* work in progress
In the previous posts, I described the disincentives to using cryptocurrencies as currencies. Until there is a stable Unit of Value, it may be better to call them cryptocommodities that can circulate electronically.
The Community or Complementary Currency Movement, which predates cryptocurrencies by 30 years, debated constantly over the issue of whether or not to peg the currency to the national currency. Time-valued currencies with a national-currency value was one option that worked well for HOURS and Time Dollar currency systems, which set a standard for example of 1 Hour = $10. Each hour value could then circulate as either value.
Most other systems felt it was just too difficult to try and explain and educate about the new value to prospective members, and so they stuck with the dollar peg, with the idea that this would some day be removed once a better method was found.
In Argentina before 2002, the economy was running well enough with the Argentine Peso pegged to the US Dollar. When I was there in 1999 to attend the founding conference of the Latin American Socio-Economic Solidarity Network, the 500,000 members of the Red Global de Trueque (RGT) were circulating completely independent alternative currency notes that were pegged to the Argentine Peso and the Dollar. Then 2002 came, and the RGT crashed along with the Peso. There were reasons for this crash other than just the rapid change in Peso – Dollar valuation when the peg unhinged, but an independent and stable Unit of Value could have helped to prevent the RGT crash.
The Terra TRC was one step in the right direction, and the Gogo was another in a different direction. But these were ways of mitigating the inherent inflation in debt-issued national currencies. How might it look for inherently deflationary Mediums of Exchange like Bitcoin? Would an incentive be necessary to encourage people to move to a more stable Unit of Value? Should the stable Unit of Value be on a side-chain, or in another cryptocurrency?
Using the Gogo as a model, factoring in the total amount of currency to be issued according to any variety of proofing methodology, during a shorter specific Period than most existing cryptocurrencies, say 10 years, and in a series or periods so that new series may change in value, an amount could be found that would most resemble a national currency value that the users would be most familiar with, but not be pegged to a national currency.
Using the Terra TRC model, people would need to be familiarized with the Unit of Account that would be based on a basket of currencies and commodities. Many items cost relatively the same around the world, so this would not be impossible to achieve.
Would an incentive to convert be necessary? I don’t think so. Bitcoin and its could go on being the stock or commodity it is presently being traded as, and be the first point of entry to the new multi-currency world that is already here.
Effective commerce demands a relatively stable Unit of Exchange. Why haven’t cryptocurrency designers realized this?
Social Justice also demands a currency that is in the hands of the people. Should cryptocurrencies be accessible only to those who have other forms of money in the first place, and should everyone else have to wait for the trickle-down effect?
Ecological sustainability also demands a stable currency, one that prevents unnecessary speculation and stops unlimited growth on a finite planet.