Virtual Currency

Virtual currency is a digital currency, which is unregulated[1], and is issued and managed by the developing entity. They can be local in nature – designed and implemented by a municipality and its partners. They can be used to incentivise sustainable behaviours, community engagement, and social impact. They enable fast, borderless transactions and are often secured through encryption or blockchain technology. These schemes create closed-loop economic systems where virtual credits can be earned and spent within specific networks, fostering local development and promoting targeted urban strategies.

[1] An ‘unregulated’ digital currency means it is not issued or controlled by a central bank. Instead, it is issued and controlled by its developers, and used and accepted among the members of a specific virtual community

Step 1: Define the purpose and use case

Identify specific sustainability or community goals that the virtual currency scheme would be used for. These could range from reducing household energy consumption to promoting recycling or increasing citizen engagement in local events. Clear objectives ensure that the currency system aligns with broader urban strategies.

Step 2: Set up the digital currency & management mode

Collaborating with the necessary experts and stakeholders, design the structure of the virtual currency, including how users earn credits and where they can spend them. Define exchange rates, rewards, and participation criteria. Develop a user-friendly digital platform or mobile app to manage transactions, track points, and provide users with access to services. The platform should ensure transparency, data security, and real-time updates on earned credits and spending options.

Step 3: Launch and Promote Adoption

Conduct a beta test to identify and fix any technical issues before the official launch. Effective stakeholder engagement is crucial. Partner with businesses, platforms, or institutions to encourage real-world usage and adoption. Use marketing strategies such as social media campaigns, educational content, and incentives like airdrops or rewards to attract users and drive engagement.

Step 4: Maintain, monitor and/or scale the system

Continuously assess the impact using key performance indicators (KPIs) such as energy savings, waste reduction rates, or community feedback and engagement levels. Feedback loops help refine the programme and inform any potential scaling to other districts or urban challenges.

Image

The foreseen costs can be divided into two categories: currency development and currency deployment. Costs associated with currency development include defining the rules and functions of the currency, performing legal, financial, and administrative assessments, and designing the currency. Currency deployment costs include technological investments, engaging local businesses, raising citizen awareness, and monitoring.

Drives Sustainable Behaviours: virtual currencies can be used as incentive mechanisms to encourage a specific desired behaviour.

Empowers Local Economies: Virtual currencies which are only eligible to be used in local businesses can stimulate the local economy.

Strengthens Community Engagement: Virtual currencies can be used to encourage citizen participation in municipal initiatives.

Flexible & Adaptable: Virtual currencies are flexible and can be used to achieve different urban goals and can be easily scaled up.

User Engagement & Participation: The success of virtual currencies is dependent on a significant adoption rate.

Technical Infrastructure: Managing a virtual currency requires secure, user-friendly digital platforms and relevant expertise.

Economic Integration: Getting local businesses to accept virtual currencies can be challenging. They are more likely to join if there is already a sizable pool of users.

Regulatory Compliance: Depending on national regulation, there could be significant legal barriers related to alternative currencies.

Leverage Existing Networks: Collaborate with community groups and local businesses to strengthen engagement.

Simplify Access: Ensure the digital platform is intuitive and easy to use for all demographics.

Highlight Environmental & Social Benefits: Showcase tangible impacts to encourage participation.