What are the alternatives to using money? The Top 6 Options
Money is one of the most important things in the world today, right? For most of us, it is right up there next to air in importance. That said, money in itself is not very exciting; after all, it’s just paper or zeros in the bank account. However, the freedom and choices that come with using money is what makes it exciting.
While to most people money refers to the Dollar, Euro, Yen and Rubi among other fiat currencies that have been around for quite a long time, did you know there are other alternatives to accessing essential goods and services or storing value even in the absence of these fiat currencies?
In this piece, we look at what is the alternatives to using money.
Let us delve into the top 5 alternatives.
1. Time banking
Time banking is a community time-based currency where, when you give one hour of service to someone you receive one-hour time credit that you can also use to receive services or donate to others.
A time banking software is used so that members can see what’s on offer and also keep track of their activities. It is most prevalent in developed countries.
Pros
Time banking values all hours of work equally. 1 hour of service = 1 hour of credit.
Links people in a social network.
You can save money whilst using a time bank because you spend time instead of money.
Cons
It overlooks differences in levels of expertise.
Cannot be used to make purchases.
2. Barter trade
This is simply the exchange of goods and services without money. Barter trade is one of the oldest medium of trade that has been in use for centuries. Today, barter trade is carried out in a more organised market; it operates in three different ways.
International barter
This involves the governments of two countries or companies in two different countries and is typically carried out in the form of counter-trade agreements.
Cooperate barter
It involves companies exchanging goods and services with other companies that they are in business with to move their inventory.
Retail barter
In this form, there exists a barter organisation. Member companies pay for the goods and services they buy from this market by selling goods and services they produce or trade on this market.
Pros
Mutually beneficial arrangement that doesn’t involve the exchange of cash.
It is a simple medium of exchange free of complex procedures involved in other monetary systems.
Balance of payment deficit and foreign exchange crisis does not exist in barter.
Perfectly utilises personal and natural resources for economic growth without wastage.
Cons
No standards for deferred payments.
There is no common measure of value.
Difficulty in dividing and subdividing goods and services.
3. Cryptocurrency
Crypto is a virtual currency—it only exists digitally—stored in a decentralised database that uses strong cryptography and is anchored on blockchain technology. Cryptocurrencies are not issued or backed by the central governments. Besides, they exist in various forms such as the Bitcoin, Litecoin, Ethereum, Ripple and DASH, among others.
Pros
Free from government control and interference.
They are global, in that they take place in a computer network regardless of your physical location.
Transactions are instant.
It is secure as funds are locked in a public key cryptocurrency system, and only the owner can access it.
Facilitates privacy, especially when combined with other security measures such as the use of VPNs
Cons
Transactions cannot be reversed; once a transaction is done, there is no cancelling.
Its market is highly volatile.
They are not widely accepted.
4. Local Exchange Trading Systems (LETS)
Local Exchange Trading Systems are economic organisations within a local community that enable the community members to exchange goods and services using a locally created currency. LETS uses a locally created currency as a unit of value which can be exchanged for goods and services.
With the local currency as a unit of value, the community has an alternative economy outside and parallel to the wider economy. This system is anchored on five principles, namely:
Non-profit making
No compulsion to trade
Information about balances is available to all members
The LETS unit is equal in value to the national currency
No interest is charged or paid
Pros
Encourages and supports local trading
More connections and interactions among its members
Increased levels of economic activities
Improved community spirit
Since no interest is charged, spending is encouraged.
Cons
Open to abuse. In that, a user can take more goods and services than they contribute and then leave the system
5. Precious Metals and Stones
There is no unique definition to these precious metals and stones since they may differ from country to country. However, precious stones generally include diamonds, rubies, sapphires and emeralds while precious metals include gold, silver and bronze.
These precious metals and stones have been used globally since ancient times as a form of payment for goods and services. Gold is the highest valued metal.
Pros
Price stability
Limits the power of governments and banks to cause price inflation by excessive issuance of money
Most of them are universally acceptable
Cons
Requires a safe storage solution
You must be able to verify the purity of the gold or at least buy from a highly trusted source.
6. Digital Gold
Gold is one of the oldest means of storing value, having been used for over 3000 years. Presently, with the advancement of technology, it has gone digital.
Digital gold is especially popular in India where gold is considered “god’s money” – It is even used as an offering in holy temples. Digital gold was created to overcome the drawbacks of handling physical gold – like having to verify its purity and finding a safe storage solution. Not to mention, it helps avoid human contact, which has proven crucial to surviving the ongoing corona pandemic.
When you buy digital gold, the company secures its equivalent in real gold for safekeeping. You can redeem your real gold anytime and have it delivered to your doorstep. What’s more, it is 100% insured.
Among the popular companies dealing in digital gold are MMTC-PAMP India Pvt. Ltd., Augmont Gold Ltd., and Digital Gold India Pvt. Ltd.
Pros
Real gold can be delivered to your doorstep at your request
Can serve as collateral for loans
Backed by genuine gold whose purity has been verified
Safe storage and 100% insured
Can be exchanged for other forms of assets such as jewellery, gold coins, and bullion
Cons
Investment is limited to a certain amount of fiat money depending on the platform
The delivery or any changes you make apply to the price of the gold
Some companies have a limit on the storage period of your real gold
Conclusion
There are numerous alternatives to using money out here; these mentioned above are just but a few. Remember, we can pretty much use anything at our disposal as an alternative currency, be it our skills, talents or possessions. Read more blogs about time banking, community, and making our world a better place here on the Nomos blog.