Overcoming economic stagnation in low-income communities with programmable money

Abstract

Purpose The purpose of this study hopes to encourage further research into the topic of local currencies, as well as specific research into increasing the efficiency of these systems through the use of blockchain technology. There is currently a lack of available research into the topic, which poses barriers for those who wish to study it, so the paper provides a general overview to be used as a starting point for those wishing to broaden their knowledge of local currency systems while also introducing a working implementation of a proof-of-concept for the proposed system. Design/methodology/approach A literature review of available studies on local currencies is conducted to provide an overview of the current systems and their shortcomings. Subsequently, blockchain technology is briefly introduced and an Ethereum-based model is proposed, which helps overcome the problems identified. The section exploring the Ethereum-based model draws code written by the author to simulate the features. Findings The paper concludes that blockchain technology can significantly help improve efficiency, transparency and security of local currency systems, while also helping cut costs associated with the implementation of a complementary monetary system. In the medium-term, local currency systems will most likely use a blockchain protocol as the underlying technology for the network. Originality/value Local currencies are an understudied topic by itself and the intersection between them and blockchain is a nearly non-existent research space. Thus, the paper takes a multidisciplinary approach, aiming to bridge the fields of computer science and economics to provide a foundation for further research.