It’s become pretty common these days to refer to Bitcoin and other so-called cryptocurrencies as “alternative currencies,” or even currencies of the future. Designed to provide payment and financial storage options that aren’t tied to conventional, government-backed money, cryptocurrencies have done quite well in the past few years, advancing from whimsical ideas to legitimate, functional resources. Many still argue that it’s the currency of the future.
However, while cryptocurrency is the first major example of such a phenomenon in any of our lifetimes, society has heard buzz about alternative currencies taking over many times before. Throughout human history—really, as long as currency has been a tangible thing—there have been people and organizations to suggest alternative ways of storing and exchanging wealth. Some were certainly more sensible than others, but the interesting thing is in looking back at the history of alternative currencies and seeing what caused them to vanish or fizzle out.
Precious commodities (think gold and silver) are among the earliest examples of currency, so in one sense it may not be fair to think of them as alternatives. However, the basic concept of currency is that it carries a value that isn’t dictated by its physical worth or characteristics. Thus, exchanging wealth via gold and silver and determining value by weight, as many ancient societies did, can truly be called an execution of alternative currency. There’s not really a defined point at which this practice stopped, given that precious metals are still traded and used to back some currencies today. However, we know that the first paper money was issued in China early in the seventh century.
We know that ancient civilizations in Greece, Rome, Egypt, and likely elsewhere used coins as currency. However, because minting on a large scale wasn’t always an option, these same civilizations sometimes used lead tokens to exchange worth, with the tokens being representative of coin worth. It’s impossible to define what ended the use of tokens, though we can safely say this is an inefficient and unreliable substitute for official currency. Likely the prevalence of more minting companies a little later in history put an end to the widespread use of tokens.
We can almost think of bracteates the way we think of coupons in the modern world. They weren’t actually paper slips or anything of that nature, but rather were coins that could be minted by official groups and church leaders. Thus, they operated alongside and, to some extent, in the shadow of prevailing national currencies, primarily in medieval times. As with most of these examples, there was no defining end to the use of bracteates, but with strengthening nations during the Renaissance period, centralized currencies grew more dominant. That likely contributed to the phasing out of bracteates.
In between bracteates and points, there were a few centuries during which “Scrips” were sometimes used as alternatives to ordinary payment. However, these were essentially paper slips serving as I.O.U.s, so it’s no wonder they didn’t really make a lasting dent in history. Points, on the other hand, are some of the most successful alternative currencies we’ve seen. Basically, these are the same rewards points and credits we use today, in that they were designed as future currency specific to a given business, earned when one makes a purchase from that business. Points are still with us today, though they’re not truly viewed as currency.
With the exception of some instances of insurgent governments or puppet states issuing their own currencies—none of which last unless those governments or states ultimately win out and become established nations—that pretty much takes us to the present day, and the latest example of alternative currency. Cryptocurrency may seem like the most sophisticated and stable example yet, but really it’s not so different from past versions of the same concept: the creation of an easier, less-regulated form of wealth management.
But what could undo cryptocurrency?
If you read through all of those examples you may have come to a certain conclusion regarding the force that seems to bring an end to every alternative currency: progress. Each time an alternative gains steam, progress in technology or political unity seems to snuff it out in favor of regulated, national currencies. And it could be that we’ll see a similar pattern with regard to cryptocurrency. Some would argue we’re already seeing it, as bank cards and mobile payments systems have already made it easier to pay with ordinary currency in a digital capacity. That’s not the only purpose of Bitcoin and other cryptocurrencies, but it’s certainly a defining feature for many consumers. However, recently another interesting theory has been circulating as to what could bring down cryptocurrency. Oddly enough, it’s power.
According to one report, Bitcoin alone could consume as much energy as Denmark by 2020. That’s a pretty alarming possibility. Even if Bitcoin only consumes half as much energy as an entire nation by 2020, it will be alarming. Given increasing global concerns about sustainability and environmental responsibility, this could prove to be the undoing of the cryptocurrencies so many envision sticking around into the future.
These things are best judged with historical prospective, but still, it’s worth noting that most examples of alternative currencies have ultimately fizzled out over time.