{{short description|Form of currency}} A '''private currency''' is a currency issued by a private entity, be it an individual, a commercial business, a nonprofit or decentralized common enterprise. It is often contrasted with fiat currency issued by governments or central banks. In many countries, the issuance of private paper currencies and/or the minting of metal coins intended to be used as currency is a criminal act, such as in the United States (18 U.S. Code § 486).<ref>{{cite web|title=18 U.S. Code § 486 - Uttering coins of gold, silver or other metal|url=https://www.law.cornell.edu/uscode/text/18/486|access-date=7 July 2018|language=en}}</ref> Digital cryptocurrency is sometimes treated as an asset instead of a currency. Cryptocurrency is illegal as a currency in a few countries (mainly in West Asia and North Africa).
Today, there are over four thousand privately issued currencies in more than 35 countries. These include commercial trade exchanges that use barter credits as units of exchange, private gold and silver exchanges, local paper money, computerized systems of credits and debits, and digital currencies in circulation, such as digital gold currency.
== Private bank notes == {{See also|Free banking#History of free banking|l1=History of free banking}} [[File:Delaware Bridge Company Dollar.jpg|thumb|right|A private $1 note, issued by the "Delaware Bridge Company" of New Jersey 1836–1841]]
In the United States, the Free Banking Era lasted between 1837 and 1866, when almost anyone could issue paper money. States, municipalities, private banks, railroad and construction companies, stores, restaurants, churches and individuals printed an estimated 8,000 different types of money by 1860. If an issuer went bankrupt, closed, left town, or otherwise went out of business, the note would be worthless. Such organizations earned the nickname of "wildcat banks" for a reputation of unreliability; they were often situated in remote, unpopulated locales said to be inhabited more by wildcats than by people. The National Bank Act of 1863 ended the "wildcat bank" period.
thumb|right|Private currency issued in Australia by The City Bank of Sydney circa 1900
In Australia, private currency had first been used since the arrival of European settlers in 1788, and into the early years of Federation before the Bank Notes Tax Act 1910 effectively shut down the circulation of private currencies by imposing a 10% tax on the practice, making it economically prohibitive. This act was subsequently repealed by the Commonwealth Bank Act 1945, which imposed a {{A£|1,000}} per day fine for private currencies, and s. 44(1) of the Reserve Bank Act 1959<ref>{{Cite Legislation AU|Cth|act|rba1959130|Reserve Bank Act 1959|44}} Other persons not to issue notes.</ref> prohibited the practice outright. In 1976, Wickrema Weerasooria published an article which suggested that the issuing of bank cheques violated this section, to which banks responded that since bank cheques were printed with the words "not negotiable" on them, the cheques were not intended for circulation, and thus did not violate the statute.<ref>{{cite web |last=Weerasooria |first=Wickrema |title=The Australian Bank Cheque - Some Legal Aspects |url=http://www.austlii.edu.au/au/journals/MonashULawRw/1976/3.pdf}} (1976) 2(2) Monash University Law Review 180. {{issn|0311-3140}}</ref>
In Hong Kong, although the government issues currency, bank-issued private currency is the dominant medium of exchange. Most automated teller machines dispense private Hong Kong bank notes.<ref>International Bank Note Society. [http://www.theibns.org/joomla/index.php?option=com_content&view=article&id=232&catid=13&Itemid=51 "Hong Kong's 1,000 (HSBC) dollar note"].</ref>
In Scotland, the Bank of Scotland, Clydesdale Bank, and the Royal Bank of Scotland, and in Northern Ireland, the Bank of Ireland, Danske Bank, First Trust Bank, and Ulster Bank, are authorised by Parliament to issue Pound sterling bank notes. They are subject to central bank (the Bank of England) regulations concerning "ring-fenced backing assets" and are backed in part by deposits at the Bank of England. They are exchangeable with other pound notes on a one-to-one basis, and circulate freely within the United Kingdom, though not legal tender, not even in Scotland and Northern Ireland. In fact, technically, no banknote (including Bank of England notes) qualifies as legal tender in Scotland or Northern Ireland.<ref>{{cite web|url=http://www.acbi.org.uk/media/sni_notes_factsheet_nov12_copy1.pdf|author=The Association of Commercial Banknote Issuers|title=Scottish and Northern Ireland Banknotes Fact Sheet|access-date=2017-02-12|archive-url=https://web.archive.org/web/20180128040158/http://www.acbi.org.uk/media/sni_notes_factsheet_nov12_copy1.pdf|archive-date=2018-01-28|url-status=dead}}</ref>
== Complementary currencies == {{main|Complementary currency}} <!-- Unsourced Many private currencies are community or local currencies, types of complementary currency.
