New digital currency planned for South African town

Economist Dawie Roodt is involved in a project to develop a new digital currency in the town of Orania.

Orania is located along the Orange River in the Northern Cape, was founded in 1990, and currently has around 1,500 inhabitants.

What makes Orania unique is that it has its own chamber of commerce, its own registered bank (Orania Spaar en Krediet Kooperatief), and its own currency, the Ora.

The Ora serves as a token or voucher rather than a full currency, and is backed by the rand.

The chamber of commerce prints Ora notes, provides them to the bank, and the bank then sells these vouchers for rand.

People who live in Orania trade in Oras, and it is legal tender in the town.

The rand from voucher sales is then invested in an interest-bearing account, which means the value of the investment grows.

Each Ora has an expiry date of three years, resulting in many Oras – especially from tourists – not being redeemed for rand.

The interest on the rand investment and the Oras which are not redeemed are an important source of income for the Orania chamber of commerce.

Digitizing the Ora

Roodt said he is involved in a project which will digitize the Ora, significantly improving the economy of the town.

The digital currency will be traded using smartphones, and Roodt said they have been working with experts to create the online platform.

The printed Ora notes will be replaced by digital Oras, with Roodt stating that this is where the plan officially stops.

This is not where the potential of the project ends, however, as Roodt said the digital Ora could become a fully-fledged currency, competing against the rand.

In this scenario, it will not be backed by or linked to the rand.

Roodt said there are several options for the digital Ora, including:

  • Backed by the rand – the value is linked to the rand value which is invested.
  • Backed by a basket of goods – guaranteed by the Orania chamber of commerce.
  • Backed by a basket of services – provided by the Orania local government.
  • Not backed at all – similar to many global currencies.

“The possibility is that we can soon have a new digital currency, which rivals the rand in South Africa, and the best part is nobody can stop us,” said Roodt.

“The only way to stop this is switching off the Internet.”

Now read: The one big difference between Bitcoin and Gold

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New digital currency planned for South African town