Alternative Currencies Research Articles

Alternative Currencies and Democratic Conflict: Some Reflections

Des de la crisi del patró or, a la dècada de 1930, fins al “corralito” argentí, a començament del segle xxi, els períodes de crisi han provocat nombrosos debats acadèmics i polítics sobre el sistema monetari internacional. Simultàniament, en anys recents, la Gran Recessió ha estimulat una vegada més els debats sobre les relacions entre autonomia nacional i democràcia, per una banda, i globalització, per altre, a més de les discussions relatives a les qüestions ideològiques implicades.El fenomen particular que aquí analitzem és l’impuls que han rebut en la actualitat les anomenades monedes alternatives; més específicament, ens proposem abordar la relació no detectada entre aquestes monedes alternatives i els mencionats debats.En primer lloc, l’article presenta un marc teòric de l’economia monetària a fi de comprendre els elements bàsics dels sistemes monetari i de pagaments. En segon lloc, analitza els aspectes macroeconòmics de les monedes complementàries locals (CC) i les criptomonedes seguint el marc teòric presentat. Per últim, posa de relleu les implicacions econòmic-polítiques de tots dos tipus de monedes pel que fa a l’afebliment o l’enfortiment dels sistemes democràtics nacionals.

New Spaces of Disruption? The Failures of Bitcoin and the Rhetorical Power of Algorithmic Governance

In less than a decade Bitcoin and the technology of blockchain – a cryptographically-secured, algorithmically-regulated, distributed-ledger – emerged as the enfant terrible of the global economy. Ironically, as cryptocurrencies reached collective valuations of hundreds of billions of dollars the Bitcoin project failed in its original purpose as an alternative currency governed by code rather than trust. Not only has Bitcoin not become a popular means of global peer-to-peer transactions but the much vaulted purity of algorithmic governance is heavily entangled in social relations. This article reviews blockchain’s computer architectures, its connections to materiality and space and the complexity of its established practices. This analysis shows that rather than occupying an algorithmic place apart, blockchain contains multiple and conflicting agencies and is messily embedded in the code/space of materiality. Nevertheless the faith in the superiority of algorithmic governance has injected a powerful discourse in economies that has proven more important and disruptive than the actual practices of Bitcoin or blockchain.

A History of Dogecoin

The frenzied public interest in cryptocurrencies has meant that, as second-order capital rushes towards the Bitcoin trade, potential investors are also drawn toward alternative currencies that may serve specific purposes; but one such cryptoasset, Dogecoin, is not so much an alternative numismatic instrument as it is a leisured exploration of community-building around a cryptoasset. This discussion paper recounts the historical evolution of Dogecoin, while also highlighting the crossover of cryptocurrency principles with the leisures of the blockchain.

Bitcoin: Medium of exchange or speculative assets?

Bitcoin is defined as digital money within a decentralized peer-to-peer payment network. It is a hybrid between fiat currency and commodity currency without intrinsic value and independent of any government or monetary authority. This paper analyses the question of whether Bitcoin is a medium of exchange or an asset and more specifically, what is its current usage and what usage will prevail in the future given its characteristics. We analyse the statistical properties of Bitcoin and find that it is uncorrelated with traditional asset classes such as stocks, bonds and commodities both in normal times and in periods of financial turmoil. The analysis of transaction data of Bitcoin accounts shows that Bitcoins are mainly used as a speculative investment and not as an alternative currency and medium of exchange.

Speculative investment, heavy-tailed distribution and risk management of Bitcoin exchange rate returns

Since its launch in 2008, Bitcoin becomes one of the most successful and fast-growing alternative currencies. As of 2017, the market capitalization is around $46 billions and arguably expected to continue growing. The Bitcoin to the US dollar exchange rate has been very volatile and fluctuating significantly. Although Bitcoin was designed as a medium of exchange, it is now more as an investment tool and thus the development of effective quantitative risk management tools becomes quite urgent for all the market participants. In this paper, we investigate empirical distribution of the Bitcoin exchange rate returns by using four types of widely-used heavy-tailed distribution and show that the Skewed t distribution has the best empirical performance. We further calculate the VaR based risk measures and found the Skewed t distribution generates the VaR values, which are closest to historical VaR values. Our results could be directly used in the industry’s stress testing practice, and help financial institutions fulfill the regulatory requirements.

