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Bitcoin, WIR, and Boston Bean. Parallel currencies in the economies of the world – an annotated link list


“Gresham’s law, observation in economics that “bad money drives out good.” More exactly, if coins containing metal of different value have the same value as legal tender, the coins composed of the cheaper metal will be used for payment, while those made of more expensive metal will be hoarded or exported and thus tend to disappear from circulation. Sir Thomas Gresham, financial agent of Queen Elizabeth I, was not the first to recognize this monetary principle, but his elucidation of it in 1558 prompted the economist H.D. Macleod to suggest the term Gresham’s law in the 19th century.” (Encyclopedia Britannica)

Does a similar law also hold for paper money, bank loans and virtual currencies? Apparently not, because otherwise the following examples of parallel currencies would not exist. The reasons why they survive, and thrive, and why, on the other side, they do not entirely replace their rivals, are an interesting topic for future research.

Here comes my collection of samples.

Local and regional currencies

Why do local currencies exist? In Shareable: Can Local Currencies be the Foundation for the Sharing Economy?  John Boik, founder of the Principled Societies Project, writes that at the moment, most local currencies are essentially “buy local” programs which encourage residents to purchase goods and services within their communities. But a more advanced form could serve as the financial underpinning of an expanded sharing economy.

There are countless variants of parallel currencies:

See a sample of the Boston Bean in the U.S.

In Japan, one example is the “r” or Earth Day Money.

Another country-wide alternative currency, which has a long tradition, is the WIR in Switzerland.

Bristol businesses queuing up to join local currency scheme  This Telegraph article describes how, as Britain loses faith in its banks and feels shockwaves from the euro crisis, one city is trying to keep local wealth in local pockets with the launch of its own currency: the Bristol pound, modeled after the Chiemgauer (see below).

Wer will schon Euro, wenn er Chiemgauer haben kann The first of a series of articles on Sü on the development and circulation of regional currencies.

German law rules that regional currencies are not allowed to look like official bills (not „banknoteneigentümlich“). See pictures of

a twenty-Chiemgauer bill (districts of Rosenheim and Traunstein, initially established as a school project in 2003),

Eder Taler bills (in the regions of Waldeck-Frankenberg and Schwalm-Eder),

Regio bills (Bavaria, issued by a monastery,  Kloster Irsee) ,

twenty Carlo (Karlsruhe),

a  twenty-BürgerBlüte bill (Kassel, Blüte (blossom) is German slang for bogus bills),

Ammerlechtaler bills (Ammersee region, Bavaria) and

the Roland (Bremen, the first regional currency in Germany, introduced in 2001).

Another example is Kohle von der Schwarzbank, a temporary project of a regional currency called “Kohle” (coal, in German is a slang expression for cash) in the German city of Oberhausen.

All in all, the Online Database of Complementary Currencies Worldwide lists currently 249 complementary currency systems (of which 107 are in Europe). Bitcoin is one of them:


There are countless articles about bitcoin. Here is a somewhat arbitrary selection.

What is Bitcoin? A short video and first informations on on how to use bitcoin.

What Is Bitcoin and What Can I Do With It? Lifehacker answers this question.

Bitcoin – How it works is also very briefly explained on Andrew Grumet’s Weblog.

What is known about Satoshi Nakamoto, the person who invented bitcoin? In The Rise and Fall of Bitcoin in Wired Benjamin Wallace tries to find an answer.

There are physical bitcoins as well.

Programmer Robert McNally Put Together An Awesome Presentation On What Bitcoin Really Is presented by Business Insider and beginning with the Question: What is Money? Followed by: What is Cryptocurrency?

“Unless you are a computer geek, an MIT grad or an algorithmic genius, it’s unlikely you will ever really understand.” But Izabella Kaminska masterfully manages to make us understand at least some bits in: When memory becomes money; the story of Bitcoin so far on FT Alphaville.

In Lessons From the Newest Electronic Money – Bitcoin on Pragmatic Capitalism, Cullen Roche, the Founder of Orcam Financial Group, LCC asks whether bitcoin is money – and gets a long list of interesting comments!

Here is Jon Matonis on Bitcoin and crypto-currencies In this podcast, GoldMoney’s Andy Duncan and Jon Matonis of the Bitcoin Foundation discuss whether crypto-currencies are a credible alternative as a medium of exchange.

There is a bitcoin wiki available in eight languages containing more than 600 articles.

This is Wikipedia on bitcoin.

Bitcoin: the fastest growing currency in the world – video Bitcoin is an unregulated, uncontrolled online currency. It can be used to buy drugs, move money across the world, or get rich quick. People behind Bitcoin speak to the Guardian’s James Ball at their home in a squat in central London.