Since 1991, residents of and around the city of Ithaca in Western New York State have been using a private currency in which participating workers either earn or purchase Ithaca Hours, which may be used to buy goods and services locally. The system has been ruled legal provided all Hours-derived revenues are reported to the IRS as income{{Citation needed|date=March 2014}}.
BerkShares is a local currency that circulates in The Berkshires region of Massachusetts. It was launched on September 29, 2006 by BerkShares Inc., with research and development assistance from the E. F. Schumacher Society. The BerkShares website lists over 370 businesses in Berkshire County that accept the currency. In 30 months, 2.2 million BerkShares have been issued from 12 branch offices of five local banks.-->
England has had the Totnes pound since it was launched by Transition Towns Totnes Economics and Livelihoods Group in March 2007; A Totnes Pound is equal to one pound sterling and is backed by sterling held in a bank account. As at September 2008, about 70 businesses in Totnes were accepting the Totnes Pound. Other local currencies launched since then include the Lewes Pound (2008), the Brixton Pound (2009),<ref>{{cite news|newspaper=The Guardian|title=Will the Brixton pound buy a brighter future?|url=https://www.theguardian.com/environment/2009/sep/16/will-brixton-pound-work|author=Leo Hickman|date=16 September 2009|access-date=25 September 2012}}</ref> the Stroud Pound (2009)<ref>[https://news.bbc.co.uk/2/hi/uk_news/england/somerset/8253419.stm Town launches its own bank notes ''BBC News'' 13 September 2009 ]</ref> and the Bristol Pound, which also allows for electronic payments.<ref name="BBC Sept12">{{cite news|last=Harvey|first=Dave|title=Bristol Pound launched to keep trade in the city|url=https://www.bbc.co.uk/news/uk-england-bristol-19627592|access-date=21 September 2012|newspaper=BBC West News|date=19 September 2012}}</ref>
Austria had the Wörgl Experiment from July 1932 to September 1933.<ref>{{cite news |title=Currency Solutions for a Wiser World » The Wörgl Experiment: Austria (1932-1933) |url=https://www.lietaer.com/2010/03/the-worgl-experiment/ |access-date=28 September 2022 |publisher=Lietaer |date=17 January 2021}}</ref>
Bavaria, Germany, has had the Chiemgauer since 2003. As of 2011 there were over 550,000 in circulation.<ref name="BBC Sept12"/>
Since starting in 2006, the "City Initiative Karlsruhe" has issued the ''Karlsruher'' which has no nominal value. Every coin has the value of 50 Eurocents and is primarily used in parking garages. As of 2009, 120 companies in Karlsruhe accept the ''Karlsruher'' and usually grant a discount when paid with it.<ref>{{cite web|title=Karlsruhe (bonus system)|url=http://ka.stadtwiki.net/Karlsruher_%28Bonussystem%29|access-date=15 April 2014|language=de}}</ref>
In Canada, numerous complementary currencies are in use, such as the Calgary Dollar and Toronto dollar. However private currencies in Canada cannot be referred to as being legal tender and many private currencies (as well as loyalty programs) avoid the word "dollar", using names like "coupons" or "bucks", to avoid confusion. Examples include: Canadian Tire money and Pioneer Energy's Bonus Bucks.<ref>{{Cite journal|last=Last|first=Arthur M.|date=December 2003|title=Canadian Tire Money: An Analogy for Use When Discussing Weak Acid–Strong Base Titrations|url=https://pubs.acs.org/doi/abs/10.1021/ed080p1403|journal=Journal of Chemical Education|volume=80|issue=12|pages=1403|doi=10.1021/ed080p1403|bibcode=2003JChEd..80.1403L|issn=0021-9584|url-access=subscription}}</ref>
Thailand's township Amphoe Kut Chum once issued its own local currency called ''Bia Kut Chum'': Bia is Thai for cowry shell, which was once used as small change, and still so used in metaphorical expressions. To side-step implications that the community intended their scrip as an unlawful substitute for currency, it issues barter coupons called ''Boon'' Kut Chum.<ref>{{Cite web |url=http://www.angkor.com/2bangkok/2bangkok/forum/archive/index.php/t-2224.html |title=A Boon to Kut Chum archive |access-date=2008-07-27 |archive-date=2008-09-21 |archive-url=https://web.archive.org/web/20080921155229/http://www.angkor.com/2bangkok/2bangkok/forum/archive/index.php/t-2224.html |url-status=dead }}</ref>