Banning bitcoin

We employ a monetary model with endogenous search and random consumption preferences to consider the extent to which a government can ban an alternative currency, like bitcoin. We define a ban as a policy whereby government agents refuse to accept an alternative currency and mete out punishments to private agents caught using it. After identifying monetary equilibria where an alternative currency is accepted, we then derive the conditions under which a ban might deter its use. As in earlier studies, we show that a government of sufficient size can prevent an alternative currency from circulating without relying on punishments. We also show that, given its size, a government can ban an alternative currency so long as it is willing and able to mete out sufficiently severe punishments.

Beyond Bitcoin: using blockchain technology to provide assurance in the commercial world

Mention the word ‘blockchain’ to most people and, assuming that they've heard of it at all, they will most likely associate it with Bitcoin, or perhaps another crypto-currency. As a decentralised, cryptographically authenticated record of transactions, the blockchain is the key concept that makes Bitcoin feasible. Yet, as Patrick Hubbard, technical product marketing director at SolarWinds, explains in this interview, the same concept has applications far beyond the contentious world of alternative currencies – in fact, far beyond finance altogether.

Competition of Currencies: An Alternative to Legal Tender

The aim of this paper is to question the scenario with legal tender law by an analysis of potential competition of alternative currencies. To accomplish such a goal, this study offers an original version of the dynamic macroeconomic model based on the money in the utility function. This model compares the current monetary conditions with the potential situation permitting more currencies circulating alongside. The main assumption about individuals' preferences over stable currencies underlines the whole paper with emphasis on the mathematical model. The outcome of the model reveals lower inflation rate in scenario with competition among currencies in comparison to the present scenario. This result by itself seems to favour the idea of an exclusion of legal tender clause and allowance of free currency competition. The final simulation of the model, using statistical software, brings to this so far unambiguous view scepticism due to possible difficulties during the discovery process.

Innowacje w rozliczeniach finansowych

The subject of the study is to discuss innovations in financial settlements in terms of their construction and technological aspects. In the first case electronic and digital forms of traditional money are analysed, with particular emphasis on the innovation represented by “digital cash”. In the second case traditional money is not used for settlements and the role of an intermediary is taken over by alternative currencies of local or global range. In case of non-monetary settlements the “evidence of performed work” constitutes the specific form of innovation. In the context of challenges related to the application of innovations in financial settlements it can be assumed that alternative currencies of local range shall not develop as the dominating form of settlements. Those of global range (cryptocurrencies) will, however, not be able to substitute traditional money, but will constitute an alternative to it, hence the formal, parallel functioning of fiduciary and cryptographic currencies does not seem an abstract vision, but one of the possible and realistic scenarios of development.

Alternative forms of resilience: a typology of approaches for the study of citizen collective responses in hard economic times

A variety of theoretical and conceptual perspectives have been applied to studying collective citizen initiatives arising in response to hard economic times, such as solidarity-based exchanges and networks, cooperative structures, barter clubs, credit unions, ethical banks, time banks, alternative social currency, citizens' self-help groups, neighbourhood assemblies and social enterprises. Since the global financial crisis of 2008, scholarly attention on novel, alternative, resilient structures has increased, especially in regions that have been most affected. A comprehensive literature review is therefore needed on these initiatives which usually aim to meet basic needs such as food, shelter, health and education at the community level, or build and envision autonomous communities. This paper has four aims. First, it proposes a new, all-encompassing conceptual framework, alternative forms of resilience, to embrace all issues and groups related to such initiatives, during the new millennium and its economic and political challenges, while taking into account the impact of the 2008 crisis. Secondly, it offers a comprehensive literature review on collective citizen initiatives studied through different theoretical, methodological and conceptual understandings. Thirdly, it provides a new typology of several approaches on novel, collective and solidarity-oriented critical resilience initiatives which take into account political issues, be they policy or social-movement related. Finally, it points to future research areas which would aim to systematically address the political and non-political features of citizen-collective responses.

Speculative Investment and Risk Management of Bitcoin Exchange Rate Returns

Since its launch in 2008, Bitcoin becomes one of the most successful and fast-growing alternative currencies. As of 2017, the market capitalization is around $46 billions and arguably expected to continue growing. The Bitcoin to the US dollar exchange rate has been very volatile and fluctuating significantly. Although Bitcoin was designed as a medium of exchange, it is now more as an investment tool and thus the development of effective quantitative risk management tools becomes quite urgent for all the market participants. In this paper, we investigate empirical distribution of the Bitcoin exchange rate returns by using four types of widely-used heavy-tailed distribution and show that the Skewed t distribution has the best empirical performance. We further calculate the VaR based risk measures and found the Skewed t distribution generates the VaR values, which are closest to historical VaR values. Our results could be directly used in the industry’s stress testing practice, and help financial institutions fulfill the regulatory requirements.

