Regional Currencies in Crypto: Localizing Digital Assets

Regional (local/community) currencies are a means of exchanging goods used in specific geographical locations.

What are regional currencies?

There are many currencies used in the economy that can be found in one locality. A local currency is a currency that is used in a specific geographical location. A regional currency is a local currency used in a larger area and a community currency is usually used within a specific community as a medium of exchange.

Local currencies can measure value in different ways - some exchange 1:1 for local legal tender.

Among others, working time is used as a valuable currency and the value of each person’s worktime is calculated in the same way. The purpose of creating local currencies is a variety. In some case, they are used to support and incentivize spending by local groups and companies. They are created because a community of people distrust the legal tender of their state. As old as money itself, this distrust is not a new thing, but the same in its history.

It is this social reason that helps to create jobs, promote local activities and small businesses in the region. This social reason promotes job creation, the promotion of different local activities and small business activity as well as the strengthening of community solidarity.

In smaller communities, counterfeiting is not a big problem. However, as the world’s population grows, the pressure on these local currencies increases as governments begin to feel competition in the monetary system.

Blockchain offers several solutions to the problems facing local currencies. One solution is to automate the loss of value of a currency over time. Usually a token is worth a fixed amount of an asset (be it something tangible, working time, etc.).

However, many regional currencies tend to have their units slowly lose value over time so that no one starts hoarding them. Blockchain infrastructure separates documentation and tokenisation and allows a gradual loss of value to be introduced into tokens, such as one percent per day or month. This separation is a simple technological solution and works perfectly in a fully digital community.

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