The Demographics Of Bitcoin presents results of a survey via Space Druid on Zerohedge. Here are some highlights:

The average user is a 32.7 year old libertarian male.

Top motivators for new users are curiosity, profit, and politics. is the dominant community platform.

Far more people have used Bitcoin to make donations than to buy narcotics.

39% of users do not drink, smoke, gamble, or take drugs.

How Bitcoin could destroy the state (and perhaps make me a bit of money) In the Spectator, Hugo Rifkind describes what he learned about bitcoin. Impressive: “… in 2010 somebody spent 10,000 of them on a pizza, a sum which would today make that pizza worth £465,368”

Bitcoin Goes Parabolic: My Updated Thoughts  Michael Krieger describes himself as a recovering Wall Street employee. He presents a “parabolic chart” of bitcoin development and compares the currency with gold and silver.

Bitcoin Hits $1 Billion When the total worth of the virtual currency reached a new high economists were mystified as to why, writes Morgen E. Peck, taking as an example the reactions in Cyprus after government announced a bank holiday in March.

I’m Raising My Bitcoin Price Target To $400 jokes Henry Blodget and explains why bitcoin “has all the elements required to become a massive speculative bubble … along with the additional attribute of not being constrained by any “fundamental” value whatsoever”, and the resulting consequences.

Is the Cyprus crisis a boon for Bitcoin? asks David Glance, Director, Centre for Software Practice at University of Western Australia

Spain turns to Bitcoin, prompting incoherent discussion on Today writes Alex Hern in the New Statesman. It’s not only Cyprus …

Bitcoin interest spikes in Spain as Cyprus financial crisis grows writes Ian Steadman on Wired.

Bitcoin Bubble or New Virtual Currency? From the Unconventional Economist, via Bullion Barron and MacroBusiness on Naked Capitalism, with many interesting comments.

Bitcoin ‘Glitch’ Sparks 23% Flash Crash This is Tyler Durden on Zerohedge.

The growing demand for larger and smaller monetary units JP Koning writes: “In financial markets, we’re starting to see stock quotes in sub-penny amounts. This is a massive change from a few decades ago when stock was typically quoted in eighths of a dollar. … Cryptocurrencies like bitcoin are particularly interesting in this respect because they are divisible to 8 decimal places. I found myself in a novel place last week when I was offering to sell a bitcoin-denominated stock for 2.99999, and someone undercut me by offering 2.99998.”

Four Reasons You Shouldn’t Buy Bitcoins Forbes author Timothy D. Lee explains why “anyone thinking about investing (in bitcoins) should understand that it’s an extremely risky proposition.”

On the other side: Bitcoin May Be the Global Economy’s Last Safe Haven  as Paul Ford argues in Businessweek.

But today (April 4) we learn from BBC that Hack attacks hit Bitcoin exchange rates.

In The Bitcoin Bubble and the Future of Currency, a rather lengthy but highly readable article, Felix Salmon looks behind the bitcoin bubble. He writes “… for the time being, bitcoin is in many ways the best and cleanest payments mechanism the world has ever seen. So if we’re ever going to create something better, we’re going to have to learn from what bitcoin does right – as well as what it does wrong.”

Why bitcoin’s rise is nothing to celebrate is a shorter version of the Felix Salmon Article mentioned above.

Bitcoin miners hit back at cyber-thieves is an interesting report by BBC’s Mark Ward about how thieves running networks of hijacked PCs are increasingly using these machines to create or “mine” the coins.

Does the Internet Depend on the Survival of Bitcoin?  asks Max Keiser in the Huffington Post.

Bitcoin getting big enough to attract regulatory repression writes Bruce Sterling on Wired.

Silk Road: the online drug marketplace that officials seem powerless to stop  writes James Ball in the Guardian. Where there is light, there is also shadow …

Web Money Gets Laundering Rule The U.S. is applying money-laundering rules to “virtual currencies,” amid growing concern that new forms of cash bought on the Internet are being used to fund illicit activities. By Jeffrey Sparshott, Wall Street Journal.


Bitcoin beware. Alternative currencies are not always tolerated. Prison May Be the Next Stop on a Gold Currency Journey  is a New York Times article about Bernard von NotHaus, found guilty of counterfeiting charges for minting and distributing a form of private money called the Liberty Dollar.

What are NORFED Liberty Dollar Coins? This is a related report about a consumer advisory issued by the U.S. Mint warning people that the Liberty Dollars might be confusing to consumers and explaining why it is illegal to use them to conduct any commerce in the United States.

In Why central banks should take charge of their digital currencies Izabella Kaminska mentions several other variants of mobile money or virtual currencies:

M-pesa(M for mobile, pesa is Swahili for money) is a mobile-phone based money transfer and microfinancing service for Safaricom and vodacom, the largest mobile network operators in Kenya and Tanzania.” (Wikipedia)

Square “The fast, easy way to pay with your phone”.