The Rise of Alternative Currencies in Post‐Capitalism

The Rise of Alternative Currencies in Post‐Capitalism

Opening discussion on banking sector risk exposures and vulnerabilities from Virtual currencies: An Operational Risk perspective

We develop the first basic Operational Risk perspective on key risk management issues associated with the development of new forms of electronic currency in the real economy. In particular, we focus on understanding the development of new risk types and the evolution of current risk types, as new components of financial institutions arise to cater for an increasing demand for electronic money, micro-payment systems, Virtual money and cryptographic (Crypto) currencies. The article proposes a framework of risk identification and assessment applied to Virtual and Crypto currencies from a banking regulation perspective. In doing so, it addresses the topical issues of understanding important key Operational Risk vulnerabilities and exposure risk drivers under the framework of the Basel II/III banking regulation, specifically associated with Virtual and Crypto currencies. This is critical to consider, should such alternative currencies continue to grow in utilisation to the point that they enter into the banking sector, through commercial banks and financial institutions which are beginning to contemplate their recognition in terms of deposits, transactions and exchangeability for fiat currencies. We highlight how some of the features of Virtual and Crypto currencies are important drivers of Operational Risk, posing both management and regulatory challenges that must start to be considered and addressed both by regulators, central banks and security exchanges. In this article, we focus purely on the Operational Risk perspective of banks operating in an environment where such ‘electronic’ Virtual currencies are available. Some aspects of this discussion are directly relevant now, while others can be understood as discussions to raise awareness of issues in Operational Risk that will arise as Virtual currency starts to interact more widely in the real economy. We propose a structure of risk analysis starting with the exposures and vulnerabilities of Virtual and Crypto currencies as the drivers of Operational Risk for these new means of exchange. Then, by using risk drivers, our approach allows us to highlight the sources of possible adverse consequences, when using or generating Virtual and Crypto currencies. These are then mapped into the risks associated to the Basel categories, providing an easier view of regulatory response, and better mitigation techniques. In addition, this will help identify and address the root causes of the Operational Risks associated with Virtual and Crypto currencies, rather than just presenting their symptoms.

An Impact Assessment Model for Web-Based Time Banks - A Thought-Experiment in the Operationalization of Social Capital

The following paper is meant to be practical, in that it offers an impact assessment model for web-based time banks that was produced as a consultancy project deliverable; and academic, in that it offers a thought-experiment about the measurement of social capital and its association with sustainable development. As the development field continues to transition towards sustainable models that include social variables, innovative impact assessment tools are needed to fully understand the role of these variables for planning and investment. Web-based time banks ‐ online networks that members exchange services by using an alternative currency in the form of time ‐ offer an opportunity to look at the operationalization of social variables in a unique way, particularly social capital and its relationship to economic development. The impact assessment model seeks to answer: how do time banks as a development intervention augment the social capital of communities? The model was designed based on three dimensions of social capital, psychological, social and economic, and Edgar Cahn’s theory of coproduction. The model contributes to the economic valuation of time bank participation through the metrics: Market Value Savings and Economic Risk of Participation.

External shocks and exchange rate regimes in Southeast Asia: A DSGE analysis

This paper investigates the choice of the appropriate exchange rate regime in the context where corporate debt is denominated in foreign currency. To address this issue, we build a small open economy DSGE model that incorporates financial frictions and alternative currency denominations of debt. We estimate the model using data from the five individual founding members of ASEAN and compare the welfare performance of four exchange rate regimes (floating, managed floating, target zone and fixed exchange rate). We find that the flexible exchange rate welfare dominates other regimes, whether debt is denominated in domestic or foreign currency. This finding suggests that the expenditure switching effects outweigh the balance sheet ones due to the countries' degree of trade openness.

Money reform and the Eurozone crisis: panacea, utopia or grassroots alternative?

