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Can PayCoupons be useful? – PayCoupons

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We started PayCoupons as a response to the European economic crisis in 2012, which was part of the Great Recession, with more than 50% of young people unemployed in Spain and other economic turmoil in Europe.

So we made a tool for economic crisis, and now I’m wondering if and how it can be applied to the most sad economic crisis of today, in Venezuela. Here’s a quick outline, and I’d welcome feedback and a discussion. (Will make a version in Spanish, but feel free to comment in Spanish already.)

PayCoupons is not a tool like Bitcoin or WeSend to bring money in or out of Venezuela, for example remittances. It is also not a tool to safeguard existing wealth against inflation. So there will always be other tools to take over these other functions of money. PayCoupons itself is meant to take over the function of enabling economic exchange from a broken currency.

When a currency has strong inflation, it becomes useless for saving and harder to use for daily purchases because prices rise faster than wages. Additionally, in Venezuela the government tries to curb inflation with strict controls on prices and wages. That can never work when they create inflation at the same time by subsidies financed with newly printed money. But it has the effect of keeping shops empty, as shop owners would sell at a loss when obeying the government controlled prices.

As a result, the black market economy flourishes, but its prices are not affordable for people who earn official, government-controlled wages only. In Venezuela, it benefits those who somehow have a supply of U.S. Dollars, for example from remittances (see). But it does not solve the problem that the economy is shrinking, so much that there is even scarcity of food now.

To fix that and be able to engage in economic trade without having enough stable money to run such an economy on, people often start using barter and complementary currencies. I have read some rumors that indeed bartering is a common activity in Venezuela now:

“He said many people also trade directly, exchanging goods like homemade bread for homemade cheese”

And PayCoupons is just that: a more modern and more flexible tool for bartering. Instead of bartering directly, you exchange coupons with other people. These are just the same concept as a company’s coupon cards or gift coupons: you can spend them like money in that shop and their value is noted on the coupon in normal currency. For Venezuela, we would be forced to use U.S. Dollars as the currency unit, because that seems to be the only stable currency that people are somewhat used to calculate in (which is important for ease of use). Since PayCoupons uses US Dollars only as a unit to measure the value of coupons and never converts it to any other unit, there should (hopefully) be little problem with its use in Venezuela: government cannot claim it engages in “speculation” as it never uses any exchange rate to Bolívares Soberanos.

I will describe how PayCoupons would be used practically in a small city once there is an active user community of about 50 people (and of course, the more people participate the better it will work, but it can start to work well with about 50).

Every user has an account on our platform pay.coupons and enters there what kind of products and services they offer. Then everyone looks through what is on offer by others, investigates about their prices, and uses the platform to orders the coupons of companies they want to buy from. The system manages the exchange (“bartering”) of coupons automatically. So for example, after the system executed the next set of trading activity I would be in the following situation:

  • I have given away coupons for my own products and services worth 250 USD. People who received them can now come to me and use them instead of actual US Dollars to pay for my products and services. Let’s say I offer homemade bread, electrical repairs and computer repair.
  • I have received coupons that I ordered before, together also worth 250 USD. This allows me to buy products and services of others which are priced in US Dollars. Let’s say I got the following coupons: 150 USD coupons from a local farmer, 10 USD form a friseur, and 90 USD from a medical doctor.

And in the whole process, not a single actual US Dollar is needed by anyone. For us it’s just a unit to measure value, like “meters” or “kilograms”.

If somebody tries to be a freerider and does not want to accept their coupons back as a means of payment, they get negative reviews and can no longer participate in the economy. On the other hand, people who get positive reviews gain reputation and will receive more orders from others because people trust them more.

Obviously, this PayCoupons trading system only works for products and services that can be made at home or in small-scale production. (There is nothing against large companies joining as well, but it will probably not happen in the beginning.) But even with home and small business based production, there is a lot that people can make to help each other out as part of an economic system: food and drinks, repair and maintenance, transportation, body care products, medical services and so on.

For anyone interested, you can already sign up for an account on pay.coupons and look around how it all works. I’ll gladly send you an invitation.

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