Saturday, 19 September 2020

Think out of the bucks: The future of money belongs to free digital currencies, not to Facebook’s Libra

The idea conveyed in the title belongs to Jean-Francois Noubel of France, a bold out-of-the-box thinker on the future of money and a passionate votary of “free currencies” as the bedrock of the “next global monetary system”.
He predicts that “money is about to follow the same path the media followed during the past years; from controlled ownership with one-way top down broadcast systems, to peer-to-peer, participatory, open publishing. Millions of free currencies will soon circulate on the net and through our cellphones.”

These free digital currencies will not be owned by governments nor tightly controlled by central banks. Rather, they will be issued and used by diverse marketplaces and communities, offering an alternative to “conventional debt-based, interest-based money”, which accounts for almost all of the national currencies circulating in the world today.

After ‘social media’, are we going to witness ‘social money’? Well, this tantalising thought has suddenly become a subject of hot debate around the world after Facebook, the big daddy of social media, recently revealed its plans to introduce a new global digital currency named Libra powered by blockchain technology. It will be available on WhatsApp, which FB owns, and also on a standalone app expected to be launched next year.

Libra will surely face numerous legal and regulatory roadblocks in country after country, not least in India. Nevertheless, Facebook seems to have built a physical shield and a digital battle tank that it hopes will pierce through the hurdles. On the physical side Libra will be backed by 28 members, including large global corporations such as PayPal, Uber, Visa, Mastercard and Vodafone. Its digital heft lies in the fact that Facebook has 2.4 billion users worldwide, 300 million in India alone using WhatsApp. We have to wait and see how Libra’s rollout will impact government-backed currencies and the global financial system.

However, what the world has not yet adequately recognised is the possible birth of a far more revolutionary monetary species – a large number of free digital currencies operating mostly locally. Libra, a global cryptocurrency, does not fulfil a key promise of the digital revolution – namely, decentralisation and true freedom to individuals and communities. It may bring ease, but not empowerment. Indeed, fears are already being expressed that the Libra juggernaut could further empower Facebook and its giant-sized associates by reducing the powers of national governments.

What Noubel and other champions of free digital currencies have been championing is quite different. The internet is causing cracks in the barriers erected by nation-states that are bound to widen as more and more ‘glocal’ communities interact, work collectively, create wealth together, and forge bonds of mutual understanding. Precisely because they can now work, produce and trade in non-traditional ways, they can also, potentially, create their own trust-based currencies to suit their specific needs.

Several innovative local currencies are already at work – for example, Chiemgauer in Germany seeks to increase local employment through local enterprises; Fureai Kippu, a “compassionate currency” in Japan promotes voluntary service to help senior citizens in an ageing society; WIR in Switzerland uses a barter system to increase commerce and profits of businesses; Time Banking in the US fosters reciprocity-based work trading without dollars changing hands.

New Money will fulfil many ideals of Gandhian economics. It will increasingly democratise both economies and societies, bring power into the hands of common people, and disempower monopolistic, distant, centralised and often unaccountable power structures.

Community money, based on trust within local (or virtual) communities, can create wealth that is more broadly shared – and hence is conducive to inclusive development. It can enhance social capital and cohesion within communities facilitated by informal pacts. By encouraging volunteerism, philanthropy and gift economy, it can also far better take care of the elderly, the disabled and the underemployed in communities, who are mostly neglected in today’s impersonal market system.

Of course, the creation of this bright future will require a lot more conceptualisation and trial-and-error self-correction. Let us hope that heavy-handed regulation by power-crazy national bureaucracies do not kill innovations that can promote ‘social money’ as widely, as fast and as beneficially as ‘social media’ has grown.

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