This is the basic question that came up on a Flash Meeting titled “Open Money for Beginners” organized by Christophe Ducamp last Sunday. This is also a question that Eric Harris-Braun, Art Brock and I ended up discussing on a conference call last Friday night. So, I decided to take a shot at it, knowing that not everyone will agree at first, but hoping I can start a constructive debate and that we can agree on a definition at some point.
One angle to start with, is etymology:
- In English, “currency” comes from L. currentum, pp. of currere “to run”.
- In French, the translated word is “devise”, which is essentially a motto, something you stand for, a rule you live by. In French, we have two words that are closer to the English word: “monnaie courante”, which means the money that is widely accepted.
- In German, the translated word is “Währung”, which according to the wikipedia page comes from a word that means “warranty”, but may also be from the verb “währen” which means “to last”.
- In Spanish, the translated word is “moneda”, which according to the etymology, means a coin minted with the mark of the issuing authority, which gives credit to its value.
So, three languages focus on the currency as something whose value is ensured by the reputation of its issuer. Only the English word derives from the consequence of this quality, which is that it flows easily between people.
A currency is a means of payment denominated in a unit of value, issued, marked and ultimately redeemed by an issuer who guarantees (“backs”) its value. This guarantee is a function of the issuer’s reputation. The stronger the reputation the more the currency will be accepted and flow.
Why a currency is not a unit of value – See discussion between Chris Cook and Thomas Greco on P2P Foundation wiki.
Airmiles are backed by the airline company’s ability to redeem them for flights.
Twollars backed by EisoMac Ltd and sponsors’ commitment to donate one US$ for each donated Twollar.
Hours at time banks backed by the commitment of participants to deliver on one hours of their time.
Can we go beyond this definition?
There are many people that are streching this definition.
Supporters of the meta currency project, according to my understanding, view the above definition as restrictive and unable to correctly address forms of wealth that are not tradeable such as health. On this topic, I think that although I can’t trade my health, my heath or health-related activities can be tracked, and these have values to the welfare system I participate in. For instance, if I don’t smoke and I can back it up via a reputable issuer (either a doctor or a trusted device), that fact has value to the welfare system (less cost to them down the road) and could be the basis of a health currency.
Other examples given by the meta currency project are: right to vote. Voting can be viewed as something issued to each voter for a particular ballot and that they redeem to the issuer when voting. There is indeed some flow of wealth here, backed by the ability of the issuer to implement the voted proposition, but voting rights cannot be transfered. School grades are another example. I see these processes as reputation-building processes that in turn can back a currency, but not as currency themselves.
I have also heard people like IdentityWoman talking about identity infocards or as a currency. This is a topic I have addressed in a recent blog post. I don’t think that my “date of birth” or “email” is a currency b/c if I issue 10 tokens that can be redeemed for it, without accountable privacy policies, one party redeeming it devalues it for the 9 other token holders. Plus having more than 1 token is useless. Plus I only want the person I share it with to redeem it. On the other hand, I can see possibly how a blogger could issue tokens denominated in blog posts or tweets that could be redeemed by the holder to access restricted content on the blog.
In online multiplayer games, there are currencies that are not use to trade goods with other players, but that can be only exchanged with the game itself. An example is influence, which some games dispense quite generously and are a parameter to the success of some operations in the game. But obviously, these games operate in a virtual context that do not have the limited resources of our real world, so that may be not such a problem.
What is your opinion? should the world currency be kept to something that can be used as a form of payment in a trade, or should it be used in a wider variety of social contracts/games/processes? more importantly, will it help people understand and adopt new currencies or will it make things more complicated and backfire?