How a hyperlocal cryptocurrency makes a better financial system

Money and power are concentrated too much in a small elite of technology companies and financial institutions, for example, claims the Society 4.0 association of Nyenrode professor Bob de Wit, among others. Cm: Roel Wolfert, a payment expert from Society 4.0, spoke about how a diverse palette of currencies can support such a regional future.

Society 4.0 focuses on a society of and for citizens. With increasing globalization, there is a movement towards more consolidation of money and power. The current political system is based on a delicate balance between workers and owners. Production is the main driving force in the industrial system. That is about to change, argues Bob de Wit, Professor of Strategic Management at Nyenrode Business University, in his book Society 4.0: The eight key questions for building a civil society† Production is no longer what the economy is all about in today’s world: Value creation comes from investors, banks and technology companies. The role of the labor force decreases, while the importance of capital increases. In Guide Region 4.0, to be published later this year by VMN Media, Bob de Wit and Roel Wolfert outline how a more local community can look and be achieved.

This book is intended as an inspiration for people who want to build a vital and hopeful future for future generations. In his vision of a different and better society, Bob de Wit explores the possibilities for new technologies, examines ‘weak signals’ and assesses countless new social initiatives and visions for the future.

Money and power concentrated

This change creates instability in the delicate balance of power. It is accompanied by anxiety. In De Wit’s vision, money and power are increasingly concentrated with those in power behind technology companies, financial institutions and pharmaceutical companies. According to him, today’s society is more and more geared to serve these rulers and no longer to improve society as a whole. According to De Wit and Society 4.0, a better social future lies in governing on the basis of regional interest in supporting a new civil society.

Also read: No major reset: In Society 4.0, the citizen decides the fate of the region

Purpose of money

‘What is the purpose of a society?’ payment expert Roel Wolfert from the organization wonders rhetorically. “It includes a support mechanism, a certain type of money.” The idea of ​​living in the community to raise as much money as possible, he calls a ‘user error’. Wolfert: “The goal is to enable trade and to save. It supports you to create a wonderful life, because money as a means can help you with that. Money is a means, not an end. Today things are seen very differently. “We need money, so we need a lot of it.” If your goal in life is’ to make money ‘, I think you’re living a bad life.’

The euro is not a currency that fits the goals of a regionally driven society, he explains. ‘You have to ask yourself: what purpose does this coin really serve? It is said that the euro is there to facilitate trade. But the effect is that there is a large concentration in areas such as Amsterdam, Frankfurt, Paris, etc., and via multinational companies also to Silicon Valley and Manhattan. Rural drains economically. Of course, this is not only caused by the euro, but it plays an important role in the impoverishment of regions. ‘

Monetary instrument lost

In addition, countries and regions have less control over their economic development with such a central currency. ‘Before the euro, EMU / ECU were used as units of account. Each country had its own currency and they moved separately, but together they were one. If the guilder went up a bit, but the brand went down, everything became one. There has been a strong bond with the euro, so the relationship is always the same, he continues. “It has made it difficult for some countries because they have lost a monetary tool: the devaluation of the currency.” This is an important means of making a region economically interesting. If, after devaluation, it is cheaper to get products from Germany, exports to them will get a boost and it will give economic strength to recover.

According to Wolfert, a solution could lie in different currencies, slightly following the Swiss model. Switzerland has the franc (CHF) and the virtual currency WIR. »WIR is used more when Switzerland is in financial difficulties. Companies then trade with each other in WIR. It makes them less sensitive to large economic fluctuations, because one can better absorb economic downturns with different currencies. ‘ A currency monoculture, such as is the case with one euro, is less able to absorb peaks and troughs. “With fewer coins, we have created efficiency, but compromised on efficiency.”

From global to regional

There are some dominant currencies – such as the dollar, euro or yuan – that have the advantage that users can use them anywhere. “But in essence, the dollar was made to serve America because that’s how money was designed.” Outside the United States, it is possible to use the dollar, but not for the benefit of countries that currently use the currency. He cites Argentina as an example that has been through some financial crisis. “The local peso is collapsing and everyone is coming back to the dollar. America is pursuing its own monetary policy to govern at the national level, but it is also having an impact on Argentina. It is making it difficult for such countries to get out of a stalemate. That, of course, is not the only reason, but it is contributing to such a country falling back all the time. ‘

The currency is therefore an important pillar to set in motion a transition to a fairer society where there is more regional balance. To illustrate this, he mentions regions such as the Gelderse Vallei, around Ede / Wageningen to Nijkerk, or Meierij, the area roughly between Den Bosch, Eindhoven and Tilburg. ‘Such a region has a certain identity and interests, such as creating healthy SMEs and producing food and energy itself. If you set it up correctly so that it works in, for example, Meierij or Gelderse Vallei, you also look at the barter and currencies that come with it.

