Sunday, 22 March 2015
The rising popularity of Bitcoins seems to be challenging a few economists to look at the fundamental characteristics of money and its basic functions - specifically as a medium of exchange, unit of currency and store of value (Castronova 2014). With no real legal framework or limitations on the creation of private or local currencies, it is the case that these characteristics of ‘moneyness’ are seen in many examples of LETS (Local Economic Trading Systems) alongside store or business vouchers.
As within the world of property, it is increasingly the case that these are also characteristics shared by where we live – homes being another form of investment that can hold value; to a greater or lesser degree outside of the control of government; and act as a framework for economic exchange. The idea of an asset-backed (note ‘asset’ rather than ‘currency’) joint ventures, partnerships and legal entities as the basis for development simply acknowledges this as an alternative to bank loans or institutional investors. Does it really matter then, if these ‘assets’ are digital or indeed community values that seem on the surface to be more intangible than hard currencies?
Reference: Castronova, E (2014) Wildcat Currency: How the Virtual Money Revolution is Transforming the Economy (Yale University Press, New Haven).