Cause UK is excited to be providing PR and consultancy support to Hullcoin which was featured in The Big Issue this week. For media enquiries contact email@example.com 07531948014.
Extract from The Big Issue 19 January 2015
Trials for a unique community currency, which aims to give a leg-up to people living on the poverty line, are getting under way in Hull this month.
Community interest organisations in the city have agreed to try out Hullcoin, the world’s first digital community currency specifically aimed at alleviating economic hardship and promoting social value.
A Bitcoin-style ‘cryptocurrency’, Hullcoin allows people to earn digital credits in return for voluntary work or contributions to their local community. The tokens would then be redeemable against goods and services provided by participating companies and organisations.
And if the local council opts to support the idea following a report to senior officers at the end of January, people may also be able to use Hullcoin in part payment of core expenses like council tax, rent and business rates.
The idea for the digital currency came about as a result of anti-poverty work carried out by Hull City Council welfare rights manager, Lisa Bovill, and financial inclusion officer, David Shepherdson.
Lisa explained: “It’s a really difficult climate for doing anti-poverty work at the moment,” she said. “Over the last few years, people have been experiencing great financial hardship and local authority services are facing cuts. Need is going up and the ability to meet that need is being reduced. So we tried to look at innovative ways of doing things.”
Community or complementary currencies are nothing new. They have been used throughout the 19th and 20th centuries to fill the void when national currencies or welfare systems fail. In recent years, initiatives such as the Brixton and Bristol Pound have achieved success retaining spending power within their own communities.
Meanwhile, a global movement of alternative currencies is redefining the way we think about money. In Local Exchange Trading Systems (LETS) and Time Banks, members exchange their skills for time instead of cash, receiving credits for each hour they give and ‘spending’ them on services offered by another member. Both systems promote ‘social capital’ and community renewal, helping marginalised people to feel a sense of self-worth and belonging by stimulating money-less trade in economically depressed areas.
Hullcoin, which is being operated through a not-for-profit company separate from Hull council, builds on these ideas – adding social value to the process of currency creation.
David Shepherdson explained: “Whereas most local currencies in this country are ‘sticky money’ backed by sterling, we wanted to back it to something that wasn’t sterling. In terms of legislation, it was an emerging technology that wasn’t controlled by the banking industry. It’s open source and we could apply our own values to it. We could align it to where we saw injustice, suffering, people in crisis.
“Money is generally issued with the creation of debt. We want to be able to issue it with the creation of value.”
Hullcoin aims to do this using the ‘Civics model’ – a local authority-backed system that would reward voluntary work with digital credits (see box). The first step will be to produce a ‘map of need’ showing what services are currently available and where communities are most severely under-resourced. The project will then prioritise those areas, working initially with voluntary organisations like community centres, community cafes and food banks to persuade people to commit time in return for Hullcoin.
As with all other cryptocurrencies, Hullcoin is being created through ‘mining’. This computerised process requires a series of complex, digital ‘puzzles’ to be solved before the computer is ‘rewarded’ with a unit of the currency. Once generated, the currency is then stored on a central virtual ‘wallet’, which will then be connected to the organisations and businesses which have opted to issue it.
Individual users will carry their own password-protected wallets on smart phones or other devices, swiping their individual QR code at point of purchase and having their balance automatically updated.
The 16-week pilot will aim to test every aspect of the technology, from distribution to user experience, in order to create trust in the system. But, says Lisa Bovill, Hullcoin’s apparent complexity shouldn’t put users off.
“In terms of the digital aspect, people do get hung up on the fact that they don’t understand it,” she said. “But they don’t need to. You don’t need to understand the technology behind chip and pin payments. All you need is to be able to use it. And it’s one of the easiest ways to transfer value from one place to another. All you have to do is flash a phone.”
But confidence in the technology is only one side of the coin for Hull’s fledgling currency. For the scheme to take off, residents must be able to use Hullcoin to buy things they actually want. Much hangs on the council agreeing to back the currency, for instance by accepting payments of Hullcoin against written-off council tax, rent and business rate arrears. A decision is expected later this year.
In the mean time, local businesses could play a part, redeeming the currency for low-risk, low-value commodities, such as off-peak services or unsold tickets for one-off events.
“The classic one is the football club,” said David. “For a particular game, a third of the stadium will be empty. Up until kick-off, a seat is worth, say, £15. Immediately after the whistle’s blown, the seat has got zero value. What we’re hoping to do is, on those occasions, they accept Hullcoin. If that person buys a drink or some food at half-time, that’s money in the till they wouldn’t have had. They also know that that coin has been generated by some good happening somewhere. So it’s a good news story for them.”
Hullcoin, he says, is all about ‘working in the spaces’ left by mainstream currency – spaces made ever wider by the squeeze on benefits and incomes caused by years of austerity, zero-hours contracts and increasing household debts. Lisa and David hope to see the currency become the ‘blood supply’ of a growing collaborative economy, which extends from locally grown food projects to collective purchasing and savings networks, providing an economic safety net for people who have nothing.
Lisa Bovill added: “There is a political stance at the heart of this. Northern cities get hit hardest by recession time and time again and they have very little to help them avoid that. There is little resilience in those communities. That’s what we see.
“It’s not just the currency. The idea is that you will have a whole package of things that will help to create resilience in those communities. So even when your mainstream currency and political policy let you down, you’ve got something else locally that will support you.”
Box: Trading values
A city-wide network of civic-minded volunteers engaged in socially useful activities would be the ideal outcome for Hullcoin. But in the real world many may be unwilling or unable to give up time to earn the currency.
One solution could be the Civics Model.
First proposed in a 2012 report by influential global think tank, the Club of Rome, ‘Civics’ are electronic currency credits that would be used to pay an annual ‘Civics contribution’, probably in the form of a local tax. Residents could either earn the credits through activities contributing to publicly agreed social aims or else buy them on the open market.
Under Hull’s version of the system, the local council would invite residents to pay a proportion of council tax, business rates or rent in Hullcoin. This, organisers say, would create a demand for the digital tokens, which could either be earned through community work or bought for sterling from people who had earned a surplus, through an online marketplace, such as eBay.
As well as enabling the activities covered by the scheme to remain entirely voluntary, the system would allow those unable to find paid employment to exchange Hullcoin for ‘real money’.
David Shepherdson commented: “This way, you’ve got people who are contributing to the cooperative economy because that’s what you’re trying to encourage. And the council, instead of receiving cuts and cutting services, is using its economic instruments, its ability to tax, as a stimulus to increasing social value. Those who don’t contribute to that economy through their effort or their time can contribute financially.”