Regional currency

In the idea of ​​Society 4.0, we organize money on three levels. First, normal consumer money. ‘It’s the money you and I have on a card, in a blockchain wallet or in our pockets. You do this with your daily expenses, for example at the greengrocer or the farm. That money stimulates the economy at the regional level, he explains. ‘If you do it in euros and buy from Albert Heijn, your euros will go to Zaandam and then to shareholders all over the world. It no longer circulates in the region. The formula for economic growth is the amount of money multiplied by the rate of circulation in this area. ‘

In short, the economic growth force of a region is not as strong as it could be by moving money to places outside the region. With a regional currency, the shareholders in production become the producers from the region itself: the farmers, traders, the local energy producer and the like. ‘The people of the region have an interest in profit. We are moving towards a common model, where the region determines production and not, as now, a shareholder in Washington DC. ‘

In addition, the region will also have the monetary instrument that disappeared with the changeover to the euro. “If things go badly in, for example, Dairy, the currency will be worth less. But it also gives a competitive advantage because people think, “I want to pick up my tomatoes at the Dairy because they’s cheaper there.” These coins should actually do their work in Gelderse Vallei, but will do their work in Dairy. Users must, so to speak, pay a fine for the exchange. This tobin tax is the Robin Hood tax to make people want something but not make it too easy. Then you get people thinking: “We also have tomatoes here. But they have good beer in the Dairy, which we do not have in Gelderse Vallei, so we get it there. “That’s how you get competitiveness. ‘ In this system, a region differentiates itself faster on the basis of its identity.

Business and international coins

Second, we also need a corporate currency that complements this system, Wolfert explains. ‘Think of the one WIR from Switzerland. You do not always want to pay a regional tax right away. You may need office supplies or components that are not regionally produced but that are located elsewhere in the Netherlands. Then you will not pay the consumer’s tobin tax. For business transactions in the larger region – whether it is the Netherlands, the Benelux or something else – you need to trade via this currency. ‘ An example is the production of cheese in North Holland, which uses mushrooms from Groningen. “If you do not have the currency to do business without restrictions, it will not benefit the regional economy.”

Thirdly, a currency for international trade is similarly needed. ‘You can also grow food in the region, but suppose you need rice from Asia. Or olives from Greece. ‘ Then you end up with fiat coins, internationally accepted currencies like dollars or euros, but it can also be Bitcoin, for example. ‘These are international currencies for international trade and we will no longer use them locally.’ In this way, the regions gain more autonomy and income inequality decreases, Society 4.0 believes.

The role of cryptocurrencies

Cryptocurrencies are a solution to the shift to, among other things, local currencies and a separation between consumer, business and international money, says Wolfert. ‘Bitcoin was conceived as a payment currency but has become an investment object. Also a user error really. But there are also coins like Stellar, which are developed solely for payment and to process many transactions. The strength of the cryptocurrency community is that they bring diversity to a world where coins are produced efficiently. “Countries are increasingly consolidating into overarching monetary unions, such as the eurozone, the OAG, the dollar and more, and you end up with ten to twenty coins. It is not enough, and then space is created because there is a need. ”According to him, cryptocurrencies fill the gap after the consolidation of coins.

So on the one hand, there is a need for regionalization, and on the other hand, there is a cheap technological solution that does not require you to set up money pressures or even central supervision. “If you look at Fuse.io, you can create your own economy and currency in three minutes.” According to Wolfert and De Wit, two things are needed for social change: first, the current way of working must hurt financially, and second, there must be a better alternative. ‘These alternatives arise in crypto countries.’

Transition to new system

This means that the Dairy coin and the currency of the business region suddenly become opportunities. The number of active users of cryptocurrencies increases by thirty to forty percent each year, at Wolfert, so a large number of citizens in a few years will be familiar with wallets and exchanges of cryptocurrencies. The old currency conversion via an exchange office is no longer necessary, the software handles this automatically. In principle, a user does not have to worry much about Dairy coins or Gelderse Vallei coins, a blockchain application also takes over the work of an exchange office.

“Global” payments are just one aspect of a number of regional issues that need to be considered before making the transition to civil society. Bob de Wit discusses this in more detail in the book Society 4.0, and brief descriptions of these domains can be found on the Society4th.org website. As a rule, a transition to a new society is not so easy, warns De Wit. ‘Many people cannot afford to say goodbye to old structures and embrace the future in harmony,’ the professor at Clingendael wrote last year. ‘An important factor here is that it is precisely the existing rulers who have no interest in the transition to Society 4.0 and cannot imagine another form of society.’

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