Private Currency and the Rise of Alternative Currencies

Private currencies, like Bitcoin, have been around since the early 2000s. They're digital currencies not issued or regulated by any government.

With the rise of the internet and mobile payments, alternative currencies have become increasingly popular. One notable example is the WIR, a Swiss currency introduced in 1934, which is still used today.

WIR operates independently of the Swiss franc, allowing businesses to trade with each other without using traditional currency. This system has been successful, with over 60,000 businesses participating.

Private currencies have been around for a while and have been used in various forms. The first mention of private currencies in the article is from England, where the Totnes Pound was launched in 2007, backed by sterling held in a bank account.

Some private currencies have gained popularity, such as the Chiemgauer in Bavaria, Germany, which has been in circulation since 2003, with over 550,000 in circulation as of 2011.

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The City Initiative Karlsruhe in Germany issued the Karlsruher, a currency with no nominal value, but worth 50 Eurocents, primarily used in parking garages. This currency has been accepted by 120 companies in Karlsruhe.

Private currencies have also been used to address specific issues, such as food insecurity, as seen in the Breadcoin created in Washington DC in 2016, which has a value of $2.20 when used at participating food vendors.

In Canada, numerous private currencies are in use, such as the Calgary Dollar and Toronto dollar, however, they cannot be referred to as being legal tender.

Private currencies have even been used in international contexts, such as the Convertible Minute, a community currency launched by the Minutes Bank users, started in Romania.

The constant, a private currency created by Dr. Ralph Borsodi in 1972, was successful in proving an alternative, inflation-proof currency could exist alongside the U.S. dollar and that consumers found the currency useful.

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The Totnes Pound, launched in 2007, is a great example of a local currency that has gained traction in England. It's backed by sterling held in a bank account and has over 70 businesses accepting it.

In Austria, the Wörgl Experiment from 1932 to 1933 showed the potential of alternative currencies. However, it's worth noting that private currencies in Canada, such as the Calgary Dollar and Toronto dollar, cannot be referred to as being legal tender.

The Chiemgauer, launched in 2003 in Bavaria, Germany, has over 550,000 in circulation and is primarily used in parking garages. This shows that private currencies can be successful even without a strong online presence.

The Breadcoin, created in 2016 in Washington DC, addresses food insecurity and has a value of $2.20 when used at over 60 participating food vendors. This is a great example of how private currencies can be used to address specific social issues.

Customer reward and loyalty programs, like the Canadian Tire money and Pioneer Energy's Bonus Bucks, are sometimes counted as private currencies. However, they lack the key element of being a medium of exchange transferable to other individuals and usable as payment for items from other vendors.

The Minutes Bank's community currency, launched in Romania, is another example of a successful private currency. It's a great example of how community-driven initiatives can lead to innovative solutions.

Digital currencies have been around for a while, with cryptocurrencies being a notable example. They're digital or virtual currencies where cryptography secures transactions and controls the creation of additional units.

One of the earliest digital currencies is Bitcoin, which has been around since its launch. In 2013, a Federal Judge ruled that bitcoins are a form of money, subject to the court's jurisdiction.

Cryptocurrencies like Bitcoin have been touted as good inflation hedges, but they've also plummeted in value over the past few months. This just goes to show that even digital currencies can be volatile.

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As of 2013, the German Finance Ministry characterized Bitcoin as a unit of account, usable in multilateral clearing circles and subject to capital gains tax if held less than a year. This gives you an idea of the regulatory environment surrounding digital currencies.

In Thailand, the lack of existing law has led many to believe that Bitcoin is banned. However, this is not the case, and digital currencies are still being used and experimented with.

The total market value of Bitcoin is the largest among all cryptocurrencies. This just goes to show the significant impact that digital currencies can have on the financial landscape.

The Minutes Bank users in Romania have launched a community currency called the Convertible Minute, which is a digital currency that allows for exchange and transfer. This is a great example of how digital currencies can be used for community development.

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Competition among currencies can be a powerful tool in controlling inflation. In fact, some private currencies have been designed to be inflation-proof.

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The Totnes Pound, launched in England in 2007, is a great example of a private currency that can compete with traditional fiat currencies. It's backed by sterling held in a bank account and is accepted by over 70 businesses in Totnes.

Private currencies can also help discipline central banks to keep inflation low. If a central bank allows inflation to rise too high, users may switch to a private currency that's more stable.

The Chiemgauer, launched in Bavaria, Germany in 2003, has been a huge success with over 550,000 in circulation. It's primarily used in parking garages, where it's accepted as payment.

Private currencies can also be designed to address specific social issues, like food insecurity. The Breadcoin, created in Washington DC in 2016, has a value of $2.20 and is used at over 60 participating food vendors.

Competition among currencies can also lead to innovation and improvement of existing currencies. The City Initiative Karlsruhe's Karlsruher, launched in 2006, has no nominal value but is accepted by 120 companies in Karlsruhe.

Private currencies can also be used as a means to promote local economies and community development. The Lewes Pound, launched in 2008, is a great example of a private currency that's designed to support local businesses.

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Governments can and should establish a framework where private currencies can exist on an even playing field with fiat currencies, so long as their issuers are law-abiding.

The U.S. has a relatively lenient approach to crypto, but there's still room for reform. The Cato Institute's Nicholas Anthony points out that U.S. legal tender laws are ambiguous about accepting cryptocurrencies for payments.

Anti-counterfeiting law prohibits coins that have a "resemblance or similitude" to U.S. coins, but it doesn't clarify what resemblance a digital coin would need to have to be considered counterfeit.

Existing capital gains taxes discourage using cryptocurrencies to buy goods and services. This can be rectified by terminating or scaling back capital gains taxes on transactions when cryptocurrencies are used to purchase goods and services.

China has banned, relegalized, and rebanned cryptocurrencies more than a dozen times since 2009. India now allows cryptocurrencies, but has instituted a prohibitively high 30% tax on crypto transactions.

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Creating your own currency is surprisingly straightforward. All you need is a system that people can understand and trust.

You don't need gold to back your currency, as shown by the Ithaca HOURs system in Ithaca, NY. Hundreds of shops there accept this local currency, which is backed by man-hours.

To create a private currency, start by drawing up an I.O.U. system that allows people to trade hours of work. This is what Ithaca HOURs are based on.

The success of Ithaca HOURS shows that private currencies can be a great way to create a new revenue stream that stays within your community. You can also use a private currency to grease exchanges or buy goods in a virtual world like Second Life.