Over the past few years there has been quite a bit of speculation about whether ubiquitous computer networks coupled with strong cryptography might lead to new currencies that are beyond the reach of the state. But why wait for the future? It turns out some Americans are already using alternative currencies.
According to a Fox News story, since 1972 more than 60 localized currency systems have sprouted up around the nation. In Ithaca, New York, for example, millions of dollars worth of Hours have changed hands. The Hour is paper and rectangular in shape much like the familiar dollar bills, and available in different denominations. So long as the currency is exchangeable for dollars, the scheme is completely legal.
Ithaca’s experiment isn’t quite motivated by libertarian concerns, but rather is the result of more left wing ideas of communitarian economics. The idea is by using Hours, the money can only be spent in Ithaca. Of course there’s nothing to stop such a currency from gradually becoming regional.
Since these competing currencies by law have to be exchangeable for the state’s funny money these currency systems aren’t really an alternative to Federal Reserve notes, but anything that gets people to question the fallacy that money must be created by the state is a good thing in my book.
Funny money. Michael Y. Park, Fox News, October 16, 2000.