FairCoin: A radical cryptocurrency alternative?

Sam Dallyn reports on a digital currency aiming to set up new, cooperative alternatives to currency systems which hand over power to unelected central bankers.

October 19, 2018
6 min read

Enric Dunran. Photo by Joseba Barrenetxea (Flickr)

Cryptocurrencies like Bitcoin have earned a deserved reputation as a murky world of bubbles, wasteful energy consumption, pump and dump schemes, and volatile price rises and drops. Yet the possibility that a cryptocurrency could offer opportunities to create radical alternative finance outside of capitalism and central banks has gained real credence. One cryptocurrency that could present a genuine exception to the story of cryptocurrencies as tools for financial speculation: FairCoin and FairCoop, the international cooperative movement that supports it.

FairCoin was created in 2014 as an eco-friendly, post-capitalist cryptocurrency, its ideals and principles emerged largely from the Catalan Integral Cooperative (CIC) in Spain, which is a radically autonomous network of cooperatives and social movements based in Catalonia that uses the social currency, Ecos. The underlying principles of FairCoop are Integral Revolution: the idea that all forms of economic and social life should be transformed by the active breaking down of hierarchy, patriarchy and capitalist social relations; and constantly working to replace them with horizontalism, peer to peer social organization, and the common provision of welfare according to people’s needs.

In the tradition of Occupy and the Spanish Indignados movement of 2011, FairCoop holds to principles of horizontalism and consensus decision making, in which decisions must have collective agreement or at least acceptance amongst participants. This can be challenging in practice, but it presents a radical alternative to a state-backed fiat currency system in which decisions about monetary policy are handed over to unelected central bankers. FairCoin then is a cryptocurrency in which political decision making and social relations come before blockchain cryptography and market logics. While Bitcoin has rightly been critiqued for the extreme and ever increasing levels of energy consumption that are used to mine Bitcoin and validate transactions; FairCoin is based on a blockchain that works dramatically differently, a small number of computers collaborate rather than compete to validate transactions through Cooperatively Validated Nodes (CVNs) and thus the energy consumption is both minimal and sustainable.

The figure who is most strongly identified with the FairCoop movement and FairCoin since its inception is Enric Duran, who raised around four hundred thousand Euros in 2008 by creating multiple overdrafts with fake solvency, and then invested this money into building the cooperative movement in Spain in 2008, leading to the creation of the Catalonia Integral Cooperative movement in 2010. Since 2014, Duran’s focus has been on working with FairCoop to generate the alternative ecological and post-capitalist ecosystem that FairCoin is based on. One distinctive advantage of cryptocurrency as a tool to build social and political alternatives is that it is not geographically confined in the way alternative currencies typically are. Local currencies for example are often associated with strengthening local economies and making them more sustainable. Yet FairCoin stresses its local to global to local aspects, in that it is based around local nodes that are organizationally autonomous but affiliated to the FairCoop ecosystem. There are over 50 different local nodes in existence although levels of activity vary considerably between regions. The most active places tend to be in Southern Europe, such as Galiza in Spain, the the Greek city of Heraklion in Crete, and Milan in Italy, to name a few. But FairCoin also has increasing presence in parts of Eastern Europe, like Novi Sad in Serbia. And perhaps more surprisingly in Switzerland in Berne and Jura. From a UK perspective there are also local nodes being built in Yorkshire and London.  

The term ‘ecosystem’ is crucial when trying to characterize FairCoop. It is composed of an alternative cooperative not-for-profit bank, Bank of the Commons, a range of lively – (if at times acrimonious) – discussion groups on Telegram that cover economic strategy, education, principles, and assembly meeting groups, amongst others.

There is also a tech team of activists who work (as far as possible) with open-source collaborative technology to build the web infrastructure of the ecosystem. Currently there are hundreds of merchants across Europe that accept FairCoin, although the social cryptocurrency faces the challenge that many alternative currencies face around how to upscale the distribution and production process, to cover infrastructural needs like electricity, collectively owned land, and transportation of goods between nodes. The FairCoop ecosystem aims to develop a fully circular economy in which the different parts of the production and distribution process can each be paid for in FairCoin in a way that is environmentally sustainable, according to relations of trust and mutual solidarity. This remains an objective that is some way off, but the FairCoop ecosystem is certainly growing and attracting participants from a wide range of different localities.

One pressing challenge for any cryptocurrency which sets its sights on post-capitalist, social finance is that it cannot be completely separated from capitalist markets that it necessarily operates alongside. And on cryptocurrency exchanges outside of the ecosystem, FairCoin is bought and sold at a much lower price than the internal value within the network of 1.2 Euros to 1 FairCoin. Although within the ecosystem every effort is made to sustain the community price decided by General Assembly, thus face-to-face relations of trust based on shared principles and ideology are crucial to sustaining the ecosystem. Efforts are also being made to make local nodes more organisationally and economically autonomous to ensure that trusted participants can exchange their FairCoin back to fiat currency if required.

Nonetheless makes FairCoin and FairCoop potentially such an important movement and experiment is that the existing money system and the model of infinite growth that it is based on through loans charged at interest presents major obstacles to not only imagining but practicing economic and political alternatives. At the time of the last financial crisis radical social movements did not yet have the tools to offer a fully fledged alternative to financial capitalism amidst the massive bank bailouts and the imposition of austerity. So in a time of continuing financial instability; to develop substantive alternatives we need not only to rethink money but to contribute to the task of building and using new monies. FairCoin as a local to global social cryptocurrency with ecological and cooperative values, presents an exciting step in this direction.