What Drives Businesses to Transact with Complementary Currencies?

There is an ongoing debate on complementary currencies’ (CCs) contribution to a transition toward resilient and sustainable economies. As part of this debate, this paper investigates which factors lead to significant acceptance and sufficient growth of a CC from a bottom-up perspective, i.e., based on its members’ decisions. First, we identify the benefits and costs driving firms’ use of CCs and find four factors that constitute a trade-off: credit gains, reciprocity expectations, coordination costs, and inherent motives. Second, we use an agent-based model to explore how these elements determine CCs’ success as a network. Our key finding is that the coupling of inherent motivation (IM) with preferential attachment (PA) - a phenomenon where members are more likely to transact with each other rather than with outsiders - may be the key to growth and acceptance: these results suggest that IM incites to join the network, but PA is the emerging economic rationale needed to drive firms’ acceptance of CCs. Both the identified trade-off and the theory of IM-PA provide new avenues to investigate under what conditions CCs contribute to resilient economies