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Blockchain and Smart contracts: a valuable drive to implement community currencies

on June 28, 2022

Since the global financial crisis in 2008, economists started to rethink alternative and new forms of cooperation and economic systems capable of cutting off third-party intermediaries and ensuring direct interaction between peers.  The digital revolution has triggered a disruptive diffusion of the internet, technology, online communities, and new technological platforms.

The sharing or collaborative economy is one economic system where assets and services are shared between private individuals and it is often facilitated by an online platform.  Solutions based on blockchain technology as Smart contracts have started growing. 
The use of a peer-to-peer payment system based on a community currency can wipe up the transaction costs associated with traditional payment systems and the financial risks related to cryptocurrencies.

Complementary currencies can be considered social innovations that respond to economic, social, and environmental challenges.
In particular, community currencies (CCs), a sub-category within complementary currencies, can improve cash flow and increase collaboration in local communities worldwide.
CCs are typically non-interest-bearing physical vouchers or digital tokens, issued and honoured by members of a network. They can only be spent on goods and services provided by other members of the network.
By employing cryptocurrency-based solutions, built on blockchain technology, social capital can be built and local society can benefit from it. 

Blockchain has been adopted as a solution for local currency development along with a few projects so far. 

One is known as “HullCoin”, a research conducted by Hull City Council to explore how bitcoin can be used as a local currency to support local communities in reducing poverty.
Sarafu Network is another experiment on community currencies that started testing in Kenya in August 2018.
It was the first-ever tomato-traded network on the blockchain. 

Grassroots Economics, a Kenyan non-profit, has developed Community Inclusion Currencies (CICs), a unique variant of CCs. The paper community currencies have been converted into blockchain-based community currencies. Villagers can trade effortlessly and manage the currencies from a smartphone crypto wallet or via SMS on feature phones without connecting to the internet.Anyone is eligible to join the network. Each individual must have some product or service to offer to their community. Registration is free and all new members receive a direct donation of 400 Sarafu. The wallets are owned by locals who can receive payment in their village’s local currency, then use it to pay for local services, such as child’s school fees.

Blockchain and Smart contracts can innovatively implement community currencies and support local communities.

The solutions currently available reside in blockchains and embedded Smart contracts.  Due to the distributed nature and the integrated cryptography of blockchain technology, community currency transaction records become immutable and secure. 

On a blockchain, it is also possible to encode programs into tokens, known as Smart contracts, that are triggered when predefined conditions are met. Blockchain technology allows the exchanges of tokens in a secure way and without intermediaries.    
The digital tokens become a monetizable asset on the blockchain and they can be claimed as paybacks, discounts, loyalty points, or bonuses to purchase other goods.

Trakti is a compliant peer-to-peer, business negotiation and contract management platform, integrated with the blockchain.

Our cloud-based and no-code platform allows the automation of the entire lifecycle of commercial contracts, signature and payment included.
You can define a preferred method for your payments and the Smart contract can automate them.

Smart contracts can boost your business thanks to the followings benefits:

  • Security: Smart contracts use data encryption and are tamper-proof    
  • Speed: Automation of contract lifecycle process and the self-enforcement capability of Smart contracts quicken the process            
  • Fewer Intermediaries: Lower request of intermediaries for trust services
  • Transparency: Higher transparency and a lower execution risk        
  • Cost-Effective: Smart contracts wipe up costs for ease of storage and with no need for intermediaries.                                

Trakti Smart contracts can handle money and blockchain-titled assets, like distributed applications or fiduciary processes, using conditional logic. Speed, efficiency, and accuracy are certainly some of the opportunities that Smart contracts can offer.
Nevertheless, trust and transparency are the backbones of these contracts. The information is shared among the participants without the need for third party controls. The application of blockchain is expanding beyond bitcoin and cryptocurrencies and the potential of this technology is rapidly growing worldwide.

Smart contracts can be easier and much more efficient than traditional contracts. They are an innovative solution in exchange for property, money, and shares.  Our Smart contracts work like a vending machine, where you drop the coin in and the snack comes out.

You just need to have the required token into the wallet and whatever you have paid for will be automatically deposited into the recipient account.Community currencies are just an example of how blockchain and Smart contracts can be closely tied to the real needs of society, by generating new opportunities for social cooperation, governed by and for the people.

Ready to find out more about Trakti Smart contracts?

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