Friday, October 23, 2015


So today, a well-known financial blogger alerted his readers to a story about the mayor of Barcelona, Spain, Ada Colau, who is seeking to make good on an election promise — to introduce a local currency. El Pais carried the story months ago in, An alternative currency for Barcelona? and updated the story in MAYOR OF BARCELONA ADVOCATES FOR A LOCAL DIGITAL CURRENCY.

Likely, it will not be currency for the exact same reason that Bitcoin isn't currency — it will lack bearer negotiability [See: BITCOIN IS SOFTWARE PROTECTED BY COPYRIGHT. BITCOIN IS NOT LEGAL TENDER CASH ]. Digital schemes always require proof of ownership. Thus such schemes can't be currency.

Notice how the mayor Colau failed to advocate for something far simpler — use actual money such as silver coins or gold coins but not both.

Colau perpetuates another delusion. How does the local merchant who earns all of his livelihood in Barcelona Bits  travel for vacation to Hamburg or Paris? Who will take his Barcelona Bits for Euros? How will any local merchant pay for imported wares?

"Local currency" schemes are more like coupon books sold by Entertainment. But rather than being specific coupons printed with the exact trade terms of a particular merchant complete with the merchant's logo, a local currency is merely an undifferentiated coupon that all merchants have agreed to accept at the same terms.

All people are doing is bartering coupons for merchandise and merchandise for coupons. The seller of those coupons agrees to redeem coupons from the merchants for bank credits from an actual banking system.

Who can redeem those Barcelona Bits for EUR or USD without incurring costs for computers, electricity, programmers and other staff? So what is the fee all must pay upon each of their transactions for this Barcelona Bits service?

Why would prudent shopkeepers with actual business acumen want to burden themselves with extra expenses?

Coupons are promotions whereby businessmen have decided to accept lower margins. Most who do are trying to gain market share for the future.

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