies." Also, The Interra Project, sponsored by VISA founder Dee Hock, is launching "a payment card and transaction platform, that rewards customers for purchasing from locally owned and sustainable businesses, donates automatically to community organizations and facilitates connections to like minded members in a self organizing manner," and, in fact, operates very much like a "local" alternative currency.

In "The Future of Payment Systems" Bernard Lietaer suggests that "complementary currencies don’t have to be necessarily small-scale social affairs. If implemented correctly they could potentially play a non-negligible role in a much larger economic arena as well." So essentially we could see an explosion of currencies instead of the consolidation of a "world currency," and we need open standards (similar to TCP/IP) that are fundamentally different than historical approaches. The challenge as always will be pushing for an open currency system as opposed to one that is monopolized by private corporations or governments.

Paul B. Hartzog is a political scientist and the creator of the postmodern theory of Panarchy. A self-styled futurist and techno-shaman, his interests include Complexity Theory, Cooperation, International Relations, Environmental Politics, Information Society and Economy, Information Technologies, Sustainable Development, Network Culture, and Ethics.

Editorial Notes: Many commentators, including Powerdown author Richard Heinberg and Julian Darley of the Post Carbon Institute, have highlighted that the dominant debt-based national currency systems require constant growth for their stability. These monetary models will become increasingly disfunctional in a post-oil-peak era. Initially at least, we can expect alternatives to arise which utilize the high tech media mentioned in Hartzog's article, however in a post-peak world perhaps the concept of 'local' will be grounded once again. Richard Douthwaite of Feasta, The Foundation for the Economics of Sustainability, has developed a proposal for a system of currencies which would work in unison to address peak oil, climate change, as well as other unwanted side-effects of the current monetary systems. More information here: Bernard Lietaer's Future of Money book is also highly recommended as a primer on how debt based fiat monetary systems work and the kinds of viable alternatives open to us. -AF

What do you think? Leave a comment below.

Sign up for regular Resilience bulletins direct to your email.

Take action!  

Find out more about Community Resilience. See our COMMUNITIES page
Start your own projects. See our RESOURCES page.
Help build resilience. DONATE NOW.


This is a community site and the discussion is moderated. The rules in brief: no personal abuse and no climate denial. Complete Guidelines.

"Blood and Oil," North Dakota, and dreams not exactly fulfilled

Last week a new television series set amidst the North Dakota oil boom …

Resilience Roundup - Oct 2

 Shell Exits Arctic as Slump in Oil Prices Forces Industry to Retrench …

Back From the Dead: The Rise of EVs

A decade ago electric cars were a lost cause. The popular 2006 documentary …

US Shale Oil too Expensive, Peaks 1H 2015

According to EIA data, monthly US crude oil production peaked in April 2015 …

Peak Oil Notes - Oct 1

A midweek update. Despite several important developments during the last few …

Low Oil Prices - Why Worry?

The Peak Oil story we have been told is wrong. The collapse in oil …

The Stuff Problem

How much mined material will we need to build a 100-per-cent renewable world?