CRYPTOCURRENCIES IN THE CIRCULAR ECONOMY OF COMMUNITIES

I had started writing a fairly extensive essay on the complexities of what we call, sometimes very naively, Circular Economy. But I doubt anyone would read it. So I've decided to do something much shorter on a couple of concrete use cases.

Economic Community (EC) is a set of close Economic Units (EU) (people, producers, merchants ...) that can easily relate to each other in a given territory.

Circular Economy (CE) is, ideally, the capacity of a EC to sustain itself with its own resources and to carry out voluntary and satisfactory economic relations with other Communities.

The health of a CE in an EC can be deduced from the percentage of EU that are producing and consuming at the same time, that is, they receive but they also give something. In some contexts the word "prosumers" is used. The higher the percentage of prosumers, the better, since there are many elements that contribute to the system and not only consume the resources.

In a hypothetical EC that does not use money as a usual means of exchange, in reality the currency is labor and what is consumed is the product of labor. If everyone consumes but does not work, it is unsustainable.

But something similar happens when money is the medium of exchange. If for some reason many EUs had money but were merely consumers of the product of the work of others, an unsustainable situation would quickly be reached. The producing EUs would end up with a large amount of money that they could not use in the Community and, consequently, a collapse would take place.

What novelty does the use of a cryptocurrency provide to the circular economy of a community?

Starting from the real conditions of the economy in the world, the acceptance of cryptocurrencies supposes, for the different ECs, a great advantage:

independence of controlling entities, States, banking systems and
financial intermediaries.

But also a drawback:

constant changes in the referential value of the cryptocurrency since
it is determined by supply and demand in a speculative market.

Even so, the inconvenience is not serious because:

1.- It is not difficult to sell the cryptocurrency quickly in such markets to obtain another currency that each EU considers more useful or appropriate for that moment, which may be another crypto or fiat currency.

2 .- It is plausible that, in the case of a cryptocurrency of finite emission, it is preferred to save in whole or in part hoping that its referential value will be higher in the future, since its implementation and use are progressively greater.

So the use of a cryptocurrency in an EC brings advantages and not too many inconveniences. Even more so if that currency is adopted by Economic Communities united by common goals or ideals that accept it as part of their own economic culture.

The latter has not yet happened in an obvious way except with one: Faircoin, which follows a particular economic model, presenting specific characteristics with its own challenges.

THE FAIRCOIN CASE

As I have already tried many times about this currency, I will focus on the issue that concerns this article: the creation of Economic Communities with CE using Faircoin.

Additional characteristics

• There is a double assessment of Faircoin: that of markets, like almost all other cryptocurrencies and also the value agreed by the Global Community itself that has adopted it (Faircoop).

• Faircoop's commitment to change Faircoin to Fiat currency at the agreed price to any EU in line with the Community's ideals that require this exchange.

To understand the enormous challenge that this represents and, even, its viability, we must also understand the reality of how the EC concept is applied to Faircoop. There really is not a global EC but small and incipient local ECs more or less developed.

EC Local is any network of producers, merchants and consumers that can interact with each other easily. Basically it is the faircoop concept of Local Node.

Hypothetical case:

If in such Local ECs Faircoin are accepted at the variable market , there would be no more inconvenience than those of any other cryptocurrency. The wallet would show the referential value of the moment and the economic relations would take effect normally. It could be exchanged to Fiat currency or facilitated that change at any time.

On the other hand, the advantage of finite cryptocurrencies persists, which, by growing the community that uses them, their reference value with respect to the inflationary currencies of the States, may be increasing. With this increase in value, the purchasing power of people who have that cryptocurrency also increases and all this occurs in a way that no one is harmed.

Current case:

But, if in the Local ECs Faircoin is accepted at the consensuated price and this price is notoriously higher than the price determined by the markets, we place ourselves in a position that requires an enormous intelligence and agile maneuverability so that said Local ECs are viable.

Note that, for all purposes, the Local ECs behave as small independent States (economically speaking).

While the market value and the consensuated value are so different, Local ECs can, at any time, have massive Faircoin entries from any EU with a merely consumer role. And those situations would not be sustainable since those Faircoin would have to be exchanged to the consensuated value (unfortunately much higher than the market value) quickly draining Faircoop's Fiat reserves.

Hence, the solutions can not be simply to look for other unsustainable Fiat entries that would be drained even more quickly.

It is very important to consider more logical operations. Between them:

• Reconsider the previously consensuated value downwards. This is something that seems incompatible with the foundational proposals of Faircoop. And, in any case, a modest decrease would not solve the matter unless it came to approximately equal to the market value.

• That all the EU establish limits (daily / weekly / monthly / total) of the amount of Faircoin that can be accepted in a sustainable way. And so each of them only manages amounts that can assimilate, use or save without having to exchange to Fiat.

• Strengthen the networks based on prosumers (consume but also produce, give and receive at the same time). This implies accepting Faircoin following a model similar to that of mutual credit currencies, a model that could be made much more flexible as soon as the possibilities of exchanging Fair to Fiat improve.

These are the special features of Faircoin. As I have always said, it is a unique economic experience in the human history that deserves all our attention, respect and even active participation. However, it must also be pointed out that it requires a quick maneuvering capacity to deal with a capitalist economic system that will have no qualms about destroying it if it can not or can not handle maneuver with sufficient speed and intelligence.

Also, as I have always said, I am an optimist.

Note:
This is a self-managed translation of my article in Spanish: # CRIPTOMONEDAS EN LA ECONOMÍA CIRCULAR DE COMUNIDADES. I do not speak native English. Even more, I am far from speaking it and writing it well. Please, be benevolent.