A private currency is a form of money that’s been issued by a private institution of one sort or another. This could either be a commercial business organization, a private individual or a non-commercial, nonprofit enterprise. Private currency is not considered to be legal tender in many countries of the world.
Private currency exists in stark contrast to currencies issued by the world’s governments or central banks, and yet despite issues of legality, there are still more than four thousand private currencies in existence issued by private parties in around 35 countries. Commercial trade exchanges that use barter credits for exchange also issue private currency.
Value is typically moved from place to place using gold, silver or precious metals, online credits and debits, local conventional currency exchanges or through the transmission of digital currencies. Private currencies issued by private entities are very different from many of these in that they are not recognized as permitted methods of payment by governments.
Private currencies are usually issued in paper form. This can be a disadvantage due to the possibility of them being able to be counterfeited in the same way that fiat paper currencies can be. Private currencies may also attract criminal activities such as fraud.
Many entrepreneurs and capitalists have created private currencies now and then and have had to face the consequences of punishment by law enforcement agencies, when charges of money laundering and counterfeiting conspiracy have been brought to bear against them.