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Bitcoinishavingitsmomentbuttherearebettersustainablecurrencies

For something entirely virtual, Bitcoin has caused a very real ruckus. Everyone from central
bankers to anarchist cypherpunks has queued up to give their five pence worth on the "decentralised
onlinecurrency",astheUSTreasurydescribesit.
So isBitcointhegreaterlevellerthatmanyclaim? Orisit,asothersargue,anunrulyupstartthatthreatens
tosendthemonetarysystemintochaos?
Upside
Let's start with the positive. Bitcoin works as aprettyeffective medium of exchange(see thisvideo for
the basics). As a digital currency, it effectively bypasses the intermediary role of banks, with their
expensive creditcardsandhigh processingcosts.Thatmakesonlinetransactionssmoother and cheaper,
aswellasprovidingmoreflexibilityforfinancingprojects.
"The banks have held back innovation in money for so long. So the fact that there are discussions in
Silicon Valley about payment systems like Bitcoin has to be a good thing," says David Boyle, an
independentspecialistinalternativeeconomicsandauthorofFunnyMoney.
The fact of direct exchange bodes well for internet entrepreneurs and traditional businesses too. Right
now,ifyoudesign ahightransactionbusiness that requiresonline payments intinyamountssay1por
lessbankchargesmakeitanonstarter.Bitcoinchangesthat.
PeoplelikeBitcoinforpoliticalreasonstoo.That'smostlybecauseitstickstwofingersuptogovernments
and thecentralbanks beholdento them. Instead,Bitcoingeneratesits ownmoney.Google'cryptographic
hashfunction' and you'll quickly get afeelforthebasicnutsandboltsofhowtheprocessworks.Butfor
most Bitcoin advocates, the specifics are less important than the principle: the decentralisation (and
democratisation) of money supply is what wins the digital currency a thumbsup, not the complex
algorithmiccomputationsunderpinningit.
Downsides
The downsides, however, are only too apparent. Stories abound about how the highprofile digital
currency is the coinage of choice for the 'darknet', used for everything from arms running to money
laundering. The closure lastyearof SilkRoad, an onlinenarcoticsmarketplacebelovedofBitcoinusers,
hitthereputationofthedigitalcurrencyhard.
Being unregulated and exclusively online, the currency is vulnerable totheft too.Goneare the days of
muggers knocking you on the head and stealing your purse. Now they just need to hack yourBitcoin
account. The MtGox hack is perhaps the best known, partly because it sent the value of the currency
plunging butalso becausethehackershadthecheektotryit again.Butthereareplentyofotherexamples
too.
Bitcoin sufferstwoother major downsides,neither ofthemheadlinegrabbersbutimportantnonetheless.
First, the idea of an alternative currency isn't that new. Recent decades have seen waves of other

examples,saysLeanderBindewald,acurrencyexpertattheNewEconomicsFoundation, aLondonbased
thinktank.ThinkLocalExchangeTradingSystemsinthe1980s,TimeBankinginthe90s,and "transition
currencies"suchastheBrixtonPoundoronlinecommunityexchangesystemsmorerecently.
Nor is Bitcoin actually thatunique.Dogecoin, Litecoin,Darkcoin,Namecoin,Peercoin and amyriad of
other cryptocurrencieslikethemareallbasedonasimilarpremiseandadoptsimilartechnologies.It'sjust
thenarrativearoundBitcoin itsmysterious founder,its claimstodisruption, itsdecisiontoset thetotal
issuanceofBitcoinsatafixedamount,andsoonthatcauseittostandout,Bindewaldclaims.
"There's a lot of discussion now about how Bitcoin is interesting as a payment mechanism and a
governance paradigm. Butthecurrencythateveryoneknowsisprettyuninteresting it's just aproofof
conceptthatthepaymentmechanismandgovernanceparadigmactuallywork,"headds.
Sustainablealternatives
Theargumentsaround Bitcoinwill rumbleon.But,fromasustainablefinanceperspective,isitworththe
fuss? If you're looking for an alternative currency system that will drive a transition towards
sustainability,thenthere are plentyofbetterplacestostartthanBitcoin.Takeeportemonnee,anewallet
systemcurrentlybeing pilotedin Belgium. The system,which is runby Limburg.net,anintermunicipal
waste disposal company, sees local residents gain discounts at municipal facilities in exchange for
reducingtheirwasteandotherenvironmentalactions.
Or consider an approach being experimented with in the French city of Nantes. Last year, local bank
Crdit Municipal de Nantes issued a pilot currency in conjunction with the municipal authority for
exclusive use in the area. The digital currency is designed to facilitate business between participating
companies as well as trade with any individual who is partof the scheme.So Nantesisregulated bya
mutualcreditsystem,withusers'creditsanddebitstrackedonlineandthensettledafterasetperiod.
Other sustainabilityfocusedpilotcurrenciestolook outforincludeTradeQoin(fortradebetweenSMEs),
AmsterdambasedMakkie (for promoting communityinvolvement)and theUKtimecreditschemeSpice
(forencouragingcommunityleddevelopment).
The dominance of physical cash as an instrumentof exchange is dwindlingfast. Expect more and more
alternativecurrenciesto springup. Bitcoinisenjoyingitsmoment inthelimelightbutit'snotnecessary
thebest,anddefinitelynotthemostsustainable.