Why would someone take new currency, my Wessex e-Groats instead of Euros? Convenience, for one thing. Look at the private currencies, such as Marks & Spencer’s vouchers or Amazon Coins, as a pointer. A friend of mine paid at a farmer’s market in Surrey using a Marks & Spencer’s voucher and got change. They are money, at least in Surrey. And I spend a fortune on Amazon, so I’d have no problem in taking a tenner’s worth of Amazon coins instead of the tenner you owe me down the pub. Two decades ago, the lateral thinker Edward de Bono published a pamphlet called “The IBM Dollar”, building on the Hayekian platform of competition in currency as the way to obtain sound money and he has a point. But even he could not have imagined how the revolutionary capabilities of the internet and, in particular, the mobile phone make this not only possible, but inevitable.
It’s hard to imagine popping to the shops with half-a-dozen different kinds of banknotes in my back pocket, but not hard to imagine an app on my smartphone managing these for me and choosing the best currency for the purpose at hand. It isn’t all about convenience and efficiency though. Some currencies, and Bitcoin is a current example, a really more idealogical in nature. The people who champion Bitcoin are only partly concerned with transactions. They are more concerned with removing the governments hands from the monetary reins. You don’t trust the government to run supermarkets, they might say, so why let it run money? The same goes for many who advocate electronic gold or some kind of world currency based on commodity prices and the like.
Others think, and I’m one of them, that the future of digital currencies is more closely connected with the future of communities, both physical and online. In places where the current monetary arrangements have all but collapsed, such as Greece, we already see local groups developing their own currencies to replacing the misfiring euro and we see the first experiments here too, with the Brixton Pound and so on. The economy of London is already distinct from the rest of the United Kingdom, so that would be a good place to start. If London started its own digital currency and if Scotland started its own digital currency, then their utterly distinct economies could be freed from the mutual shackles of national monetary policy.
In so far as the government, rather than international bond markets, controls that monetary policy you can see the possibility for some form of oversight or governance. But in a world of hundreds, thousands of digital currencies it will be the market that sets the values. Right now, we use one currency, Sterling, for everything. But I suspect our children might regard this as outdated as the Edwardian gold standard we so fondly remember in the slang “half a dollar” moniker for the half-crown coin. They might use Bristol Pounds or World of Warcraft Gold when they go shopping, but put Kilowatt Cash and Motorway Moolah in their pension funds. It seems to me that as the currency iceberg slips under the waves of the cyber-sea, we’re going to see a new world of choice between currencies that embody different values, and that’s a good thing.
(You can listen to the interview based on this essay via the BBC iPlayer here, starting at 45 minutes in.)
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