The prospect of a cashless society raises important
The increasing use of complementary currencies extends questions as the less fortunate members of society, who beyond loyalty schemes. One example is the small but
often can be unbanked, could find themselves further
growing movement to create local currencies. Cities as far marginalised if a bank card of some kind was required to apart as Brixton20 and Bristol21 in the UK, Langenegg22 in access many products and services. Western populations, Austria, Nantes23 in western France, Ithaca24 in New York, with their extremely high banking penetration and
and Berkshire25 in Massachusetts have issued their own ubiquitous payments infrastructure, can address this by currencies, pegged to the national sovereign currency.
ensuring that even the poorest segments of society have Technically these currencies are not legal tender, and are access to bank cards. Some governments are even
commonly treated as vouchers.
starting to pay benefits electronically, using the savings from electronic payments to offset the cost of issuing cards The intention is to try to keep money circulating in the to the individuals receiving benefits.
local economy rather than having it sucked up by the
national economy. Local businesses accept local
Merchants are also turning to loyalty cards, using the money in payment for food, arts and crafts created
value held in the customer’s loyalty account to manage locally. The co-founder of the Bristol Pound, Ciaran
the relationship. Research shows that consumers choose Mundy, said: “The practical vision was to get
brands that offer loyalty rewards – and spend more with something that would connect local communities with
them – over brands without, preferring store credit over their businesses in a way that kept money building up
other rewards. “Basic monetary rewards give retailers a in their local communities. What happens is that if you
‘ticket to play’ in the loyalty game but the real opportunity spend it at a large supermarket chain, 80 per cent of
lies in building deeper engagement with members through that wil exit the [local] economy very quickly.”26 Some more personally relevant, unexpected and emotional
communities also allow local taxes and rates to be
rewards,” said Adam Posner, CEO of Directivity, a loyalty paid in local currency, keep purchasing power in the
and retention consultancy. “This plays out in the research, region. The mayor of Bristol, George Ferguson, even
which shows surprise rewards such as a gift on your
takes his entire salary in Bristol Pounds.27
birthday, exclusive offers or special experiences go a long way to overcoming the belief that programs don’t offer There has also been a large increase in the number of
any real value.”
cryptocurrencies in the past few years, starting with
18
Bitcoin. Cryptocurrencies are promoted as the future
These loyalty programs, for all practical purposes, often of money, with their low transaction fees and
use complementary currencies with an exchange rate is
independence from government or central bank
tied to the local sovereign currency. Nowhere is this more control. Distributed cryptocurrencies are often seen as apparent than with airline frequent flyer programs where the natural solution for exchanging value in an
members leverage the program’s relationship with other increasingly networked, interconnected and digitised
(sovereign) currencies to create value from nothing, such global environment.
as by buying dollar coins from the US Mint with a credit card and paying off the charge immediately, a practice called ‘manufacturing spend’.19 The European Central
Bank has classified airline miles in the same category as Bitcoin, while The Economist magazine valued the global stock of frequent flyer miles at more than US$700 billion in 2005. Airlines should be considered the central bankers for these complementary currencies, as they can unilaterally set the exchange rate (and devalue the points) or close accounts.
The Future of Exchanging Value Cryptocurrencies and the trust economy 15
It’s the system
If we are to understand the possible futures the rapidly The adoption of new technology is rarely
expanding world of FinTech is presenting, we need to
straightforward. While technology can change
expand our view to consider the social systems
society, society can also change technology.
as wel as the technological systems. Nintendo’s Wi
and Apple’s iPhone were able to sweep aside more
Past predictions of technology-driven futures have
complex and technically sophisticated rivals by
always proven to be far from the mark. For instance, few paying attention to the social systems. Both products
of us have a flying car or a landing pad on the roof. We were widely considered under-powered, under-forget that our overflowing optimism for a new
featured and technologically inferior to their
technology ignores many of society’s constraints, and
competitors at their launch, but they were successful
the technology’s limitations, or unfortunate side effects.
because their creators paid close attention to how
The invention of the nuclear reactor, with its promise of consumers related to the products and how the
an unlimited power source, did not result in a nuclear product fitted into consumers’ lives.
reactor in every home, nor was the nuclear-powered
Ford Nucleon28 ever developed beyond a concept car.
What is true for ‘hard’ technology is also true for money.
It’s also unlikely that recent developments in artificial intelligence will put us all out of work or result in the Indeed, money is a technology. What we think of as
creation of some analogue to either
modern money emerged as a solution for streamlining
The Terminator or The Avengers’ Ultron.
commercial exchanges between two parties who know
little of each other. Money is a technique – a way of
Our enthusiasm for a new piece of technology leads us to carrying out a particular task, especially the execution or consider only the technological possibilities it seems to performance of an artistic work or a scientific procedure present – the world of the possible. We don’t consider the
– for resolving the problem of the double
social aspects – what society will allow or accept. History coincidence of wants29 in barter exchanges.
has shown repeatedly that the social aspects are as
important, if not more important, than the technological Money is a formalisation of the technique of using a
aspects. The reductionist approach of technological
third commodity with a stable value – such as gold
determinism, which presumes technology drives the
– to facilitate the exchange of goods. Money initially development of social structure and cultural values, often was the testing of a commodity’s quality and weight,
has proven to be wrong. Even if we
and stamping a seal on it meant you knew it was good.
can find a way to miniaturise a nuclear reactor, social Bank notes were created from the realisation that a
pressures will shape how and where it can be used, or
deed granting ownership of a valuable commodity
even if it is appropriate to use the technology at all.
stored in a safe place could be exchanged instead of
the commodity itself. This raised the interesting
As this example suggests, technological and social
question: is money founded on debt (an IOU), or is it a systems shape each other. The same is true on a
commodity itself? The obvious answer is that it’s both.
larger scale. Technologies – such as gunpowder, the
printing press, the railroad, the telegraph and the
Internet – have shaped society in profound ways. On
the other hand, social systems – governments, the
courts, formal and informal organisations, social
movements, professional networks, local communities,
market institutions and so forth – shape, moderate and redirect the raw power of technologies.