Excerpted from KozieJ:

“There are already some systems that bind coin issuance to some common good. For example:

* Namecoin — doubles as a distributed domain name system. You get NMC for participating in the network and making the domain name service available. You pay for registering domains in the network.

* Solarcoin — bound to green energy production. Each solar coin represents one MWh of solar energy generated, where proof-of-work consist of certificate issued by a 3rd party renewable energy tracking organization (in Europe that would be RECS http://www.recs.org).

* Cloudcoin — You earn coins for offering bandwidth and disk space to a distributed cloud storage (think p2p Dropbox). The cloudcoins can be used to pay for using this hosting service.

Backing currency with a common is not new — every national state currency is backed by a state (it’s production development, trust in it)which in fact is a common good. Participation in developing the state brings value to national currency, and reciprocally the circulation of currency fosters its development. In similar fashion, there exist local currencies created to spin city or district economy. This is done by Feathercoin and Auroracoin by which Iceland will boot on 25th march 2014!.

To design a cryptocurrency system means defining what is recognized as “working for” or “having stake in” some common good, how one is awarded for sustaining and developing it, and what are the fees for using it. If designed properly, cryptocurrency could be backed by any common, even bizzare. Dogecoin, which recently grew in popularity, is used to cultivate the wow (sic! one could also write: feeling of awesomeness). It is mostly used to tip users that share great content or should otherwise be “voted up”/”liked”. Some Dogecoins are just given away (they are not very valuable, one DOGE is around 0.1 of a cent).

I’m not participating only in one common – that of the state. I’m also a prosumer of clean environment, my neighbourhood, free culture, even privacy or “gross national happiness”. By using a currency bound to particular good, I become its share- and stakeholder. I could decide which common goods I want to support and hold coins for each in a multi-currency digital wallet. A mechanism of the market would be hijacked this way to give incentives and motivation, a mechanism coordinating human deeds. This political aspect of cryptocurrencies, allowing one not only to participate in a combined common of the state, but to support some good cooperatively and independently. Moreover, because money can be universally exchanged, these commons backed coins can be exchanged for one another, and for fiat money too. This means “cooperatives” built around a particular cryptocoin are not isolated, but connected to one another and even to normal market (possible with all good and bad consequences of that — but that’s a to-be-researched).

There are already a few ways to create a new cryptocurrency. Besides the possibility to create an alternative coin by forking Bitcoin (it’s free software!), one can use higher-order digital money systems like Open Transactions or Master Protocol.”