Tokens that provide an alternative currency for communities where the official economy fails? They're two centuries old--and happening right now

A halfpenny token issued by the Parys Mining Company of Anglesey in 1788. The hooded druid design was used for many years and was the first of hundreds of token designs.Next to that, a mockup of an Etherieum coin in gold; next to that, a token from Mike Riddell’s Counter Coin scheme

A few items spinning off this piece from the Conversation UK about the long-standing presence of alternative currencies on these islands - and what we can learn from them in sustaining crypto and blockchain’s own currency experiments, as they serve to strengthen communities.

First the C/UK piece, by Edward Thomas Jones and Laurence Jones from Bangor University:

Welsh mining towns had alternative currencies 200 years ago – here’s what the crypto world could learn from them

The global cryptocurrency market has seen a number of recent setbacks: from the collapse of the Terra/Luna system in May 2022 to the failure of FTX, one of the largest crypto exchanges in the world.

Because of these factors, and other concerns over cryptocurrencies’ carbon emissions, these assets lost US$2 trillion in value (£1.5 trillion) in 2022.

But while cryptocurrencies get a lot of attention today, in some ways they are not a revolutionary concept. Hundreds of years ago, workers in Wales were often paid with alternative currencies instead of money.

These currencies were physical tokens that represented and were linked to the value of real money. Many cryptocurrencies work in a similar way, acting as digital tokens that represent a ledger of financial assets (this is known as “tokenisation”).

Digital currencies are also not reliant on any central authority, such as a government or bank, to uphold or maintain their network of exchange. Again, this is similar to how physical tokens were used by Welsh mining companies.

Currency crisis

Towards the end of the 18th century the coinage of Britain was in a deplorable state due to the severe shortages of silver and copper coins. During the Industrial Revolution people migrated from the countryside into mining and manufacturing centres. But living in towns required money, and the ability to pay wages was impossible for businesses without small change.

With an influx of new workers using money, new shops were opened to meet demand, creating more jobs that required payment in coins. Although the production of counterfeit coins was illegal and punishable by death, it was not illegal to produce tokens with other designs which could be used instead of coins.

The first great era of token production during the first Industrial Revolutionbegan in 1787 with the issue of the Parys Mining Company token. This company mined at Parys Mountain on the Welsh island of Anglesey. It briefly produced more copper than any other mine in the world during the Industrial Revolution.

What Parys mountain on Anglesey looks like today. rhianjane/Pixabay

It also used the high-quality ore from its mine to produce tokens which could be exchanged for official coin at full value at any one of its shops or offices. This made the Parys Mining Company the first company in the world to issue tokens. These were described as the “premier tokens” of the 18th century by that era’s coin experts.

Soon, practically every town in Britain was producing its own tokens. This was driven in part by a shortage of government coinage and improvements in coin manufacturing by Matthew Boulton’s Soho Mint in Birmingham, who also turned his hand to tokens.

By the turn of the 19th century, the total supply and fast circulation of tokens, foreign coins and other substitutes probably exceeded those of the official coin of the country.

The process of tokenisation was subsequently seen in other countries, in particular the United States. Mining and logging camps in the 19th century US were typically owned and operated by a single company, often in remotelocations with poor access to cash.

These companies would often pay their workers in “scrip”, or tokens. The workers, given the limited places they could spend scrips, had little choice but to purchase goods at company-owned stores. By placing large mark ups on goods, the company could increase their profits and enforce employee loyalty.

While the production of tokens by the Parys Mining Company were spurred on by the first Industrial Revolution, the adoption and popularity of Bitcoin and other cryptocurrencies has been hastened by the fourth Industrial Revolution.

Although they are more than 200 years apart, the history of these tokens have important lessons for today’s cryptocurrencies. First, for cryptocurrencies to succeed there needs to be various ways for individuals to accumulate the crypto/tokens, plus a demand and use for the crypto that means it holds its value, and trusted environments where exchange for goods and services can take place.

And second, for cryptocurrencies to be successful and sustainable in the long term they must uphold their original purpose of having an ecosystem that remains independent of a single company or government. Efforts to lock cryptocurrencies to a single organisation do not look positive, for example Facebook’s failed attempt to launch a cryptocurrency, announced in 2019.

The tokens of Welsh mining companies inherently failed when the closures of the mine or shops led to the removal of one or more of the three components of the ecosystem. And then people left with the tokens lost their money, a lesson for us today.

More here (and republished under Creative Commons).

At the end of the graphic (after the Ether coin) is a “Counter Coin”, part of the token currency set up by the indefatigable Mike Riddell, who works in the North of England.This month’s Medium essay from him is a comprehensive case for Countercoin’s social worth and value:

The Promise of a Token-Based Economy for our Left-Behind Places?

