Hullcoin: can blockchain unlock the hidden value in Hull’s economy?

It might come as a surprise – but something innovative is happening in Hull.

Hull is one of those cities, like Swindon and Slough, that’s long been the butt of jokes – like the one about the guy that typed ‘Hell’ instead of ‘Hull’ into his Sat-Nav, but still got there – it’s not that funny, or even really justified.

In the 2003 book of Crap Towns Hull came in at number one but so did London in 2013 whilst Hull dropped out of the top 50. This year, though, Hull is the UK City of Culture but it still has some major needs: a 2015 survey by the City Council found that over half the population lived in the most deprived areas of the country.

“Most deprived areas” don’t normally spawn innovation and the City Council’s main solution was to throw £100 million of its capital reserves into civic improvements to overhaul Hull’s image, and to cosy up to Siemens in an attempt to secure more jobs. Meanwhile, while other people poke fun about #CityofCulture2017, a small group of truly community minded ‘hactivists’ have set to work at the real cutting edge of social development to “unlock the hidden value in Hull’s economy”.

Enter David Shepherdson and Lisa Bovill, from Kaini Industries, an initiative which sprang out of a 2014 piece of research, funded by Hull City Council, that explored how the disruptive technology underpinning bitcoin could be facilitate a local currency to support communities in Hull affected by poverty. After a few years of development and community outreach they launched Hullcoin which enables people who engage with charities and community groups across the city of Hull to earn digital coins by volunteering and undertaking activities that benefit themselves. Hullcoins can then be redeemed as discounts against all sorts of things at over 140 participating retailers across the City. Hull City Council and the NHS are both supporting the project, as is the University, Hull College group and the Department of Work & Pensions.

How does the Hullcoin economy work?

Kanini Industries ‘mined’ 10 million Hullcoins – a quick non-energy-intensive process that took about 30 minutes (because it did not requires the competitive ‘proof of work’ process associated with Bitcoin). Kaini Industries then run due diligence on any local community groups that wish to issue coins, to ensure they promote activities which “create a better community”, and allocate them “bundles” of coins – normally in batches of 500. These community organisations, health and employment services then issue individual coins to people for volunteering or helping themselves or others to “create a better community”. People with Hullcoins can then redeem them at participating retailers across the City in return for discounts on goods and services of between 5 and 50%. The retailers can then choose what to do with the coins, either re-issuing them as employee rewards, to loyal customers as discounts on future purchases, or they can donate them back to a community group or charity to help stimulate the local economy even more. Kiani industries monitor the amount of coins in circulation and have an agreement with the council to take some offline, if required, to help manage supply and demand.

It’s a truly novel idea which uses the blockchain to empower Hull’s real assets, it’s people, by placing a direct and tangible value on community support, self betterment and volunteering – the key aspects of mutual aid which are so critical to community development but so often ignored or undervalued in modern society.

Hullcoin is the first initiative of its kind to utilise blockchain in this way. The project is still only in private beta at the moment and the developers are keen to “iron out the glitches” which will prevent the system from scaling. But if their forthcoming crowdfunder, scheduled for April 1st 2018 (hopefully the date won’t be too off-putting!) is a success they have plans to white-label the system for other cities at which point it could really provide a pathway out of poverty for millions of people.

The concept of Hullcoin has many similarities to ‘Covestment‘, a term coined by Jordan Bober and Michael Linton, the inventor of LETS, to describe a means of “financing the future and creating economic resilience by weaving innovations in network currencies, crowdfunding and community microlending”. In Covestment, companies issue currency (or ‘discount vouchers’ if you like) to a Community Covestment Fund from which members of the community can buy the local currency with regular money. The Covestment fund uses the cash to provide loans to local entrepreneurs and businesses, and people use their local currency to obtain discounts when they shop at the businesses which backed the currency at the start (see diagram below). In exactly the same way as Hullcoin the result is a stimulation of the money supply and hence local economy.

The recent surge in interest in new forms of money makes experiments like Hullcoin and ideas like Covestment highly topical and what’s most exciting is that we don’t need to wait for the government to wake up to the possibilities. These are ideas which we can start experimenting with right now – to take control of our local economies and make them work for the benefit of everyone.

Lisa Bovill, one of the developers at Hullcoin will be speaking at the OPEN 2018 conference on “collaborative technology for the cooperative economy” in July and it will be fascinating to hear how the project is progressing and the impact it is having for the people of Hull. If our hunch is right it has probably already had a more direct impact on less privileged people’s lives than a single cent of the £100million the City Council “invested” in beautifying the city. Watch the 3 min video featuring Bob Clark from the BBC to see how chuffed Bob is to get 15% off his brisket pie – that’s the real “hidden value” – right there.

Find out more about Hullcoin or listen to a 23 min podcast on Hullcoin from World Hacks on the BBC.