More about targeted currencies

A targeted currency is one that is designed to solve a specific problem. Every community has unmet needs and untapped resources. Targeted currencies can serve as the catalyst to activate latent resources, creating new economic flow.

In an ecosystem, each species has their own vital fluid; the blood of a deer would not substitute for the sap of a pine tree. But too often currency designers bring the thinking of managed systems (hierarchical, top-down) to the design of currencies. This thinking manifests by trying to use a familiar system over and over again, even when conditions differ significantly from those that presaged the original system design.

Rather than using general design parameters, a targeted currency has tailored characteristics that address the specific needs, resources and values of a community, matching needed outcomes to unique problems.

Targeted currencies are dynamic. Generally, they start their lives with a simple set of characteristics that address the needs, resources and values of a community. The currency evolves as the nature of the community changes and users begin to realize the power of currency distinctions, adding layers of complexity as they’re appropriate. These shifts can encompass major characteristics as well as refinements of algorithms that define how quickly and to what places the currency flows.

Targeted currencies can exhibit interdependence. When we design solutions to solve complex, multi-faceted problems, one possible result is a system that uses multiple, interdependent currencies to achieve the desired resource flow. Just as human blood carries red and white cells, so, too, can the economic fluid of a community carry multiple messenger streams that combine to provide economic vitality.

Targeted currencies resonate with the values of a community. With the wide diversity of community values in the world, money can be asked to provide some unique social roles and uphold ancient agreements. By supporting the underlying social mores, a targeted currency can enhance the community’s bond.

There some general currency classifications and terminology that all fall within the concept of targeted currencies, understanding that each individual currency is targeted to address a specific situation. Some of the currency types we develop include:

  • Community – These currencies are about supporting trade within a group of like-minded people, many of whom want to move beyond the capitalist market economy. Since many communities in an information age are non-local, currencies can be vital in creating trading markets to support their particular needs.
  • Local – These currencies can support a small town or a neighborhood within a large city. These communities are punctuated by the strength of physical interaction and the chance of town-hall meetings to cement the communal bonds. Often times, these currencies can support ‘buy local’ programs that provide leverage against international big-box retailers.
  • Incentive / Loyalty – These currencies are often used by businesses to support return business and are issued based on buying activity. The most familiar are frequent flier miles, and myriad iterations have followed the airline’s lead.
  • Reputation – These non-tradeable currencies reflect a person’s standing within a particular community. They are particularly popular in large online communities like eBay, where there is a combination of interactions with near-strangers and some type of risk, be it financial or trust-based (how do I know this statement is true?). These currencies incent good behavior and reduce the free-rider problem, as participants know your actions (positive and negative) will be recorded.
  • Social Justice – These currencies are used to right a particular social wrong. In the case of food stamps, they allow less fortunate people to afford food. Time-Dollars release latent skills in a community and incent members to exchange those skills, providing self-sufficiency in communities where that may be in short supply.
  • Economic Development – These currencies are built to improve the flow of national currencies, often within a geographic region defined by a city, county, multi-county region or other large trading area. They are often (but not always) built in partnership with municipal or state governments, or multi-regions jurisdictions and councils of governments.

In order to clarify some potential points of confusion, it is important to address the distinction of targeted currencies relative to some other familiar emerging terms in the currency space:

  • Alternative – this is a fairly viable name for the large set of non-national currencies, but has been rejected by much of the currency community as it seems to threaten established interests. Currency practitioners are not trying to incite problems with central banks so they have been steering away from this term.
  • Complementary – This is the non-threatening term in vogue with most burgeoning currency practitioners at this time. However, it seems that most Americans don't fully appreciate the spelling difference between "compl-e-mentary" and "compl-i-mentary" so they hear "free money." The community that has rallied around complementary currencies appears to support a pattern of thinking that supports creating a few one-size-fits-all solutions for application to ALL communities instead of appreciating the disparate needs of different communities. We don’t believe this is the intent of those who coined the term, but it has emerged in the ensuing discussions.