Customer reward and loyalty programs operated by businesses are sometimes counted as private currencies. However, though "points" or "miles" may be exchangeable for merchandise or travel from the program sponsor, most of them lack the key element for currency of being a medium of exchange transferable to other individuals and usable as payment for items from other vendors. A few programs do have "partnerships" allowing this to some extent, and permit the transfer of points or miles. Some startups, such as the Canadian website Points.com,<ref>{{cite web|url=http://points.com|title=Points.com|website=points.com}}</ref> have sought to make loyalty "points" more currency-like by creating an exchange where points from one loyalty program can be traded for points in other such programs.<ref>{{cite web|url=https://www.pcmag.com/article2/0,2817,2369584,00.asp|title=Points.com establishes currency exchange for loyalty programs|website=PCMag |date=September 23, 2010}}</ref>
== Cryptocurrencies and digital currencies == A cryptocurrency is a form of digital or virtual currency where cryptography secures the transactions and controls the creation of additional units of the currency.<ref name="crypto currency">{{cite news|url=https://www.forbes.com/forbes/2011/0509/technology-psilocybin-bitcoins-gavin-andresen-crypto-currency.html |title=Crypto Currency |author=Andy Greenberg|work=Forbes.com |date=20 April 2011 |access-date=8 August 2014}}</ref> A cryptocurrency wallet can be used to store the public and private keys which can be used to receive or spend the cryptocurrency. The cryptographic systems used allow for decentralisation; a decentralised cryptocurrency is fiat money but one without a central banking system. In terms of total market value, Bitcoin is the largest cryptocurrency.<ref name="WsjVolatile">{{cite news |last=Espinoza |first=Javier |title=Is It Time to Invest in Bitcoin? Cryptocurrencies Are Highly Volatile, but Some Say They Are Worth It |date=22 September 2014 |url=https://online.wsj.com/articles/how-to-decipher-cryptocurrencies-1411333011 |work=Journal Reports |publisher=The Wall Street Journal |access-date=28 June 2016}}</ref>
On 6 August 2013, Federal Judge Amos Mazzant of the Eastern District of Texas of the Fifth Circuit ruled that bitcoins are "a currency or a form of money" (specifically securities as defined by Federal Securities Laws), and as such were subject to the court's jurisdiction.<ref>{{cite web|last=Farivar |first=Cyrus |url=https://arstechnica.com/tech-policy/2013/08/federal-judge-bitcoin-a-currency-can-be-regulated-under-american-law/ |title=Federal judge: Bitcoin, "a currency," can be regulated under American law |publisher=Ars Technica |date=2013-08-07 |access-date=2013-08-15}}</ref><ref>{{cite web|title=Securities and Exchange Commission v. Shavers et al, 4:13-cv-00416 (E.D.Tex.)|url=https://www.docketalarm.com/cases/Texas_Eastern_District_Court/4--13-cv-00416/Securities_and_Exchange_Commission_v._Shavers_et_al/|publisher=Docket Alarm, Inc.|access-date=14 August 2013}}</ref> In August 2013, the German Finance Ministry characterized Bitcoin as a unit of account,<ref name="Marketwatch20130819"/><ref name=FAZ20130816/> usable in multilateral clearing circles and subject to capital gains tax if held less than one year.<ref name=FAZ20130816>{{cite news|url=https://www.faz.net/aktuell/finanzen/devisen-rohstoffe/digitale-waehrung-deutschland-erkennt-bitcoins-als-privates-geld-an-12535059.html|title=Deutschland erkennt Bitcoins als privates Geld an (Germany recognizes Bitcoin as private money) |last=Nestler |first=Franz|date=16 August 2013 |website=Frankfurter Allgemeine Zeitung}}</ref><ref name=Marketwatch20130819>{{cite web |url=http://blogs.marketwatch.com/thetell/2013/08/19/bitcoins-are-private-money-in-germany/ |title=Bitcoins are private money in Germany |last=Vaishampayan |first=Saumya |date=19 August 2013 |website=Marketwatch |archive-url=https://web.archive.org/web/20130824204723/http://blogs.marketwatch.com/thetell/2013/08/19/bitcoins-are-private-money-in-germany/ |archive-date=24 August 2013 |url-status=dead }}</ref>
== Private currency crimes ==
As national currencies can be counterfeited, so too can private currencies, and private currencies are subject to other criminal issues, including fraud.
