https://cointelegraph.com/news/the-saber-case-how-complementary-currencies-can-go-crypto-and-change-the-world
In
the past few years we’ve been witnessing the new massive waves of
cryptocurrency adoption — you can now pay in Bitcoin for almost anything
from coffee to real estate. But the ideas were always above money in
community and there is still so much untapped potential from
decentralized digital coins. A history of Saber — a Brazilian
complementary currency project, developed in early 2000s to promote the
educational system, is an important example of the social potential we
tend to forget keeping up with the rates of exchange.
Brief history of complementary currencies
Complementary
currencies (CCs), also known as community currencies, are basically an
alternative (or, indeed, a compliment) to conventional money. Their
purpose
is usually to strengthen the local economy at times of recession by
stimulating additional transactions and therefore keeping the economic
cycle in motion or to achieve certain social, environmental, or
political goals.
In most cases CCs are not legal tender -
i.e. they are not accepted at a national level; you can’t buy whatever
you want using it - they only function as a quasi-monetary exchange
medium for certain purposes within a restricted area. In theory, CCs
should stimulate the local economy and encourage people to act
collectively intelligent. Although replacing conventional money and
undermining national currency is not usually the goal of a complementary
currency, the state often appears to be reluctant to the idea, and the
model has developed the reputation of an experiment, not a proven
method.
The first complementary currencies could be
traced back to ancient Egypt, where local people used otrakas — pieces
of pottery — to issue receipts for the amount of harvest farmers would
put into storage. Those pieces, in turn, could have been traded for
local services. Similarly, in medieval Europe people would regularly
turn in bracteates — pieces of jewelry — for new coins, although always
with a deduction. The system was designed to prevent people from
hoarding coins and keeping them out of the financial ecosystem. That, in
turn, would increase the velocity of regular money.
In
recent history, CCs started to appear in the first half of the 20th
century. One of the most notable example is the Wära free economy
experiment held in Germany. The Wära was a currency introduced by Hans
Timm and Helmut Rödiger, followers of a German merchant, theoretical
economist and anarchist Silvio Gesell. During the course of the
experiment, Wära banknotes were printed, available in denominations of
1/2, 1, 2, 5, and 10 Wära (one Wära would be equal to one Reichsmark) to
support the economy of a mining town Schwanenkirchen, which had been
hit with massive unemployment. Like otrakas in Ancient Egypt and
bracteates in medieval Europe, Wära was a demurrage-charged currency,
which means that each banknote had a monthly cost fee of one percent of
its nominal value. This prevented people of Schwanenkirchen from storing
the currency and putting it out of active circulation. It had its
benefits for users too: for example, people who bought coal (the local
economy’s staple) using Wära received a discount.
During
the course of the experiment, Wära allowed local services to continue
despite the fact that the national currency was scarce. As a
result,
new jobs were created and taxes were paid. However, the scheme ended
abruptly: the finance ministry of the Reich forbade the currency, and
the town returned to its previous decadent state.
Similar
experiments were held in other countries around that time: local
currencies were used in Wörgl, Australia (1932 - 1934), Alberta, Canada
(1936) and in the US during times of Great Depression.
The Saber experiment
In
2003 a Belgian economist Bernard Lietaer collaborated with Brazilian
professor Gillian Schwartz of São Paulo University - who has previously
worked as an economist at various public and private financial
institutions including BankBoston - to submit a proposal for a
complementary currency called The Saber to the government of Brazil.
Saber
was aimed to help Brazilian schools provide greater educational
opportunities “without creating any new financial pressure on the
economy”. The educational vouchers were designed to launch a substantial
“learning multiplier” so that a given amount of money can produce more
learning for a bigger number of students. In other words, The Ministry
of Education would allocate Sabers among schools in economic areas where
normally there is no funding for higher education. Local students at
the age of 7 were to receive a certain amount of Sabers on the condition
that they must choose a mentor among older students (they can later
earn more Sabers by giving those lessons at the rate of 5 Sabers per
hour). At the end, when they turn 17 and graduate from school, they
could spend the gathered Sabers to pay (fully or partly depending on the
available amount) university tuition fees.
The
mere idea of an alternative to the local currency sounded rather
controversial. As Schwartz remembers over a Skype call with
Cointelegraph:
“Pioneers are doomed to see
the other side of Jordan river, but never make it there. Maybe I was
researching [the concept of creative currencies] too early, but anyway
it’s not about anyone’s idea, it’s more about the zeitgeist”.
The
Brazilian government declined the project at the review stage. However,
18 years since Schwartz's team first started doing the research on CCs,
things have changed considerably. Now, the rise of Bitcoin allows more
room for experiments in the financial area. Schwartz notices:
“I
think it’s a learning process for everyone. Now the private banks, as
well as some departments at a federal level are discussing blockchain
technology here. Sao Paulo’s stock exchange has also been one of the
pioneering institutions [in that regard].
