First, this is not an essay about Bitcoin, at least not the currency part of it. Bitcoin the currency appears to have a few problems and myths dogging it, not the least of which is all the profit seeking associated with it as a commodity play. However, Bitcoin the cryptocurrency technology, is a far more compelling and useful discussion if used to enable local complementary currencies.
Edward Harrison recently referenced the use of its technology in a commentary on his Credit Writedowns blog titled, Bitcoin as a deflationary force for bank fees. The title does not hint at the idea of Bitcoin’s backend technology value but is highlighted in the body of the piece here:
People need to stop fixating on Bitcoin the currency and start focusing on Bitcoin the technology. The technology is the big deal because Bitcoin is a low-cost and global instantaneous payments system that uses the distributed nature of the internet to create a robust platform with hundreds of potential uses.
I would be remiss by not stating that Marc Andreessen’s commentary titled, Why Bitcoin Matters, served as some reference for Edward’s thoughts. Marc’s thoughts are definitely worth a read.
Okay then, how can we conceptually apply Bitcoin the technology to create complementary currencies? Here are a couple of ideas to consider: 1) Rob Parentau’s excellent essay on New Economic Perspectives site titled How to Exit Austerity, Without Exiting the Euro and 2) A great discussion by Bernard Lietaer on his idea of Money Diversity expands on the benefits of the many complementary currencies in use today.
By using Bitcoin the technology to power many different local complementary currencies backed by assets such as tax revenue streams, volunteer hours, and other products and services, perhaps we can inject much needed economic energy into the blighted areas of our communities, counties, provinces, and/or states. As Bernard Lietaer discusses above, we need monetary diversity to split up the single firehouse stream of a sovereign currency like the USD, JPY, GBP, et al at the national level into many customized smaller streams at the local level.
Are we missing the forest for the trees just because of the problems associated with Bitcoin the commodity currency? I think the answer to this question may be yes.