Circulation of a digital community currency

Area of Science:

• Economics
• Network Science
• Sociology

Background:

• Successful currency systems rely on effective circulation.
• Digital transaction records offer a novel data source for analyzing currency circulation.
• Community currencies can play a vital role, particularly during economic disruption.

Purpose of the Study:

• To propose and apply a network analysis approach to study currency circulation using digital transaction data.
• To analyze the circulation patterns of the Sarafu digital community currency in Kenya during the COVID-19 pandemic.
• To understand the structural properties and key actors within a community currency network.

Main Methods:

• Representing monetary flow as a network of users and transactions.
• Applying network flow and cycle analysis to digital transaction records.
• Utilizing network centrality measures to identify key participants and hubs.

Main Results:

• Circulation was highly modular, geographically localized, and involved users with diverse livelihoods.
• Network cycle analysis confirmed the necessity of cycles for circulation.
• Sub-networks exhibited degree disassortativity and preferential attachment, with community institutions and early adopters acting as hubs.
• Women's participation was identified as significant.

Conclusions:

• Network analysis of monetary flow provides detailed insights into currency circulation.
• Findings can inform the design and implementation of community currencies in marginalized regions.
• The study underscores the importance of localized networks, cycles, and inclusive participation for currency system success.