Utavi: On community development, urbanization, and digital currencies

Alternative currencies have potential to help developing cities.

Alternative currencies have the potential to catalyze community development in rapidly urbanizing areas. Photo by Angela Sevin.

About the author: Raj Ramamurti is the founder and CEO of Utavi, a digital startup focused on alternative digital currency. He has more than twenty-one years of experience in developing computer networking hardware products. Utavi is based in San Francisco, and is currently piloting its new digital alternative currency model. Raj is a volunteer guest contributor to TheCityFix. If you would like to become a contributor to TheCityFix, submit your ideas here.

More so than any other countries in the world, China and India have been characterized in recent years by growing populations and rapid urbanization. And, while urban environments hold the promise of improved livelihoods for rural transplants, services in these cities have often struggled to keep up with their influx of rural-to-urban migrants, in turn creating under-serviced and disadvantaged urban areas. In an effort to embrace these newly urban citizens and ensure their success, China and India must implement structural adjustments. China has thus far been more willing to do so, investing $116 per capita in urban infrastructure in comparison with  $17 per capita in India, which is urbanizing at a slightly slower pace. But China faces another urban dilemma: integrating its rural transplants. China has seen a severe social divide between rural transplants and established urbanites, which underscores the difficulty in creating truly cohesive communities in the context of rapid urbanization.

One viable solution for both India and China’s challenges can be found in alternative currencies, or currencies that are separate from the national standard. Each alternative currency would be specific to a particular developing urban area – like a small city or a neighborhood within a city – and could only function in that area. This would ensure that the urban area’s value stays within its own boundaries, affording the area the opportunity for economic growth and community development. Areas that require the most development, like those that are home to rural transplants, would require government assistance to stimulate the area with its respective alternative currency. The use of alternative currencies would not only strengthen such areas economically, but would build a more connected, empowered community simply by uniting its members under their own unique currency.

Alternative currency examples: BerkShares in Massachusetts

The alternative currency theory has worked on a smaller scale in the Berkshire region of Massachusetts. The region began using BerkShares, which were printed and distributed like dollars. While the region didn’t have the same immediate concerns as China or India, they adopted the system in order to improve their local economy and foster a better sense of community between the region’s inhabitants and businesses. Similarly, the Berkshire region did not require government involvement because they were already in adequate economic standing—they simply needed to grow instead of develop. But at the heart of the alternative currency theory is a message that is widely applicable: strengthen a community and you’ll strengthen a country.

Scaling up: Alternative currency applications in developing cities

So what would an alternative currency model look like for China and India’s large-scale communities? We at Utavi believe it should be digital. This would eliminate the cost of paper money production while at the same time offering increased opportunities for cooperation and interaction – citizens could track their area’s alternative currency members and merchants through online community groups. Additionally, citizens could easily switch between different community currencies online, depending upon their current location, demonstrating a true blend of the local and the global. At Utavi, we are currently piloting a new model that allows alternative currencies to be used digitally. And Utavi offers one more attraction for developing urban areas: the model isn’t backed by a national currency. In other words, the government doesn’t need to spend money for a big return.

Here’s how Utavi works: the government would insert an alternative digital currency into a given local economy by paying its citizens to projects normally managed by the public sector, such as rebuilding infrastructure or providing healthcare. At this point, the currency doesn’t have any value. But the government would incentivize local businesses to accept this currency in exchange for tax breaks and allow citizens to use their earned alternative digital currency for goods and services. Eventually, the currency would circulate enough for it to become increasingly independent, offering the urban area more control over its growth and value. Though the solution seems plausible, the idea of alternative currencies is still fairly new. Our goal is to prove via Utavi’s pilot that alternative digital currencies are a viable method of catalyzing community development. Whether Utavi or other alternative currencies become a part of the solution or not, the world will be watching as India and China address the challenges that have come with rapid urbanization and rural to urban migration.


Raj Ramamurti is the founder and CEO of Utavi. For more information on Utavi and to participate in the pilot, please visit www.utavi.com. The author would like to thank Paige Schaefer for her contributions to this post.

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