Social currencies that promote local economies

Social_currencies

Below, you will learn all about social currencies: how they came about, what types of social currencies exist, how they differ from traditional currencies and what advantages they provide. 

What is a social currency?

The social currency is money was created especially to promote social or environmental projects, mainly at the local level. In others words, this currency is created to promote local work and consummation, empowering communities and specific groups to achieve social objectives.

 

This type of currency, want to facilitate the exchange of products or services between communities, without the use of traditional money. The social currency not want to intents replace the traditional money, simple want to develop positive issues that the other currency can’t, leaving wealth aside.

 

 It is based on a mechanism of mutual benefit between the individuals who use it.  This makes life easier for people who have restricted access to official money. In addition, it encourages local consumption and production.

 

Companies such as Comunitaria ( Before Wikibank) use this type currency to favor the most poor neighborhood and  to promote the local shops’ economy.

How do social currencies originate?

Historically, social money arose from situations in which there was a shortage or absence of legal money, as a result of crises or wars that generated critical economic situations in geographically delimited areas.

 

This caused people to look for alternatives to national currencies in order to facilitate shop in the exchange of products and services.

 

Therefore, its purpose was not to replace the official currency, but to complement it in order to fulfill certain social or economic functions that the traditional currency could not. That’s the reason why social currency is also often called complementary currency.

What type of currencies are there?

The currencies have a lot of different names, but, Are all currencies the same? There are 4 different types of social currencies, which are used in different ways, but in the end they all serve the same function.

  • Mutual credit systems. It is a type of currency that allows the participants of a network to obtain interest-free loans thanks to the constant circulation of transactions that take place within this community.
  • Time Banks. It is about a exchange a service for time. Time banks offer non-monetary mutual aid with which to provide services, fostering cooperation, social integration and solidarity. In this case, the currency is time.
  • Local currencies. It is a type of currency that circulates within a certain region, encouraging the local economy to improve. In some cases, they are in the form of banknotes and in other cases, they are used only and exclusively through technological platforms.
  • Barter networks. It is based on the exchange of products among a group of people without the use of money. They are generally offered through local fairs by means of vouchers or credits.

Local currency features

The social currencies are used locally. As previously mentioned, this currency only have value at a specific location, benefiting exclusively individuals in a neighborhood or city.

 

The important benefit that use this currency, is it have a great impact  economic and social environment. This way that it enriches the members that compose it without being able to leave the ecosystem where it circulates.

 

Likewise, these currencies generate transparency, and exclusively are used to exchange products inside the community. It does not allow any speculation or accumulation.

 

One of  the currency success factors is the digital use. This spouse an advantage, because of can’t duplicate currency or banknotes. In addition, you can keep better control of the currency circulation.

 

To use this currency digitally, Comunitaria uses an open source blockchain technology.  We call this a social donation cryptocurrency, and it is used to make mobile payments to local neighborhood merchants through an app. 

Differences between social currency and traditional currency

As mentioned above, social currencies are not intended to replace traditional currency. They are used as a complement for some social and environmental issues, where legal currency cannot be used. In the following, let’s look at some significant differences:

  • Unlike money, social currency can’t be accumulated. In other words, with legal currency, we can save money and obtain wealth. However, with social currency you cannot save because it is only used for the exchange of products.
  • Traditional currency ignores human and social aspects such as solidarity and reciprocity. In contrast, social currency develops positive social aspects.
  • The social currency keeps a constant value adjusted to reality. This benefits the most economically sensitive groups, therefore, in this case, inflation and deflation do not exist.

What are the advantages of social currencies?

Social currencies stand out because they have many social advantages, especially in local economies.

  • Fight against social exclusion and inequalities.
  • Promote local proximity shops, fostering employment and optimizing resources in their geographical area.
  • There is no inflation, deflation or speculation.
  • Prevents economic bubbles from being generated, as they can’t accumulate or operate outside a specific area.
  • Generates citizen participation and promotes relations between neighbors