Feasibility of online cryptocurrencies versus digitally managed credit systems (i.e. Ripple)

Hey all,

Personally, I would be more in favor of supporting city- or region-bound local currencies - but for the purpose of giving the #grexit scenario some momentum I think this might be a very interesting potential for effective form of direct action.

For every Euro that is taken of the bank, about 10-20 euro’s will disappear from the market - providing an excellent vector of attack, giving that a suffciently effective alternative is in practise.

However, while visiting Greece for the last couple of weeks one thing I noticed is the low penetration of mobile internet-connected devices (i.e. tablets and smartphones). Hence, for the introduction of a cryptocurrency to take off, we would have to introduce a paper or physical complement or double. In any case, I urge people to study the Ripple protocol, starting by the following resource:

https://www.youtube.com/watch?v=M16ZatXbmLg

(Note that whenever you hear Gateway, you should realize that they’re essentially a superset of what we would traditionally consider a Bank.)

If we are willing to settle for a more centrally (but perhaps democratically) managed currency, we could use something like Ripple to introduce any number of digital/physical currencies. Doing this would give us the convenience of easy exchange and direct money transfers as long as people are willing to buy and sell eDrahma for Euro’s. In this scenario the challanges will be in getting the currency accepted by users as well as assuring that it is actually the community managing the currency, as the currency creation would have to be centralized (though federation of authority, with several local ‘banks’ should be now problem).

In this case, a better approach would be to have a plethora of local currencies, as I mentioned in the beginning of the mail. This way there will be no centralization and thus no single point of attack for (tax) authorities and the likes. Think of it as a digital extension for the LETS system. As this would, ideally, make use of communities who already have some means to represent themselves, determining the monetary policy would be less of a problem.

Alternatively to the aforementioned approach, we could settle for a fork of an existing Bitcoin-clone. The clear advantage with Bitcoin-like protocols being that they are fundamentally decentralized. However, we should (somehow) make informed decisions on monetary policy: i.e. wether to go with an inflationary (like fiat currencies) or a deflationary (like Bitcoin) model, whether and how to do mining and (again) how to convince people of the value of this thing.

In both cases, the software-part would be hard but still several factors to the social part. The difficult part with introducing community currencies is to convince communities to accept the currency, to make sure it integrates with and aligns with the interests of the people. This latter part might be more easily accomplished by opting for the first option - though previous lessons suggest this is a proces that takes time.

Perhaps the wise way to go is to opt for a hybrid strategy; introducing the eDrahma as a Bitcoin-fork on a short term, as a form of direct action or intervention. On the long term I hope to be able to package Ripple or an equally powerful technology (Ethereum) such that it will be easy for any community to introduce, manage and swap their own currency.

For more information about alternative currencies, please see my knowledge base (under construction):
https://decentralize.hackpad.com/Decentralized-monetary-systems-3tNKyXVEqXM