Spending power

Hull’s version of Bitcoin could provide a remarkable way of helping people out of poverty, reports Stephen Walsh

Trials for a unique community currency that aims to give a leg up to people living on the poverty line are getting under way in Hull this month.

Around 25 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 “crypto-currency”, 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 initiative, 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. The pair are directors of Hullcoin, which is being developed separately from Hull council as a not-for-profit company.

“It’s a really difficult climate for doing anti-poverty work at the moment.”

Bovill explains: “It’s a really difficult climate for doing anti-poverty work at the moment. 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 providing a new way to think about money. In Local Exchange Trading Systems 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 people feel a sense of self-worth and belonging by stimulating money-less trade.

Hullcoin builds on these ideas – adding social value to the process of currency creation.

“We could align Hullcoin to where we saw injustice, suffering, people in crisis.”

Shepherdson says: “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 a local authority-backed system that would reward voluntary work with digital credits. 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 cafés and food banks to persuade people to commit time in return for Hullcoin.

As with all other crypto-currencies, 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 that 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 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 says. “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.”

Much hangs on the council agreeing to back the currency

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 council tax, rent and business rate arrears it expects not to collect. A decision is expected later this year, following a report to the council’s senior management in February.

In the meantime, 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,” says Shepherdson. “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.”

Voluntary group TimeBank is one group taking part in the pilot. It will be offering Hullcoin to people taking part in its cookery skills workshops. Participants include vulnerable adults from a local psychosis intervention service. Once they’ve earned the credits, TimeBank members will be able to use Hullcoin to buy cut-price veg boxes from an organic food supplier. Other groups taking part include Coast & Vale Community Action (CaVCA), Hull & East Riding Citizens Advice Bureau, Max Life Youth Project and Goodwin Development Trust.

 “There is a political stance at the heart of this.”

Hullcoin, says Shepherdson, 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. Bovill and Shepherdson 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.

Bovill adds: “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.

“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.”

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