Co-written by Victoria Alsina. Originally published in Forbes on March 27, 2018. Available online here.
The comedian John Oliver dedicated a recent episode of Last Week Tonight to discuss cryptocurrencies, “the virtual currencies that combine everything you don’t understand about money…with everything you don’t understand about computers.” Cryptocurrencies are alternative digital mechanisms for exchanging value. They have no centralized issuing authority like a central bank but, instead, rely on cryptographic technology to facilitate accounting and recordkeeping. Bitcoin was one of the earliest examples but the number of these cryptocurrencies is proliferating as technology creates the opportunity for anyone to create their own secure, tradeable currency.
While most of the 1,300+ actively traded cryptocurrencies are designed to generate profit, there is an exciting new entrant into the crypto- and alternative currency creation space: cities.
Currency Is the New Money
From Bristol to Barcelona, cities around the globe are leading a revolution in the creation of complementary “civic currencies” — some digital, some physical — designed to promote local economic development, foster active citizenship, and invest in sustainability while building a sense of community cohesion.
Also known as “complementary currencies,” “alternative currencies,” or “social currencies,” cities have issued their own tender long before blockchain or the internet (see International Journal of Community Currency Research), but technology is jumpstarting the movement around digital civic currencies with Barcelona and Berkeley being the latest to announce that they would start to issue their own tender.
How do these civic technologies work? Often, the city will pay civil servants partially or even completely (the Mayor of Bristol is paid entirely in the Bristol pound) with the local civic currency. Residents and businesses can also purchase with national tender. They can then use the local currency to pay taxes and fees or to purchase local services.
For example, in the St. Lawrence Market and Gerard Square areas of Toronto, local businesses accepted Toronto Dollars. One Toronto Dollar was worth one Canadian Dollar, which residents then used to shop locally. Ten cents of every dollar went to support community projects, including for those who are unemployed or homeless. In Santa Coloma de Gramenet in Catalonia, they pay part of civil service salaries in the “grama,” which can only be spent locally, again fostering economic development.
By using the local civic currency, some cities also dedicate a small percentage of the value to promote social innovation and invest in local environmental and sustainability projects. Nu-Spaarpas, for example, was an experiment launched in Rotterdam in 2000 to create incentives for sustainable and eco-friendly behavior and purchases among its citizens. Consumers were rewarded when they engaged in behaviors like buying products that were identified as “green” or simply recycling. The points they were given could be redeemed for various products and services such as event tickets, public transportation passes, and “gifts” from participating shops.1
The city of Berkeley, California is also taking advantage of the blockchain technology to enable investors to buy Berkeley’s cryptocurrency to fund city-issued municipal bonds. The money raised by this crowdfunding will be used to pay for things such as affordable housing, homeless shelters, ambulances, and street plantings. As with other local currencies, Berkeley coin owners will potentially be able to spend the currency at participating businesses.
Spice Time Credits in the UK is pushing the innovation envelope even further to encourage altruistic and collaborative work within communities by allowing people to exchange abstract and typically arbitrarily-appraised concepts such as time spent volunteering. For every hour that an individual contributes to their community, they earn one Time Credit which can be spent accessing an hour of activity provided by the organization’s corporate or community partners.
Civic Engagement Powered by Civic Currency
What’s next on the horizon for civic currencies? Cities like Barcelona are beginning to contemplate use of these new currencies to create an incentive for citizen engagement and civic participation in urban democracy, not only in the urban economy, by rewarding constituents for getting involved.
Just as in the United States, where the government compensates individuals who do not otherwise get paid by their job for the time spent doing jury service, civic currencies may offer a way to reward people for giving of their time and expertise to help their community. Toronto dollars, for instance, have been given as gifts to welfare recipients who perform volunteer work for charitable and non-profit organizations.
As more cities turn to the internet to invite the public to participate in urban lawmaking, they will need incentives to promote engagement. Madrid and Paris, for example, invite the public to co-create solutions to urban problems using Decide Madrid and Madame La Maire, J’ai Une Idée, respectively. These so-called crowdlaw platforms enable the public to participate in diverse stages of law- and policymaking, from spotting problems, to identifying solutions to deciding how money will be spent. Civic currency could create an incentive for more and more diverse people to participate and participate well. It is easy to envision having the city give small amounts of civic currency that people can use to pay their taxes, parking tickets or shop for local goods, in exchange for helpful contributions to crowdlaw processes.
More generous rewards can be reserved for individuals and local groups that invest more time in working with their cities, for example, to co-design a park or volunteer in a local school. Nonprofits like the IdeasLab in Costa Rica are offering a digital civic currency called the Revolutionary Token, an Ethereum-based cryptocurrency to support investment in civic leaders and change agents. One experimental study has shown that compensating participation with city coins significantly increased the number of people that contributed to the participatory process, independently of their income, educational level or age.2 By using civic currency, the reward offers both extrinsic reward as well as intrinsic, psychic motivation. Multi-motivational incentives arenas are well-known for their advantages.3
Let the Experiments Begin
Putting a price on participation will have its challenges, to be sure. Some will argue that participating in the life of one’s democracy should be its own reward and an obligation incumbent upon each of us that should not be compensated. However, given the economic benefits to the local community of using civic currency, it would make sense to test the impact.
Similarly, how do we measure the value of commenting in a discussion forum or participating in a participatory budgeting exercise? Conventional wisdom suggests that the quantity, quality and diversity of information gathered, as a result of each contribution, should be part of the analysis and city councils should develop metrics together with the public to assess their social impact.
The use of city coins as “civic currencies” to promote citizen participation is definitely an option that city governments should explore and test. As more decentralized cryptocurrencies proliferate, wouldn’t it be nice if they helped us to do well by doing good in our own cities?
1 Joachain, H., & Klopfert, F. (2012). Emerging trend of complementary currencies systems for environmental purposes: changes ahead. International Journal of Community Currency Research, 16, 156-168.
2 Prados Rodríguez, M., Gómez-Álvarez Díaz, R., & Rodríguez Morilla, C. (2018). Votecoin. La participación ciudadana digital en el ayuntamiento como principal impulsora de la moneda social en la ciudad. In II Congreso Internacional Move. net sobre Movimientos Sociales y TIC (2018), p 321-342 (pp. 321-342). Grupo Interdisciplinario de Estudios en Comunicación, Política y Cambio Social de la Universidad de Sevilla (COMPOLÍTICAS).
3 Van Ransbeeck, W. (2016). Gamification in Citizen Participation. Retrieved from https://www.citizenlab.co/blog/civic-engagement/gamification-in-citizen-participation.