What is Phoenix Dollars
Phoenix dollars were a type of private currency created in October 2005 by a man named Gordon Hayes. Hayes issued the money in the form of silver disks, bars, and electronic holdings. He claimed all electronic holdings had backing by silver which he held in a secure vault. Eventually, Hayes also began issuing SilverBack banknotes, which functioned as traditional silver certificates. These slips of paper signified that the holder possessed the stated amount of actual silver.
In May 2018, the former official website for Phoenix Dollars was no longer operable, and the domain was available for sale.
BREAKING DOWN Phoenix Dollars
The name for Phoenix Dollars is not from the city of Phoenix, Arizona. Instead, the name came from the mythical Phoenix, which would continually rise, reborn from its ash. In Hayes’ words, the name was a, “metaphorically representative of the death of the old currency and birth of the new.”
Hayes created the Phoenix dollar in part to help people protect their wealth in case of political or economic instability. He believed that the U.S. dollar (USD) would collapse and viewed his business as a way to “promote and teach freedom.”
According to Hayes, Phoenix Dollars are a way to encourage a bartering economy. The use of a currency, not issued by any government, could prevent wars and stop the growth of empires. Further, Hayes thought governments would not engage in conflict against “non-threatening nations” if the war meant a depletion of their silver supply. In contrast, he pointed out, under current economic systems, a nation’s central bank could merely issue, or print, more currency if the country’s treasury became depleted through war.
While this is technically true, economics shows that printing more money leads to inflation, which must be regulated by the government or a central bank. Given that the currency was, in fact, silver, its value pegs to the market price of silver. Thus, if silver traded at $16 per ounce on Monday, a one ounce Phoenix dollar was worth $16. If the price of silver went up to $18 on Friday, the Phoenix Dollar disk’s value rose by $2 that week.
Private Currency and Phoenix Dollars
Other people have also attempted to create and popularize private currencies, with varying degrees of success. Law restricts private money, issued and backed by physical commodities, such as gold or silver in many countries.
- Continentals were a form of paper currency used in the United States during the time of the American Revolutionary War, circulated to fund the war effort.
- The Stroud pound is a local, private currency introduced in the British town of Stroud, Gloucestershire in September of 2009.
- The Calgary dollar is a local currency developed and used only in Calgary, Alberta, Canada. Calgary dollars are part of an initiative to inspire local consumers to shop close to home.
- The Totnes pound is an alternative currency of Totnes, in Devon, the United Kingdom introduced in 2007.
- 2018 is the ten-year anniversary of the Lewes Pound is a local currency for use in Lewes, East Sussex, United Kingdom. Lewes pounds are only accepted by local businesses and merchants.
One notable example of a private currency is the Bitcoin, a cryptocurrency monitored by blockchain security technology. Today, Bitcoin is mined and traded globally, though it does not have the backing of any government, central bank or organization. Many other cryptocurrencies have followed on the bitcoin’s heels, though none has yet equaled its popularity.