Would you invest in an alternative currency?
Full episode text
Currency – how a group chooses to store and exchange value – seems to be half shared faith, one-quarter resources, and one-quarter incomprehensible… at least to most people. When it comes to standard currency, there’s commodity currency — a placeholder for a shared commodity of agreed-upon value, or fiat currency, that has value because a government or institution says that they have value and everyone agrees.
Issuing currency has always been messy. While it’s generally considered the purview of governmental agencies, there’s a whole world of alternatives that was the beginning of currency, and continues through this day.
As quoted in Time in 2008, author Peter North explains currency this way: “When money gets dried up and there are still needs to be met in society, people come up with creative ways to meet those needs.”
In many communities, this means individual currencies that may not have national or international value – from Ithica Hours to the hundreds of types of currencies American Colonies issued. These currencies are even are experiencing a resurgence as a way to encourage shopping local in some communities, from Bay Bucks to Time Traders.
Beyond individual communities, there are worldwide alternative currencies that have risen with the internet, with BitCoin leading the charge. In 2011,, MarketWatch declared that BitCoin was “just another crash”, with the price vacillating between 3 and 33 US dollars per BitCoin. Of course, this may have been a bit of a premature announcement of dead on arrival, as BitCoin was well over $400 per as of the recording of this podcast.
Really, investing in or putting your faith in any currency comes down to a willingness to trust — trust that others putting value in this esoteric piece of paper or digital data — will continue to be willing to trade it for other things of value. Which is a part of what makes currency of any kind – alternative or not – a leap of faith.