Community Currencies are alternative currencies designed to serve the needs and values of a specific community. They facilitate local exchange outside traditional banking systems, encoding trust and shared values into monetary design. In Web3 contexts, they can be implemented as ERC-20 tokens, smart contract credit systems, or reputation-linked issuance mechanisms.
How It Works
Community Currencies create local economic systems that prioritize circulation and community benefit over accumulation.
- Design the currency — the community defines issuance logic (mutual credit, token-based, timebanks, or vouchers), decay mechanisms, and mint/burn rules
- Establish governance — frameworks for distribution, acceptance, and community oversight
- Issue and distribute — currency enters circulation through work recognition, mutual credit, or direct issuance
- Enable local exchange — members trade goods, services, and labor using the community currency
- Maintain circulation — optional decay or demurrage mechanisms discourage hoarding and keep currency flowing
Advantages
- Enables trust-based exchange without fiat dependence
- Embeds community values into monetary mechanisms
- Creates liquidity in cash-scarce environments
- Builds circular, regenerative economies
Limitations
- Ineffective for global exchange or high-liquidity needs
- Poor interoperability with speculative markets
- Requires strong social cohesion to function
- Unsuitable for rapid capital accumulation
Best Used When
- Local peer-to-peer trade within a defined community
- Financial inclusion in underbanked regions
- Recognition of informal and care labor that fiat systems ignore
- Building economic resilience and solidarity outside extractive systems
Examples and Use Cases
Sarafu Network (Kenya)
A Kenyan community currency enabling post-disaster trade and local economic resilience without dependence on national fiat currency.
Bioregional DAOs
Local tokens redeemable for workshops, food, and services within a bioregion — creating circular economies tied to real community output.
Mutual Aid Credit Systems
Internal credit systems for care labor and community work, where 1 hour = 1 credit regardless of the type of labor performed.