This essay is about regional economies and how we measure their success: in particular those regional economies that are loosely described as post-industrial or left-behind. Think ex-mining, ex-steel, ex-shipbuilding, and ex-Potteries.

My patch, so to speak, is Stoke & North Staffordshire, which according to experts, is England’s fourth most left-behind.

In writing this essay, you should know that what I am is a qualified valuer with 35 years experience in urban regeneration, and that what I am not is an academic. Nor am I trying to present or become one. However, in doing my best to persuade you the reader, that economic change is right around the corner, I have supported my arguments with as much research as possible. Whether we want that change or not, is what separates the ‘us’ from the ‘them’.

In a nutshell, my argument is that social capital is so important to the regeneration of post-industrial regional economies like Stoke & North Staffordshire, that it must be manufactured as a process, urgently.

And then networked into an economy that joins together all left-behind places into a sustainable business model that supports a “de-growth” trajectory.

Now is precisely the right time to unlock and mobilise the latent and stored value of social capital. In order to mobilise it, first we must measure it.

What is Social capital, anyway?

It isn’t helpful to learn that the way social capital is defined and measured is contested, but broadly speaking it can be defined as the networks of relationships among people who live and work in a particular society, enabling that society to function effectively.

Social capital is seen simultaneously as an input and an outcome. A cause and effect. Effects include “the existence of more economic development or less crime”. (Portes, 1998).

So social capital is two things at once.

It’s firstly an input. A resource that is processed to add value. For instance, if Little Johnny is a lost and lonely unemployed youngster, the act of volunteering his time to community rather than wasting it, is a process that adds value. His time is the resource and community the process. Put the two together and they have formed social capital. Secondly, it’s an outcome. Because Little Johnny has performed work the economy is better off than it was before, and maybe there is less crime on the street.

But the results of his work get taken for granted. Little Johnny’s time is a perishable commodity, which if not put to work is an opportunity gone begging. The cost is intangible because nobody counts it, yet the economy has produced less, and wasted more.

If time is a perishable resource, and if a contribution of that time can reduce crime and make the economy more sustainable, then why is the system wasting it?

Why is the system not doing more to track, measure and manage a process that could as I argue, waste less and sustain more?

Manufacturing Results

Tims is perishable, when it’s gone it’s gone. Not making the most of it is a wasted opportunity to do more with it.

Mention the word waste and people see waste of the tangible kind, the sort you tip in the bin. The waste I’m asking you to visualise, is the waste that you don’t. Intangible waste.

Empty seats on buses and in cinemas, and those quiet times at the gym or the hairdressers are all examples of intangible waste that drag on business and economic performance.

To the owners of these assets, waste isn’t an issue. Life is good, they can afford to be wasteful.

But the markets can bite. The owners of these assets — the cinemas, gyms and buses operate as service providers that employ capital equipment. For all capital equipment, the biggest cost is the cost of not working, during which interest has to be paid while the equipment does not earn. As our owners know, their main expense is the interest charged on their investment - yet they concentrate their efforts on costs that are already too low, labour being the obvious example.

They should concentrate, in other words, on the costs of their asset not being worked, rather than on the costs of it working.

Local economies are full underused resources. Quiet times at the tattoo parlour, the barbers or the physio, and everyone who provides some sort of local service such as will-writers, copy-writers, accountants and web designers. They all have quiet times that are a hidden drag on their business.

By focusing on the cost of their assets not being worked hard enough, and by recognising that these resources are time-bound, valuable and perishable, an opportunity begins to emerge for a secondary market to clear this stored value, before it perishes.

AirBnB have shown us how an under-used spare room can be transformed into a new revenue source and an individualised experience for guests. Airbnb have never turned a sheet in their lives, yet they have a business that threatens the hotel industry. In 2007 they weren’t around — these marketplaces grow fast.

Imagine a localised business network where voluntary groups and business service providers could combine their surplus assets and idling resources to support each others work — to build community, unlock the stored but perishable value and in the process generate recurring and predictable revenues from an AirBnB-type enterprise model delivered via the internet?

By transparently measuring the cost of resources that aren’t being worked, the spotlight falls on those asset managers who do not perform. By measuring what matters the system can improve performance.

Results that capture the imagination

As a volunteer myself in the Cultural Squatters, Sunshine House in Wiganand now in Burslem, I know for a fact that youngsters without work would love to be valued for what they can do, rather than feeling judged for what they can’t. Working clay together around a table making ceramic coins, we enjoyed the experience of connecting, the sense of belonging, the doing of good and the making a difference.

But most voluntary experiences do not pan out like this and more organisations are too bound up in red tape and risk-mitigation to curate experiences that people find enjoyable.

There is so much waste in our system; by tasking volunteers with the job of eliminating it, we can repackage volunteering as collective action activities as cause-related marketing opportunities for the business community to sponsor with their excess stock and spare capacity. A new partnership where the community takes the action and the business supports it…