When the 2008 economic crisis hit, activists in Brixton, South London, realized they needed to find a way to keep valuable pounds within their community. With the creation of the “Brixton Pound,” a complimentary local currency accepted by over 250 businesses, these activists directed money spent in Brixton to local stores instead of global chain stores. The paper bills highlighted famous people born in Brixton, including David Bowie. When customers paid with the Brixton Pound, business owners were able to choose whether to reinvest the currency or change it to Sterling. The Brixton Pound went out of circulation in 2019 as fewer customers used cash for retail purposes.
Fast forward to 2021: the Brixton Pound community, recognizing that “the value of paper money is starting to recede globally,” decided to build a digital version of the Brixton Pound. The currency will be tokenized and built on the Algorand blockchain platform. Consumers will be able to obtain the currency via a smartphone app, which can then be spent in local stores. In this way, the organizers of the Brixton Pound hope to reintroduce the notion of supporting local businesses with an innovative twist using blockchain technology.
What role can lawyers play as local currencies become digitized via the blockchain? First, this experiment will raise numerous novel legal questions that lawyers should be ready to answer. How will taxes be collected? How will this affect traditional monetary systems? Will low-income populations have equitable access to new digital local currencies?
In addition, lawyers should consider whether they would accept fee payments in digital Brixton Pounds. Attorneys should also be keeping an eye on the development of larger projects involving Central Bank Digital Currencies (“CBDCs”).
Brixton is not the only jurisdiction considering a move to a local digital currency. In England, Bristol is planning a similar move. In the United States, cities like Miami and New York are experimenting with CityCoin projects involving programmable smart contracts. It remains to be seen how these projects will evolve, but it is exciting to witness how blockchain technology can be used to support small businesses and local communities.