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Wörgl: the miracle of a local currency

The Miracle of Wörgl

Legend has it that in the midst of the Great  Depression, the mayor of the city of Wörgl, in Austria, issued a new currency… which depreciated every month by 1% due to the so-called rate of oxidation! That currency was a “Certified Compensation Bill”, a form of local currency best known by Stamp Scrip, or Freigeld.

What followed was wonderful: the currency got into circulation, unemployed people got back to work, local businesses reopened, and in order to avoid losing money a high percentage of citizens spent the currency very fast, local government projects could be all completed … The implementation of the currency resulted in a growth of employment and prosperity, creating a virtuous circle. More surprisingly, inflation and deflation were not detected during the experiment…. Believe it or not, it all happened during the worst economic crisis of the century!

The Wörgl currency was an application of the monetary theories of the economist Silvio Gesell by the town’s then-mayor, Michael Unterguggenberger

Legend has it that in order to reverse the crisis, other cities tried to replicate the Wörgl model, but the National Bank of Austria decided to terminate the experiment on September 1, 1933.

Oracle has it that someday, a developer will find the code that will make the worldwide issue of a Wörgl-like digital currency possible. This day will change economy as we know it, forever. It will mean a complete turnabout. Just imagine a currency that rewards you —or can even make you rich— for spending it quickly! (see the last paragraph of this post).

Wörgl currency

A significant problem about cryptos is that holders prefer to keep them as a store of value in the hope that their price will eventually increase.  As a result, they are not brought into circulation to conduct transactions between consumers and businesses. Whereas it is true that potential buyers wouldn’t find a depreciating crypto particularly  appealing, it is also true that an additional reward for spending it quickly —e.g., the quicker you spend it the highest refund you get— could solve the question.

To be honest, I’ve actually published this post as if it were a message in a bottle. Maybe someone will be able to put the puzzle together and come up with a fundamentally different crypto based on the Wörgl experiment. I really think it would make a difference.

PS: It is necessary to modify the source code of a suitable crypto (or else create a new Blockchain from scratch incorporating a rate of oxidation ) so that the resulting currency both depreciates each month and offers an added incentive to encourage people to spend it. An extra motivation for those who spend it faster could be to participate in a daily lottery or raffle, so that you could actually win a small fortune every day by spending  your currency quickly! Such process could be automated through a Smart Contract. Please, share. We need to find that coder 😉

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Marcel Solé