Now it’s
becoming much easier to explain to my partners, local leaders or young
people what a creative currency could be, because there’s Bitcoin and
all that discussion whears 10-15 years ago that would be seen as
completely out of question — how can you even dare to substitute the
real currency?”.
What’s next? A global creative cryptocurrency to promote education, culture and arts worldwide
These
days Schwartz is busy creating a CC that goes beyond the regional — the
project was launched in Brazil last November, although at its most
initial stage. “We lack a monetization platform for creative processes
which already exist [in our society]. [The world] should be more
democratic rather than autocratic and technocratic”, — he says, while
stressing the popularity of state-reinforcing technologies like mass
surveillance in modern society as well as fluid stability of global
currencies over the past few decades.
The platform
called DarVoz got inspiration from UNESCO’s MIL CLICKS’ (a project
Schwartz joined in 2006) agenda, which is based on the idea that
responsible consumption and production of online content worldwide could
be rewarded with digital currency. As professor explains:
“We’re
working on the idea that we can share digital toolkits that may include
the creative currency. It’s a concrete example of this idea of a great
creative community that is leveraged by universities, artists, citizens
into a whole new sphere for information exchange and local development.
Whilst it doesn’t involve governments, it’s not against [the idea of]
governments”.
Why not issue a new coin
straight away, while it seems so easy to do in the world where even
memes almost accidentally become successful currencies? Well, according
to Schwartz, it contradicts the whole idea. “It makes no sense to go for
an initial coin offering (ICO) if you don’t have the other ICO, which
is Initial Community Organization. You need [to establish an] organic
connection between community and the currency first. The idea is not
that we want hundreds of new ICOs, we’re aiming at a currency system
with diversity being an important part of its dynamics. It’s really
complementary, it’s not antagonistic to the existing currencies and
infrastructures. We’re not going backwards in terms of globalization —
that’s for trade barriers advocats. Instead, we’re going forward,
towards more interconnectivity but with a balance between the
technological and the humanitarian”.
Acknowledging that
conservative governments of the world wouldn’t be particularly happy
about the idea that a regular, state-approved currency can be in any
form substituted by decentralized ones, Schwartz seeks support among
more open-minded institutes: universities, research groups and outreach
projects.
“So far we haven’t leveraged enough support…
there’s a funding issue here” admits Schwartz: “In order to develop
something like a running currency, confidence is required. To get that
confidence, you have to be trustable as an institutional body or as an
organization. We still haven’t been able to convince any policymaker".
However, DarVoz has found an alternative solution: these days Schwartz
and his team are discussing their concept with other universities all
over the world: "That way, we should be able to have a global social
currency that connects different cultural and educational projects”.
Crypto technologies and transparency
To
run such currency, DarVoz needs a platform. Schwartz’s team is
currently negotiating with Holochain, an open source framework for
peer-to-peer applications. “We’re going to hold a meet up with their
team to brainstorm at the end of March. [But the] political situation in
Brazil is very unstable at this point. In 21 years that I’ve been
working with those projects at University of São Paulo this is the worst
time to start” the professor laughs. Some caution wouldn’t hurt,
Schwartz believes:
“It’s important to hold
an open dialogue with the central bank as to what kind of currency that
is and what kind of sphere it’s connected to… all kinds of walls are
being built these days. It’s kind of like going back to the middle ages
in that sense”.
The currency’s purpose is
part of its value, as opposed to regular currency, which, according to
Schwartz, “is useful for whatever — [with regular money] you can buy a
gun, you can buy a glass of water”. His team is looking to achieve NGO
levels of transparency — the activities circulating within the currency
must be traceable and accountable for in order to be monetized. Such
digital records are supposed to be stored within the Blockchain-type
backbone of the currency:
“It naturally
evolves into the public sphere of shared audiovisual content … Say, you
held a lesson with 15 kids in Bolivia and took care of the garden around
the church. You connect to the global network and share the record of
your activities… Basically, it’s about how you translate knowledge into
acknowledgment on a democratic [platform]”.
Despite
the complexity of his concept and low interest among policy-makers and
investors, Schwartz remains optimistic. “This is a learning process. The
issue here is not about the currencies, it’s about all countries
reaching a new level of understanding that can be at least comparable to
the post-war welfare consensus. We’re now probably living through the
last stages of the crisis. A new consensus is very likely, because we
have much more tools to discuss, share and use. However, on the other
hand, those very tools are very useful for control, censorship and
oppression as well. You can use a knife to kill or to slice the bread
and share”.
