Local Cryptocurrencies 101: Everything You Need to Know About Regional Crypto-money
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It’s not news that the global economy isn’t a solid entity. Some countries, which are commonly referred to as developed, enjoy steady economy, while their developing (or underdeveloped) peers struggle to find their place in the world, and, in some cases, even survive.
Local cryptocurrencies: The theory.
Even the 21st century, which some people like Francis Fukuyama saw as the end of history, is yet to offer the solution to the economic disproportions and continuing crises that affect both developed
and developing economies. It is a well-known fact that 1 percent of the Earth’s population is in control of the majority of all money and valuable assets in the world.
For that reason, certain countries or locations seek to introduce what is called a complementary currency that, in most cases, never goes beyond the town or settlement of its origin. Such complementary currencies seek to solve the problem with the lack of cash, and keep the money within the community that had produced them. Thus such additional currencies ensure their survival and development during the times of economic unrest, at least in theory.
The mission of local currencies, however, doesn’t stop at that. After the emergence of bitcoin and the very notion of cryptocurrencies, local currencies were among the first to embrace the concept of decentralization. Such currencies, while not recognized or even banned by local regulators, in fact aspire to create an alternative economy, something like a parallel universe folded into our usual one.
Some of those alternative currencies were issued as e-vouchers with increased liquidity that sought to drive local small businesses and free them from the dependency on U.S. dollars. The communities that use such currencies are to control their local resources more efficiently, at least in theory.
With the concept of decentralization added to the mixture of local currencies, their phenomenon started worrying the governments big time. Economic decentralization could theoretically drive local communities away from their dependency on the central government, and therefore, make the powers that be next to obsolete.
This is the most fundamental reason why such currencies are yet to gain any traction even on the local level. Another notable reason is, of course, the fact that they are barely promoted. Their advantages are yet to be understood by local businesses, and they should be marketed properly in order to become a recognizable phenomenon.
True local cyptocurrencies
In practice, however, the objectives, the implementation, and the success of such currencies dramatically vary.
For instance, Iceland has issued so-called AuroraCoin, a local premined cryptocurrency one half of the entire pool of which had been distributed in equal proportions among all local citizens. It was one of the very first local cryptocurrencies minted during the prevailing disappointment of Iceland nationals in the existing bank system and its recurring crises. Unlike some of its peers, AuroraCoin is still alive, which is commonly explained by the tech-savviness of locals combined with their traditionally high political activity.
Another notable kind of local cryptocurrencies are so-called “supplementary payment instruments,” with MazaCoins and Kolions being the most notable examples.
MazaCoins were invented by the Sioux, the native American tribe. They sought to reboot their own internal economy with the coin by attracting business to their native lands as the natives are exempt from personal revenue tax in the U.S. However, as it turned out, the cryptoeconomy was a bit too complicated for those assigned by the Sioux to control their currency, so the project never really worked.
Kolions, on the other hand, were devised by Russian farmers who started using them for their internal settlements. This project seemed to work much better than MazaCoins: the farmers claim the internal prices have seriously dropped, and the range of goods and services has expanded due to cooperation. Unlike the failed Sioux project, kolions were not conceived as altcoins and never entered a single cryptocurrency exchange. That might be the reason why the coin behaved as planned and did not fall victim of fierce speculators as MazaCoin eventually did.
Another remarkable example of a purely local cryptocurrency is LLP (Liverpool Local Pound), a Bitcoin offshoot that uses its blockchain. It is a local initiative seeking to support small businesses in the Liverpool area. The service offers one to use an app where they could exchange money from their plastic card for LLP. All transactions between merchants are instantaneous, and the service also offers bonuses and discounts to cover wider audiences over time.
However, most local cryptocurrencies are not linked to a particular community or city. Just like AuroraCoin, they go countrywide, and sometimes even global, and find a niche everywhere where locals are not quite happy with the existing bank system. Such are, for instance, GreekCoin, PLNCoin of Poland, SpainCoin, and so on. Their models are generally similar to AuroraCoin.
The main problem with local cryptocurrencies, once they go online, is that they’re not really local anymore. One can access and use them from any place in the world, so in some cases they are prone to regular exchange speculations. This deprives local communities from the primary reason of controlling their internal monetary relations, and makes such money regular undermarketed altcoins. For that reason, most “local” cryptocurrencies available outside their respective communities or cities are local mostly by the name, and have quite different objectives.
For instance, eKrona is a Scandinavian cryptocurrency that has something similar to DogeCoin: it is based around a statement, not economic needs or requirements. It is positioned as a “coin for Vikings,” and is mostly about marketing and national identity, not economic benefits for the region. Euroscepticism that feasts in the E.U. these days reflected in the cryptocurrency market’s mirror as well. There were eMarks, GuldenCoins, PesetaCoins, and most of them never sought to become a serious alternative to Euro but to manifest the citizens’ nationalist inclinations.
Nationalism also plays the first violin in areas which seek sovereignty but are not given one. Such are ScotCoin and CatalonianCoin from easily guessed Scotland and Catalonia. Both regions have held secession referendums and have obvious independence aspirations. The reason for the existence of such altcoins is to manifest the desire to live apart once again, and partially to become less dependent on the economic policies of their respective capitals.
In Ukraine, a local cryptocurrency dubbed Karbovanets (which, ironically, translates into ‘ruble’) is not marketed whatsoever, and appeals mostly to local patriotic communities. The continuing turmoil in the country’s relations with Russia that had annexed part of its territory justifies the gradually expanding awareness of the coin.
Local cryptocurrencies: Practical cases.
There are only a few cryptocurrencies with regional branding that have had certain success.
One of them is PesoBit, a Philippines-based project that has even held an ICO, possibly due to the obvious global hype around the phenomenon. The policies by the Philippines president Rodrigo Duterte, who is often accused of becoming a dictator, combined with the expanding freelance sector and uncertainty in the local national currency have promoted the project, so PesoBit is quite popular in the country.
Another example here is Sibcoin, an altcoin first created in Russia which positions itself as a “cryptocurrency for the people.” A Dash offshoot, Sibcoin offers its users some services like instant remittances of fiat money, and focuses not solely on Russia but on all Russian-speaking communities around the world with slightly awkward marketing that uses lots of bears and balalaikas. The communities, however, seemed to onboard the coin, and it is quite popular there.
Some merchants and local businesses, including the aforementioned farmers of Kolionovo or store/restaurant network LavkaLavka even accept payments in Sibcoin. Maybe that might explain the coin’s explosive growth of price from virtually null to almost $2.50 this year.
In practice, nearly everyone with sufficient tech background can launch an altcoin these days. As a result, the Coinmarketcap index of all cryptocurrencies takes minutes to scroll, and the market is getting oversaturated.
Local cryptocurrencies, though some of them have gained certain traction in their respective target communities, could fill in their own particular niche in this world of endless coins and tokens, however, just like all other altcoins of any sort, they don’t appeal to wide communities so far. Some of them still do try to go wider.
On the other hand, a decentralized cryptocurrency that does not enter any exchanges and therefore is not prone to speculations and other market manipulations, could fulfill the local communities’ need to have some independence and control their own resources.
While this is unlikely to happen anytime soon, local cryptocurrencies could eventually become the blockchain’s big shot at conquering the global economy. However, such an economical decentralization entails political decentralization as well, so local cryptocurrencies will have to eventually wage a war with regulators and governments if they mean to survive and become truly useful.