Blockchain has been having a bit of a 'moment' over the past year, with some of the world's largest banks joining forces to create a framework for using the technology; it's not hard to see why it has been touted as one of the "edgiest innovation ideas of 2016". But while the focus has largely been on the wider potential of the decentralised system for reducing crime, record keeping and even electronic voting, some digital currencies using this technology are having a unique societal impact of their very own.
In Hull, resident and public civil servant Lisa Bovill, together with her colleague Dave Shepherdson, launched a local digital currency HullCoin. Designed as a type of digital token, HullCoin (which launched in full on 29 April) was created to pay council tax and for goods and services from firms who were signed up to the scheme.
For a city faced with plummeting household incomes and high levels of unemployment, this scheme put spending power back into the hands of the Hull community, ensuring that coins would actually benefit those who really needed it. In fact, by rewarding volunteers for their "good deeds" the HullCoin actually serves to benefit the whole community by incentivising favourable behaviour.
Of course the HullCoin is not the first of its kind; local currencies have been around since the Victorian times and both the Brixton Pound and the Bristol Pound have seen great success in recent years. Working alongside pound sterling, both these currencies have been designed to give local traders and customers the chance to support independent businesses in their community. These types of currencies encourage people to actively consider where their money is going and to commit to spending some of it locally; it is a continual circulation of money within the local economy. For areas like Brixton in South London, these schemes not only help to protect the jobs and livelihoods of local people but also serve to raise the profile of the area on a regional and national scale.
Research by the New Economics Foundation (NEF) has made a number of interesting discoveries about the societal impact of these currencies. According to the NEF they can counter inequality and social exclusion; breaking down social isolation, increasing self-confidence and giving people access to goods and services that they might not otherwise be able to afford. The foundation also revealed that local currencies can serve to support the SME (small and medium-sized enterprises) economy. By providing these alternative means of exchange, currencies nurture closer links between local SMEs.
Of course there are other ways in which digital currencies are helping to support the development of small enterprise. Over the past few years the crowdfunding industry has seen enormous growth, with new platforms launching around the world each year. Recently there has been an intersection between this industry and digital currencies (like with our own LEOcrowd). The connection of course makes perfect sense; digital currencies are an obvious payment medium of choice for crowdfunding platforms, given the lack of associated payment fees. By using a range of different currencies, these platforms attract a greater amount of investment for SMEs, as backers are not put off pledging money by high international charges.
Ultimately money must be put back in the hands of people, rather than being the great social divider it can be the great social leveller. It needs to work for individuals rather than against them. While money has traditionally served to increase the divide in society between the haves and the have-nots, digital currencies have the potential to remedy this; by stimulating the economy, fostering enterprise and fundamentally uniting communities. It's great to see Hull blazing a trail.