The Liberty Dollar was a commodity-backed private currency created by Bernard von NotHaus and issued between 1998 and 2009. In 2011, von NotHaus was arrested and subsequently convicted on charges of money laundering, mail fraud, wire fraud, counterfeiting, and conspiracy.<ref>{{cite press release |title=Defendant Convicted of Minting His Own Currency |publisher=U.S. Attorney's Office |date=March 18, 2011 |location=United States District Court for the Western District of North Carolina |url=https://www.fbi.gov/charlotte/press-releases/2011/defendant-convicted-of-minting-his-own-currency |archive-date=December 5, 2012 |archive-url=https://web.archive.org/web/20121205094219/http://www.fbi.gov/charlotte/press-releases/2011/defendant-convicted-of-minting-his-own-currency |url-status=dead }}</ref><ref>{{cite web |first=Tom |last=Lovett |title=Local Liberty Dollar 'Architect' Bernard von NotHaus convicted |date=March 19, 2011 |publisher=Evansville Courier & Press |url=http://www.courierpress.com/news/2011/mar/19/local-liberty-dollar-architect-found-guilty/}}</ref> The charges stemmed from the government view that the Liberty silver coins too closely resembled official coinage.
In 2007, Angel Cruz, founder of The United Cities Corporation (TUC), announced he was establishing an alternative "asset based" currency named "United States Private Dollars".<ref>[http://www.dailykos.com/story/2007/8/25/93036/7434/248/376052 "Florida man launches 'United States Private Dollar'"], ''Daily Kos'', August 25, 2007.</ref> Cruz claimed United States Private Dollars were "backed by the total net worth of the assets of its members" and had printed six billion dollars' worth of the private currency;<ref>[https://web.archive.org/web/20080112204706/http://www.theunitedcities.org/web/content/view/15/14/ "TUC Currencies", United Cities website], via Internet Archive</ref> the backing assets were claimed to be valued at 357 billion dollars.<ref>[http://openpr.com/news/25136/TUC-IMPROVING-THE-US-ECONOMY-BY-THE-CIRCULATION-OF-THEIR-PRIVATE-CURRENCY-TODAY.html "TUC Improving the US Economy by the Circulation of Their Private Currency Today", OpenPR.com] August 2, 2007</ref> The currency featured the slogan "In Jehovah We Trust".<ref name="Orlando Sentinel">[https://www.orlandosentinel.com/2007/08/25/kissimmee-nonprofit-concerned-over-checks/ "Kissimmee nonprofit 'concerned' over checks"], ''Orlando Sentinel'', August 25, 2007</ref> The Comptroller of the Currency issued an alert warning banks that checks issued by TUC were "valueless instruments" and should not be cashed.<ref name="Orlando Sentinel"/> In 2008, Cruz was indicted by a Federal grand jury in Florida on one count of conspiracy to defraud the United States under {{usc|18|1344}} and {{usc|18|371}} and six counts of bank fraud under {{usc|18|1344}} and {{usc|18|2}} in connection with his dealings with Bank of America, while attempting to get United Cities bank drafts cashed.<ref>Indictment, ''United States v. Cruz'', case no. 6:08-cr-00177-UA-DAB, docket entry 1, Aug. 6, 2008, U.S. District Court for the Middle District of Florida (Orlando Div.).</ref> As of late October 2010, Cruz was still a fugitive,<ref>Status Report, ''United States v. Cruz'', case no. 6:08-cr-00177-UA-DAB, docket entry 88, Oct. 28, 2010, U.S. District Court for the Middle District of Florida (Orlando Div.)</ref> though an associate was convicted on related charges and sentenced to prison for eight years. Angel Cruz was finally captured in 2020.<ref>{{cite web |title=U.S. Marshals Arrest Fugitive 9 Years on the Run in the Dominican Republic |url=https://www.usmarshals.gov/news/chron/2020/091420a.htm |website=www.usmarshals.gov|date=7 January 2021 }}</ref>
== See also == {{Portal|Numismatics|Money}} {{div col|colwidth=21em}} * Commodity money * Complementary currency * Dash * Demurrage currency * Disney dollar * Gold standard * History of the United States dollar * Kirtland Safety Society * Local Exchange Trading Systems * Monero * Nano * Nxt * Peercoin * Prison commissary * Scrip * Store of value * Ven (currency) {{div col end}}
==References== {{reflist|colwidth=30em}}
== Further reading == * Hayek, Friedrich A. ''Denationalization of Money: An Analysis of the Theory and Practice of Concurrent Currencies'' 1977. {{ISBN|978-0-255-36087-6}}
{{DEFAULTSORT:Private Currency}} Category:Privacy Category:Private currencies Category:Freiwirtschaft