Standard of Value Physical Unit Denomination: Currencies denominated in some physical
unit, such as is the case for the best known commercial loyalty currency: the
Airline Mile system, where the unit of account is a flight of the distance of one
mile. Among other contemporary examples let us mention some Japanese
models: the WAT (whose unit is equivalent to the value of 1 kWh of electrical
current generated by citizens’ cooperatives through renewable energies such
as wind, water, sun); the gram of charcoal used as bio-regional unit in Osaka
or the crop denominated currencies of the “leaf” unit in Yokohama or Kobe.
Historically, the Wara currency in Germany in the 1920s and early 1930s was
similarly denominated in kg of coal.
Comparisons of Different Standards of Value
The currencies referring to the conventional national currencies have
familiarity as their main advantage. They also avoid forcing shops and
businesses to deal with multiple pricing systems – one in dollars, one in local
units. Particularly when the national currency is a stable one, such a choice
makes a lot of sense (e.g. the WIR currency in Switzerland is equivalent to
one Swiss Franc). The downside is of course that if the national currency gets
into a major crisis (e.g. the Russian Ruble in 1998), the complementary
currency risks going down with the national currency.
Currencies using time as unit of account make most sense when services
are the most typical use of the complementary currency. Sometimes there is a
misunderstanding that “everybody’s time is supposed to be of the same value”
for such a unit to work well. This isn’t actually true: nothing impedes a dentist
to ask customers for instance five hour units for one hour of work as his
activity obviously requires a longer training and expensive equipment
compared to one hour of unskilled labor.
Time currencies also automatically avoid being caught up in a crash of the
national currency, and can make it easier to make exchanges with other time-
based systems. Their downside is that it may require multiple pricing (how
many hours for a dozen eggs?) something that businesses in particular don’t
like. One easy way to solve this problem is to ensure that the time unit is
roughly equivalent to a round value in conventional money (that is why one
Ithaca Hour is equivalent to US$10; or one WAT in Japan to 100 Yen).
Currencies using a physical unit of account such as miles, pounds, grams,
or kilos of something, etc. have advantages similar to the time currencies.
Often such units provide a “real physical connection”, and if the product
involved is widely used and produced in an area, they can be considered as
logical bioregional currencies. But they have also the same issues with pricing
as time currencies, and the potential solution is also the same - in Osaka, for
example, one gram of charcoal is considered equivalent to 1 Yen.
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