Paypal the online money transfers system.

Dwolla another payment system that allows to send, request and accept money.

Ven the “global, digital currency for everyone”, used among a local community of networked users.

Mobino which offers an infrastructure to manage the circulation of e-money where people can have an account directly linked to their phone number.

With respect to the latter, Izabella Kaminska writes: “Before you start thinking this is going to be another boring “mobile money is the future” post, we should point out two important things. First, there’s Groff [the “father” of the Mobino] himself. He comes to mobile payments by way of telecoms, by way of French military service at CERN, by way of working with Tim Berners-Lee, by way of writing important elements of that small project known as the world wide web, by way of working with Steve Jobs on the European side of NeXT, and so on… So, credentials — he has more than a few. But if you’re thinking, well, it’s not like the space is lacking big software entrepreneur names, then the next point should be of more interest. Groff’s key aim with Mobino unsurprisingly is digitising money. As he noted to us:

Over the last 20 years we’ve managed to digitise everything; the press, shopping, even love… Money is the most intangible thing, and yet it’s the last to be properly digitised.

Yet, when Groff talks about digitising money, he doesn’t mean it in the M-pesa or Bitcoin sense. What he wants is a fully democratised, honest and harmonised digital currency structure. One that works with the government, not against it, whilst all the time empowering citizens.”

My last link in this category is a report by the European Central Bank on the growth and impact of virtual currency, including case studies of bitcoin and Second Life, the virtual community using the Linden Dollar.

Euro crisis

Some observers see parallel currencies as a solution for the euro crisis. Here are some examples:

From the failed idea of an optimum currency area to a regime of multiple currencies? As Thomas Mayer, former Chief Economist of Deutsche Bank Group and Head of DB Research, and now a senior fellow at the Center for Financial Studies at Goethe University Frankfurt  and external adviser to Deutsche Bank, mentioned: Parallel currencies emerge when official currencies fail to meet the needs and preferences of their populations.

Forget Euro Breakup—Think Euro Mutation In this article in the Wall Street Journal, Thomas Mayer recycles his idea of a future currency regime in Europe which he considers a more likely outcome than the current monetary arrangement or a total euro breakup. He is expecting what he calls a euro mutation, that is “the emergence of two new currencies that will operate alongside the euro, creating a three-tier monetary union”. In his words, “a three-tier euro zone would emerge. Countries like France, Italy and Spain would become the “core” countries, where the euro would be used both as a medium for transactions and a store of value. Germany, the Netherlands, Finland and its peers would constitute the “upper tier,” where the euro is a means of transaction but not a store of value. Countries such as Greece, Cyprus and Portugal would compose the “lower tier,” where the euro is a store of value but not a means of transaction.”

German bank tables plan for parallel Greek euro presents Deutsche Bank’s proposal for a a “geuro” – a parallel currency allowing Greece to devaluate while staying in the eurozone.

List of parallel currency proposals for Greece and the EMU by author(s) is a rather eclectic, but nonetheless interesting, collection of German and English language texts, compiled by the Money Network Alliance.


Do you know other examples of parallel currencies? Tell us in your comment!

From → Markets

  1. RT @izakaminska: This is very good on Bitcoin (from a year ago) by @dgwbirch

  2. “Does a similar law also hold for paper money, bank loans and virtual currencies? Apparently not …” unless you deem Bitcoin the good and fiat currencies the bad, in which case Gresham is being proven right, again.

    • So far, I do not see bitcoin replacing other currencies to a noteworthy extent. Some $1.2 billion is still a small market.

      • I suppose, but in the context of Gresham’s law, that is concern is a logical fallacy, confusing quantity with direction. While you are correct that Bitcoin is currently a smaller market, I think Gresham is correct in that the higher quality currency at this particular juncture (bitcoin) is displacing the lower quality currencies such as dollars, euros, and even gold, even though they represent the majority of status quo. Regards.

      • Maybe the market will grow and maybe the related problems – including government interference to protect the current system if only to secure the tax basis – are overcome you could be right. In my view, this is still a long way to go with many unanswered questions looming on the horizon as the articles in the link list show.

  3. I don’t write a leave a response, however after looking at through a great deal of comments here Bitcoin, WIR, and Boston Bean. Parallel currencies in the economies of the world – an annotated link list | reszatonline. I actually do have 2 questions for you if you tend not to mind. Could it be simply me or does it seem like some of these comments look like they are coming from brain dead individuals? 😛 And, if you are posting on additional social sites, I would like to keep up with everything fresh you have to post. Could you make a list of the complete urls of all your public pages like your twitter feed, Facebook page or linkedin profile?

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