The euro and the dollar might be struggling to maintain their credibility on the world market, but there is one currency out there that works in a very different way and is steadily increasing in value: social currency. According to wikipedia social currency can be defined as, “the entirety of actual and potential resources which arise from the presence in social networks and communities.”
Among the more successful and ever growing social currencies online is Bitcoin, a peer-to-peer currency that operates with no central authority. Thanks to this key characteristic, it differs from fiat currencies that are subject to mismanagement by governments and supply shocks that can paralyze currency. When you combine that with the fact that all bitcoin transactions are public and the software that runs the network is open source, it becomes understable how a social currency could build trust while the old fashioned currencies keep losing it.
Evidence that social currencies are on the rise on the internet can be seen in other examples where people choose virtual monetary systems to exchange for goods or services. Many will remember farmville and second life, both of which have a dedicated user base that make use of virtual money. But beyond games, alternative payment systems are booming within online communities where people create original and unique products and services. Gee Chuang of Fastcompany points to sites like Quora, StackOverflow, Reddit, and Pinterest, all of whom “have content consumers and producers (not unlike buyers and sellers) that trade insights and knowledge, not for money, but for the satisfaction of contributing and building up their own reputation or social currency.”
It is once again a case where traditional centralized structures of society have lost their credibility, inspiring international collaboration to create alternatives that reflect how creative and curious people want the financial system to work. Embracing characteristics such as being mobile, social, and respectful of one another while doing business. You may not be using a social currency at the moment, but as this cultural shift continues it is highly likely that in the near future, you will want to.
Photo: TraderTim / flickr