Could A Solar-Powered Currency Be The Next Bitcoin?
Even though SolarCoin’s success relies heavily on the solar industry and current solar power users who can “get paid” for being green, it might be hard to sell the idea to homeowners who are used to receiving cash rebates from utility companies. That, coupled with the innate nebulousness of the future of cryptocurrency, may prevent the community’s buy-in.
The biggest question, however, is whether SolarCoin can make solar power more attractive to new consumers. SolarCoin can’t promise that and won’t necessarily make solar power cheaper. “It hasn’t been in place long enough. There’s not as much expectation to see it driving any growth,” Honeyman said.
Still, at minimum, SolarCoin, which says its model is 50 times more energy efficient than Bitcoin, is an altruistic way for renewable energy advocates to show support and grow the solar community, Honeyman said. “The good thing is that there’s a huge opportunity for homeowners,” apartment complex owners and those who aren’t solar generators to contribute to the cause, Honeyman said.
The hope, however, is that solar costs will eventually come down as more people turn to solar. It’s great if SolarCoin plays a part in that, Dolan said. But ultimately it’s about the future of digital currency and its place in a global economy.
The socially conscious cryptocurrency
Alternate currencies like Solarcoin and Bitcoin aren’t a new concept. Several towns across the world use their own money, some of which can be exchanged for traditional currency. But currencies are only as valuable as the community that uses them. Right now each coin represents 1 megawatt hour of solar electricity and is kept in a secure, encrypted online wallet. Because they are so new, SolarCoins haven’t yet attained any monetary value. But each coin is expected to be worth $20 to $30, according to SolarCoin’s website.
As with all cryptocurrencies, price is based on supply and demand. There are only a limited number of coins available to be in circulation, and just like traditional currencies such as the U.S. dollar, its worth can fluctuate. Bitcoin, known for its constant bubbles and busts, has painstakingly built a following over the past five years, and recent sign-ons by big retailers like Overstock.com have helped stabilize the currency. SolarCoin hopes to grow in a similar way, and its added stability and green appeal may help avoid some of the fluctuations Bitcoin has weathered.
“It’s up to the broader community to set a value for that coin,” Dolan said. Over time, the number of coins earned would increase and, theoretically, accumulate value. Also, the more businesses accept it, the higher their value grows. Because the solar generators get SolarCoins regardless, it’s in their interest to make sure they benefit from their investment by encouraging non-generators to join the exchange, making the coins accrue value like stocks, and trading or cashing in the coins for traditional currency or goods.
What sets SolarCoin apart from its counterpart, Bitcoin, is that it follows a more traditional model of currency: money is based on a physical asset. In this case, that asset is rooted in the renewable energy market, which is expanding. While both currencies cap how many coins can be in circulation at once, the fact that consumers can get SolarCoins through a deed — generating solar power — instead of mining, exchanging and trading, makes it a less volatile commodity. Yes, SolarCoin has the same risks as Bitcoin and its value could plummet, but by backing its worth with a steady source it may reduce sharp oscillations in price, thus making it more attractive to consumers and retailers.
“Non-generators [and retailers] can help by crafting services that they might exchange for [Solarcoins],” such as conferences, subscriptions, memberships and webinars,” Dolan said. All it takes is merchants accepting the cryptocoins at checkout as a way to boost their brand, especially if they represent a cause like solar energy. Cryptocurrencies would then become a bit more than just another form of money. They would tie monetary value to consumers’ and businesses’ core values. For example, a store can boost their credibility within the green community by accepting SolarCoin or a fictitious coin based on electric car ownership, kind of like having a LEED certification that shows a building meets certain environmental standards. In this way, coins with a moral hook can more easily attract customers unlike Bitcoin, which is primarily alluring because of its novelty and anonymity to both curious investors and criminals.
It’s unclear how long Bitcoin, SolarCoin, or any cryptocurrency will last. But future iterations may have a better chance of rivaling traditional currencies by following SolarCoin’s model and tying moral and social consciousness to global economics.
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