Today’s global economic system relies predominantly on the fiat system; nation-based currencies which are regulated by central banks and government institutions. Discussed in this paper are emerging trends in alternative currencies and economic transactions and how these trends could ultimately lead to fledgling economic models that could act as a complement or adversary to mainstream capitalism in the future. The dominant trends in alternative currencies and economic transactions are the following:
Virtual currencies (often referred to as cryptocurrencies, or encrypted virtual currencies), is a decentralized form of online currency that is “mined”. These currencies have no tangible value. But some, Bitcoin principle among them, have become a viable form of economic exchange. Bitcoin exchanges have been set up in several parts of the world[i] and, more importantly, Bitcoin is recognized as an unstable but acceptable currency which can be exchanged for American tender. As the cryptocurrency ecosystem matures, there is the potential for a stable, globally recognized alternative to nation-based currency.
Rapid, significant price fluctuations of virtual currencies
Fluctuations in currency valuation will continue as the market moves from infancy to maturity. In the early stages, high risk investors will consider potential for rapid increase/profits to be a benefit rather than a drawback. A blend of experience, government oversight, and virtual community pressure will help to stabilize currencies. As certain virtual currencies stabilize, those that do not will be pushed “to the fringes” and die – relative stability will become a key indicator for investors.
Calls for government regulation
Governments will eventually catch up to virtual currencies and begin regulating. Some governments will decide virtual currencies undermine their own national currency. Regulations will provide some levels of stability and security for investors and those who trade in virtual currencies. Virtual currencies will not be available globally as certain countries will outlaw/ban usage.[ii] This opens the door for governments to issue their own virtual currencies as the trend becomes commonly accepted and the government looks for ways to maintain control over local economies.
Involvement of criminal elements
A recognized form of international payment/exchange that has little oversight will attract international gangs for a variety of reasons. Overall involvement is still minor compared to traditional currencies.[iii] Ongoing, and high profile usage of virtual currencies could damage the reputation/legitimacy of these currencies with more traditional investors. Virtual currencies also make it easier to exchange funds for services without global banking system oversight.
Customization is a growth market in almost every industry as people look increasingly to express their individuality. As education levels around the world increase, and awareness of global issues become more urgent, alternative forms of economic value systems will emerge. Currency increasingly becomes a form of expression as opposed to a mindless transaction.[iv] Increased transactional mindfulness will benefit companies who can tap into and exemplify customer belief systems, while organizations that cannot will show reduced sales as process becomes a simple exchange of goods/services for cash. Sustainable growth could become more “valuable” on the market than forms of growth/industry that is not; other key issues could also drive a sort of “rate of exchange” in which a sweatshop labour made pair of shoes costs a certain amount with one currency, and another amount with another currency, driving behavioural and buying patterns to change.
LETS and alternative currencies as a growing response to recession and national debt crises
The barter economy and other locally based models of exchange have gained popularity in niche markets (such as car sharing, community book exchanges, etc.).[v] But computer programs are increasingly being employed to optimize the exchange of goods and services which operate outside the boundaries of the traditional market. The “great recession” has created a number of developed, educated countries that have to endure heavy debt loads and (arguably) punitive terms of loans from IMF and other institutions. Boom/Bust cycles will increasingly become the norm. Local and sustainable products will become increasingly available. Communities, fed up with government ineptitude, will focus on ways to circumnavigate the national currency and develop exchanges to work together.[vi] Local communities who disengage from the national economic system to a certain degree, will navigate economic downturns more successfully that those communities who do not have sophisticated LETS in use – these examples will be noted by other communities, prompting an increase of adoption. As adoption increases, demand for locally sourced and produced products will grow, which will in turn increase the number of products available.
Today, barter economies are primarily localized in affluent neighbourhoods, and are often co-opted by commercial, capitalist interests. There could be a shift in thinking of the sharing economy as global in scope – a necessity considering the strain on global resources and the environment – which could inform a new approach to economic activity. With chronic poverty throughout the world, consolidation of wealth in the “1%”, and a strain on resources caused by population growth and climate change, the ability to share resources across demographics and countries becomes increasingly critical to the success of a democratic social order. A strategy that involves government supports at all levels (local, federal, global), an emphasis on not “sharewashing” organizations (taking for profit organizations and positioning themselves as a sharing organization) and the ability to span resources (including knowledge) across countries could help in reducing poverty without placing dramatic new strains on the environment. Without corporate influence, the sharing of goods and services across countries could be more efficient and egalitarian, freed from the constraints of profit pressures.
Two potential scenarios emerge for the future of alternative currencies. One, in which alternative currencies remain a complimentary, community based form of exchange. Or two, in which communities “check out” of the global capitalist-based economy, and there is a convergence of virtual currencies and LETS communities to create sustainable and diverse economic systems.
Over the next several years, alternative and complimentary currencies, and the associated monetary systems that support them, will gain acceptance and become popular with wide-ranging communities. This increased activity will occur in both the virtual and physical realms. Current, volatile events with Bitcoin signal the growing pains of a new form of monetary exchange which will pave the way for other alternative virtual currencies through learning by trial-and-error and varying levels of regulatory oversight by the government. LETS systems will grow in popularity as communities increasingly look locally for food, services, and other goods as “the barter economy” matures and software systems are in place to support the exchanges. This will also allow communities to achieve greater levels of independence and a certain degree of insulation from global “shocks” brought on by unrest and environmental issues which will impact the global economy.
Nation-state currencies run the risk of losing their dominance of global currencies – in large part due to boom-bust economic cycles. Many citizens could opt for virtual currencies on one hand; or take the opposite approach and look to LETS-style programs for the bulk of their economic exchange activities. Advanced algorithms and programming will help make these types of exchanges far more efficient than they are today. Down the road, hyper-efficient and democratized exchange systems, built on intelligent, AI-like programming, could prove a threat to capitalism.
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 “Wall Street Tech Firms Open Bitcoin Exchange”, The Escapist, Adam Gaunlett, March 2014, http://www.escapistmagazine.com/news/view/132893-Wall-Street-Tech-Firms-Open-Bitcoin-Exchange
 “The absurd trial of a Russian farmer who invented his own inflation-proof currency”, Quartz, Andrei Kozenko, June 2015, http://qz.com/429536/the-absurd-trial-of-a-russian-farmer-who-invented-his-own-inflation-proof-currency/
 “Europol calls Bitcoin perfect money laundering tool”, Duhaime’s, Christine Duhaime, March 2015, http://www.antimoneylaunderinglaw.com/2015/03/europol-calls-bitcoin-perfect-money-laundering-tool-says-organized-crime-is-quickly-changing.html
 “Bitcoin Alternatives Galore, but What’s the Difference?”, Newsweek, Zach Schonfeld, February 2014, http://www.newsweek.com/bitcoin-alternatives-galore-whats-difference-229859
[v] “Local Exchange Trading Systems and Community Resilience”, CRC Research, Chris Strashik, December 2009, http://crcresearch.org/community-research-connections/crc-case-studies/local-exchange-trading-systems-lets-and-community-re
 “Could the future of money be city currencies?”, The Urban Technologist, Rick Robinson, July 2012, http://theurbantechnologist.com/2012/07/05/could-the-future-of-money-be-city-currencies/
 “Excluded communities and the future of sharing”, Share the World’s Resources, Rajesh Makwana, March 2015, http://www.sharing.org/information-centre/articles/excluded-communities-and-future-sharing