Morning cryptofolks, lately I have been researching the use of local currencies. I submitted a research project recently considering the limitations of the Complementary Local Currencies (CLCs) in the United Kingdom (UK). I was a little critical of the more famous schemes, such as the Bristol Pound, as they are yet to demonstrate financial sustainability. Although these projects should receive some initial funding, as they are innovative, there must be a plan for generating income to fully realise their aims. I am interested in this space as I am involved in a project to set up local currency in the West Midlands, and will be speaking about the progress at this cryptocurrency event: BitBrum. The final aspect of my research project I considered two new routes for CLCs; one called Sardex (another blog) and a cryptocurrency-based system called Hullcoin.
Hullcoin gained a huge amount of attention a few years ago, with both cryptocurrency and traditional media sources covering its development. To people like us, the concept of a locally-based cryptocurrency is interesting, however the usual right-wing media attack dogs came out in force, with the Telegraph accusing the city of “printing money.” Without dwelling on the irony that money is printed by private banks on a daily basis, the national and international media attention demonstrated an interest in the project. I interviewed the co-founder of Hullcoin; David Sheperdson to find out the latest progress of Hullcoin and what the plans were for applying the cryptocurrency at a local level.
The project initially developed from a consideration by Hull City Council of how CLCs could be used to address financial exclusion in the city. As mentioned in other blogs, they found that the traditional CLC approach of “buying currency into existence” wouldn’t meet the aims of supporting the most disadvantaged, as they have little fiat money to begin with. They therefore considered cryptocurrency, and the initial local authority project was to mine other cryptocurrencies and distribute them. A mining rig was donated by a local Bitcoin enthusiast and they began mining smaller coins, including the UK-based one Feathercoin. The idea for a local-specific Hullcoin developed out of this initial project, with the City Council consulting the cryptocurrency industry and local stakeholders. It was one of these meetings that got the international attention on Coindesk that you may remember back in early-2014. The city council panicked at this stage and rolled the project out into its own legal entity, which is now Hullcoin.
Hullcoin is a pre-mined system that has 10 million units that have been designed to have no intrinsic Sterling value. Most cryptocurrency projects develop with the aim of listing on an exchange to provide the project a fiat value. Hullcoin aimed to reduce the likelihood of the project becoming a speculative vehicle and does not actively list its tokens. The objective of Hullcoin is to incentivise the creation of social-value. It is doing this through distributing the pre-mined currency to schools, health centres, local authority departments, charities and prisons. The coins are issued to individuals by these organisations based on the achievement of social aims. So for instance, Hullcoin is trialling numerous projects; giving smokers Hullcoins for every week they are smoke-free, parents if their children’s homework is complete and charities providing volunteers with them. Interestingly, the system it uses allows the social-value created to be written on to the coins and tracked.
Hullcoin is currently developing local business partnerships to create a sort of “market” for the Hullcoins. For instance they are working with local leisure centres to encourage them to accept Hullcoins as a discount for accessing the gym at quiet periods. They are hoping that shops will also accept Hullcoins for discounts on stock that is close to out-of-date. Other projects have demonstrated that there is a possibility for developing this kind of thing. Spice, which is the UK’s largest provider of time credits, have hundreds of partners that accept time credits for things such as sports games, cinema visits and art classes. Hullcoin is also working with local prisons, to encourage the pursuit of rehabilitation activities and issuing coins to prisoners. They are then working with social housing providers to allow recently released prisoners to use the Hullcoins as discounts on their rent. As the social-value that is being produced is written to the coins, it is hoped businesses may use them as a way of achieving Corporate Social Responsibility (CSR) objectives. I have worked on similar projects in the past, where corporate clients, including housing associations, are interested in effectively “purchasing” social-value and promoting it in their own CSR reports.
There are many interesting aspects about Hullcoin, that David Shepardson described as a cross between a cryptocurrency, a community loyalty point and a social-impact bond. It resonates with other processes I am finding, where it is not enough to just “issue” a currency, but a “market” has to be constructed around it to encourage usage. Hullcoin also could be used to support what is eloquently described as “non-market transactions” and summarised by the infamous; “ice-berg economy”. That demonstrates that the capitalist market and labour transactions are actually only a tiny fraction of our daily lives. In fact we spend an awful lot of our time supporting other types of transactions, that are not usually accounted for. Alonsgide this, the cryptocurrency industry is starting to move towards theories around “cryptoeconomics” – essentially; how can tokens be used to influence behaviour. Augur (REP) is an example of this approach, where users are rewarded with tokens when they tell the “truth”. I think this is going to be a huge area of application for cryptocurrency over the coming years, so it’s great to see Hullcoin apply it encourage the creation of social-value.
Hullcoin has a holistic long-term revenue generation strategy. It is hoped that through proving Hullcoins raise footfall to businesses/services, the beneficiaries could be charged a fee. Once the UK climbs out of the cesspit of austerity and resumes aiming to improve the lives of its citizens, cryptocurrencies like Hullcoin could be used to meet social objectives. Healthcare is definitely a major one. It is likely much cheaper to incentivise healthy behaviour through cryptocurrency than pick up the costs of obesity-related diseases within the health services. As the world moves toward the concept of basic income, whatever that looks like, cryptocurrency could be used to supplement incomes through encouraging community-beneficial activities. So someone may receive a basic income in fiat, and then earn a cryptocurrency like Hullcoin maintaining a community farm. I think that the exciting developments around cryptocurrency should not just be considered at a global level, but how they can encourage real change in local spaces. Its great to see schemes like Hullcoin attempt that global-local fusion. Thanks for reading.
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Latest posts by Stuart Bowles (see all)
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- Hullcoin: A cryptocurrency for the City of Hull, UK - October 24, 2017