Can currency be a force for social and ecological good?
Electricity-Backed Currency blog series
Back in 2011, Nick Gogerty and Joseph Zitoli of the Thoughtful Capital Group wrote a proposal to back national currencies with electric power. They argued that electricity provides benefits to society, unlike gold, and retains monetary value better than government debt or mortgage-backed securities — the assets the US Federal Reserve Bank now holds against dollars in circulation.
Naturally, central bankers and policymakers around the world ignored the academic paper. I did not.
SolarCoin is a digital currency designed to reward producers of solar electricity. One megawatt-hour of solar power generation earns one SolarCoin for the resident with a solar array on their property or, for bigger projects, the owner of the installation. Like Bitcoin, we can trade it person-to-person, with no need for a bank or other intermediary. Launched in 2014, it is not affiliated with a specific country.
This first blog post is an introduction to SolarCoin. Two proofs of work back the online currency: a ‘proof of computer work’ that secures it and ensures trust without a central institution governing the SolarCoin community, and a ‘proof of solar work’ that validates solar electricity generation with third-party verification. This post goes over how solar producers can claim SolarCoins and how anyone can join the community and get some SolarCoins.
Does SolarCoin have value? This question is not easy to answer, yet on a fundamental level, something has value if we think it’s important. SolarCoin provides physical trust without central authority as well as goodness in clean, renewable energy. If we agree those things are important, then an argument can be made that SolarCoin has intrinsic worth. Yet monetary value is a bit more tricky.
A currency has value only if a large community uses and accepts it as payment. Thus for SolarCoins to be able to buy goods and services, then the currency must become popular; people, organizations, and businesses need to accept them as payment, which will only happen if they have confidence that their SolarCoins will be useful elsewhere. This article discusses ways that SolarCoin might overcome this chicken-and-egg dilemma.
If SolarCoin does succeed in gaining real money value, it will drive the implementation of solar electricity projects. First, SolarCoin offers an added reward to solar electricity producers, which means more solar investment. As solar expands as a source of electricity, the price of a solar system in dollar terms goes down, further accelerating the solar installation rate. Increasing solar investment can slow climate change and reduce local air pollution, protecting communities from the harmful effects of environmental damage.
Handing out digital cash to people with solar panels can benefit our electricity systems and the environment, but there are more equitable ways to incentivize clean energy. SolarCoins offer a new source of income most accessible to people who are already well-off. Without mechanisms for extending access to the means of producing solar power to poor people neglected by the private banking system, SolarCoin speeds up the rate at which wealth concentrates among the fortunate few.
This post suggests strategies for SolarCoin to offset or reverse some of its built-in unfairness. By spreading SolarCoins to more people, the currency’s value increases, which in turn drives investment in solar electricity. Ideas for making digital eco-money more equitable include splitting SolarCoin claims among those who share ownership or rental of a solar system, as well as distributing a SolarCoin gift to anyone with no investments in the fossil fuel industry, which immediately rewards folks with no capital and incentivizes shareholders to divest from dirty energy.