Hacker News Reader

Comment by callmeed | Hacker News Reader

This sounds really silly ... mainly because people are using cash less and less every year to make purchases. They use credit/debit cards more than cash.

On the other hand, I think it's important to support local businesses (when they deserve it) and the idea of a co-op of local businesses sounds like a good idea. In fact, I think there could be a startup idea in there. Something like:

1. A business creates a co-op group online and other local businesses can join.

2. Consumers can go to the group's page online and purchase a gift certificate/voucher that gives them $1.10 credit on the dollar.

3. Consumer prints it out (has a unique code on it) and can use it at any of the member stores

4. Member store would just need internet access to enter the code and debit the voucher and could transfer their money out later

Thoughts?

View on HN

"This sounds really silly ... mainly because people are using cash less and less every year to make purchases. They use credit/debit cards more than cash."

Hmmmm. Assuming each store has a wireless internet connection available to them (possibly at the cost of a wireless router), using off-the-shelf hardware for magnetic cards and an embedded system, a server on the internet, and some programming time, how much money would it take to set up an alternate local currency with full plastic card support? Not much.

Probably still too much. But not much, and the thing that's really expensive initially, the custom programming, can be re-used well.

The custom programming could do some clever stuff, too; automatic backing to a standard credit card? And you'll need full transaction capabilities; I need to be able to send some other user the money for not much extra cost.

I don't think full plastic card support is anywhere near out of the question. In fact, this is far more practical than it was in the 1930s... if it doesn't happen this recession, I wouldn't be surprised it does in the next one...(!)

I like your ideas. They should be explored more.

I think the big danger is that, in this model, currency continues to exist in the ether. Without something in one's hands, a financially strapped nation might avoid this type of system.

I think there's scaling issues to consider, and, for a change, good ones rather than bad ones. A small currency with only a few tens of thousands of dollars of US$ equivalence in it can afford to be purely ethereal. A little less secure, too (though not egregiously poorly secured, which is the usual case for a new system of any kind).

After all, in the end, money is simply confidence. I don't believe in the gold standard because I believe it fundamentally misunderstands the nature of money (and of gold, but that's another story). Money simply is the confidence that the next person will also accept it, and the fact that the confidence chain can be broken is not fixable, it is fundamental to the nature of money. US Dollars, even gold-backed, can have the same problem, and note that the reason we're talking about this at all boils down to fear that the US dollar won't be as useful as it was before, that the US dollar won't be good enough to keep the local economy going.

A smaller system, especially if it is truly geographically local, can engender confidence in ways that the larger system can not; "I know everybody using this", or if you prefer, more ominously, "I know and have easy access to where everybody using this lives".

You can grow this like you could grow any other enterprise, I think; the system you get out of the gate that works in Small Town doesn't need to be the same one that works in New York. The only tricky thing is that I have no idea how to monetize this; who will want to buy a currency that you're taking a profit from? And it will need to be monetized; there's some risk here that I wouldn't touch with a ten-foot pole without an LLC minimum, and that LLC sure wouldn't take it on for free.

how much money would it take to set up an alternate local currency with full plastic card support?

you need someone with a brain to regulate the amount of currency in the system. how many FooDollars will exist at once? this has been tried. years ago, a neighborhood tried to set up a "chit" system for getting babysitters. because they had no idea how many chits to print up, they just printed up as many as anyone would ever want...in the end they just created their own hyperinflation.

If it is backed against another currency, presumably US dollar, don't you avoid this problem? If you put in USD1 you get out small-town-dollar1.1

That makes it illegal.

Can you explain?

I genuinely thought that was how these currencies worked. What am I missing?

mainly because people are using cash less and less every year to make purchases. They use credit/debit cards more than cash

credit cards are cash...someone else's cash (namely a bank) that is being loaned to the card user. nonetheless, the transaction is in the local currency at the point of purchase and paid back in the local currency of the bank and user

I was referring to people actually carrying paper cash on their persons and using it for purchases.

Reply on news.ycombinator.com