The economic crisis that broke out in 2007–2008 and the ongoing crisis in the Eurozone has given a new urgency to discussions about alternatives to capitalism, and a new salience to proposals for monetary reform and for grassroots economic alternatives. Using Marx and Engel’s concept of Utopianism as an analytical tool to distinguish between what is the work of ‘cranks’, and what of ‘brave heretics’, the paper examines four monetary responses to the crisis: (1) Positive Money’s call for a state monopoly on money issuance; (2) the reintroduction of national currencies, in particular the drachma; (3) proposals for state-issued parallel currencies; and (4) grassroots or subaltern money networks of various types. The paper argues that the dominance of neoliberal ideology at a European Union level means that proposals for monetary reform at the international and national level are unlikely to be taken seriously by elites and consequently seem utopian in Marxian terms. There seems to be little political will to engage with the complexities of and potential opportunities of a more diverse monetary architecture within the Eurozone, and a perceived need to ‘discipline’ potentially ‘irresponsible’ governments like Greece’s SYRIZA, although ‘responsible’ actors in the north of the Eurozone get more leeway. The potential of grassroots alternatives is also too often overstated. While alternative currency networks developed as part of the Greek crisis are not particularly well developed, alternative currency networks could work as sites of innovation, normalising the idea that there are progressive alternatives to Eurozone breakup.

Alternative Currencies: A Historical Survey and Taxonomy

Alternative currencies have appeared regularly for at least the last half-millennia, often arising out of similar socio-economic circumstances and ceasing to circulate within a relatively short time period. While regulatory shifts and technology shocks account for some of the challenges alternative currencies have faced in gaining wider adoption, the most common observed explanation for why alternative currencies decline is insufficient demand due to relatively high transaction costs, low institutional support, inconsistent social motivation, and other factors. Present-day alternative currencies, such as the Brixton pound, are similar to past alternative currencies, while bitcoin features several radical differences.

Knowledge markets: a typology and an overview

Knowledge markets are defined as value exchange systems where the quantity, quality and terms of interactions amongst agents are determined primordially by the dynamic properties of intellectual capital creation and exchange. Such properties include the attributes of knowledge-based value production as well as a distinctive ethos and organisational design. Based on this definition, an array of ten types of knowledge markets is introduced, with a synthetic characterisation for each category. First level types are: intellectual capital dealing, open dealing, crowd dealing, cooperative dealing, non-monetary dealing, social dealing, alternative currencies plus incentive regimes, alternative banking, open knowledge labs and emerging knowledge markets. Each category is broken down into subtypes, each subtype in turn characterised and/or exemplified. The typology description is accompanied by an extensive and updated literature review. The resulting map of knowledge markets may contribute to understand the uniqueness of these novel value-generation arrangements and capitalise on their transformative power.

Money and the Commons: Lessons from Complementary Currencies

Complementary currencies (CCs) represent one of the financial initiatives aiming to reorganize finance for the collective interest at microscale. The objective of this article is to analyze the shared dimensions of such alternative currencies, and therefore define to what extent they constitute new commons. To this end, the article first sheds light on two main conceptions of the commons, the institutionalized commons in organizational studies and the “common principle” in business ethics. Second, we analyze the commons dimensions of seven CC systems. We contribute to the literature through the combination of different approaches on the commons that are usually isolated and provide a new understanding of money through the analysis of community currencies. The findings show how these monetary systems and organizations can be considered as commons according to the “common principle” framework since they promote the common interest through the creation of new communities. Nevertheless, only systems relying on collective action and self-management form new commons according to the institutionalized commons framework. This allows us to suggest two categories of common principle governing organizations: the “social common” that fulfills both the institutionalized commons framework and “common principle”, and the “commercial commons” that fulfill the “common principle” but not the institutionalized one. Finally, we argue for a new ethos of the common, a principle of organizing commons practices through both collective organization and ethical concern for human flourishing.

Local Currencies in the Times of the Crisis

For a long time the problems of the existing financial system have been raising discussions which concentrate on searching for solutions offering greater effectiveness in alleviating the effects of more and more frequently reoccurring crises. The never-ending financial crisis, which began in 2007, and a way to cope with the risk of bank insolvency by the state debt buy-out not only threatens the economy but also undermines the trust to public institutions. In the face of increasing problems, we speak more and more often about the reconstruction of the global financial system, yet simple solutions do not come up. The events of the recent years show that the society, more and more aware of the disease and the consequences resulting from the existing financial system, is looking for solutions which would enable surviving in the crisis situation. One of such ideas are alternative local currencies. The idea itself is nothing new as they have been functioning in many countries for years, but as their historical prototype one may consider solutions adopted during the Great Crisis of the 1930s in the town of Worgl in Austria. The aim of the article is to present the importance of local currencies in overcoming an economic crisis against the background of historical events, as well as today. Today’s local currencies have become popular in many European countries, although their construction and possibilities differ both historically and nationally.