No doubt about it, cryptocurrency -- or to use its more upbeat-sounding name, altcoin -- has had major PR problems. Though the five-year-old digital currency, created as an alternative to government-issued paper money currencies, has gotten a lot of media attention lately -- particularly its first and best-known exemplar, Bitcoin -- it is frequently perceived as: a) an incomprehensible system, b) a silly waste of time, or c) a sinister and possibly unethical financial instrument (or all of the above). Not surprisingly, relatively few merchants, even now, accept altcoin as a medium of exchange. Despite this situation, a foundation has been established to create and distribute a new digital currency, SolarCoin, for the express purpose of incentivizing the generation of new solar power.
“Money, including digital money, is just a protocol: it can be used for either good or bad,” says John Dolan, chair of the SolarCoin Foundation. He claims that the media has focused too much on the negative news (e.g., the illegal goods bought with Bitcoin on the Silk Road black market website), and that the upside of altcoin has been overlooked. For example, digital currency can enable immigrant workers to much more easily and cheaply remit money to loved ones in their home countries. The Foundation, according to Dolan, embraces mechanisms that will help altcoin do good in the world. So the Foundation’s mandate is that 99% of the (eventual) 99 billion SolarCoins will be granted to generators of solar energy. The first coins will be distributed to such generators within the next few weeks.
Let’s say that a young couple, the Andersons, installed a solar system on their roof some years back. The Foundation will pay the Andersons for the energy they generate at the rate of one SolarCoin per megawatt-hour (MWh) through a verifiable meter-reading process. The Andersons could also retroactively claim coins from solar energy produced since 2010, provided they could prove the MWhs they’ve generated. Payment of SolarCoins would be over and above any other incentives, such as utility credits as a result of net metering, that the generator may receive.
The Foundation has established a policy of not granting SolarCoins to owners of SRECs (solar renewable energy certificates or credits) on the grounds that they wish to award the coins to solar energy generators only. (It might be more difficult in many cases, Dolan says, to trace ownership of SRECs back to the original generator.) In any case, he observes, SRECs are unique to the U.S., and SolarCoin is seeking a “globally consistent theme.”
Some SolarCoin Foundation volunteers, Dolan notes, have projected a longer-term value for the new coin, if their effort is successful, to be in the $20 to $30 range. However, the success of the coin in growing to that level would depend upon trust and demand, and as with all digital coins, price would be set by market factors. The Foundation’s strategy is to form as broad a community as possible. This goal would be achieved through the wide distribution of both the coins themselves and of the digital “wallets” that allow users to perform transactions with them. The Foundation encourages the development of applications to facilitate transactions: “If you can make the currency very easy to transact with,” said Dolan, “it will grow in value.”
Dolan predicts that a whole world of micropayments with digital currencies could soon open up; technology will enable this concept to be achievable within five years. “When a ‘green’ merchant like, say, Whole Foods, becomes willing to accept SolarCoins, then that merchant can use the currency to express its green values to customers.” In addition, instead of “liking” a green charity on Facebook, coin owners could make micro-payments to the charity in SolarCoins, and these tiny donations would accumulate for the charity over time.
Dolan considers the U.S.-centric attitude of many altcoin owners and traders regrettable; it misses, in his view, the global picture. The SolarCoin principle -- one coin for one MWh of energy -- is the same whether the solar generator is in Phoenix or India. But if the coin were today valued at, say, $1.00, that dollar would matter a lot more in India than in Phoenix. Thus, there would be a much greater incentive to earn and promote the use of SolarCoins in India.
Another hypothetical couple Dolan posited, the Bankole family, reside in a poor African country. The Bankoles have many good reasons to use SolarCoins. They can do their banking digitally outside normal banking hours; an unstable government can’t take their currency from them; and they can take advantage of all that sunshine to do good for the planet. The widespread adoption of digital banking in poorer countries could allow banking to leapfrog over older tech and its infrastructure: why create a network of ATMs and bank branches when you can transact business with few or no fees with SolarCoins instead?
Dolan gives credit to Bitcoin as the “first mover" among altcoins, but suggests that there will be no winner-take-all in the world of alternate currencies: Bitcoin may not be the “last coin standing.” He compares the shakeout he foresees in the altcoin world to the auto industry in the early 20th century. A handful of altcoins will survive, and people will have three or four digital wallets, just like they have three or four credit cards today. And environmentally conscious people will want to transact with SolarCoins for what it says about them. “At the cash register, when the consumer has the chance to use either the XYZ coin or SolarCoins, he or she will choose SolarCoins to make a pro-renewable energy statement,” says Dolan.
Disclaimer: Any opinions expressed in this blog by persons not affiliated with PV Solar Report reflect the judgment of the author and not necessarily that of PV Solar Report.