Time is Money as Alternative Banking Moves to the Blockchain
A new project is seeking to adapt the adage 'time is money' for the blockchain age.
Loosely based on a system called time banking, invented in the early 19th century, Sydney, Australia-based Chronobank is working on issuing blockchain tokens (similar to bitcoins on the bitcoin blockchain) that would allow labor hours to be used as a currency.
As such, the company is perhaps the latest example that showcases how fringe economic systems are inspiring new ones based on blockchain. But Chronobank is notably using the global power of these networks to attempt to expand the historical abilities of the system on which it's based.
For example, in time banking today, a merchant trades one hour's worth of work for the consumer's one person-hour, which the merchant can then use to pay for another merchant's goods or services later.
But while this most often happens at a local level, labor hour tokens at Chronobank will be linked to average wages in each country.
These coins will also be tradable peer to peer and on a decentralized marketplace called LaborX, and tied to a reputation system for employees and employers, allowing employers to choose the best workers for the job and workers to assess hiring companies worldwide.
In that, the online platform will help connect a more globalized workforce.
That's not to say that time banking processes haven't been digitized to a certain extent.
But online portals for time banking are generally used to more easily manage earned and spent time, not as much for connecting time bankers in disparate areas. For instance, Paul Glover, who is currently an adviser to Chronobank, developed the paper note, Ithaca Hour, in 1991 to stimulate economic growth in his upstate New York community.
Since then, more than $110,000 worth of Ithaca Hours have been issued in an area where 500 merchants accept the currency and thousands of residents use it. The project also began offering no-interest loans with the local currency up to $30,000.
"This paper money is a tangible, powerful symbol of community solidarity, like a business’ logo or a nation’s flag," Glover told CoinDesk.
The experiment brought together the community through a physical marketplace where people interacted and became more than just consumers to each other, he said, noting its effect on building a stronger local community.
A global link
While Glover admits that he doesn't fully comprehend the blockchain, he hopes Chronobank has the capacity to stimulate the growth of local communities albeit on a global scale.
"I endorse all types of experimentation in monetary objects," he said, explaining that he’d like to see a hybrid hour-denominated currency, a unit both in paper and digital form.
Glover’s position as an adviser will likely help steer the project in the right direction. Because the Ithaca Hour initiative expanded outside a few friends, the project now has a catalogue of goods and their prices as determined by the community. For instance, a massage is worth four hours.
This goes above and beyond the traditional time banking model where one hour equals one time credit.
"Anything bigger than a small community would not work in such away, as the people are less inclined to discount their hours and time for total strangers. What we are trying to do, is to think of a community as our whole planet, not just small town," said Sergei Sergienko, CEO of Chronobank.
For that, he believes a distributed, blockchain-based system is needed.
"The current system is too inefficient and too expensive," Sergienko said. "And current systems leave too much room for abusing the workers."
In this case, Chronobank is trying to solve this using smart contracts that immediately settle as the work is delivered.
Of course, time will now tell if the idea will work.
In mid-December, through a smart contract-enabled distributed autonomous organization (DAO) on the ethereum blockchain, Chronobank will release 'Time' (a different token than labor hours) as part of a token sale that will seek to raise money for the platform.
While many in the industry have become wary of initial coin offerings (ICOs), Sergienko said, they are sometimes the only way to raise funds.
This is especially the case, he said, for open-source projects like Chronobank, since venture capitalists aren't as interested in companies that give proprietary code away for free.
The project, though, does already have some momentum.
Sergienko is also the cofounder of Edway Group P/L which runs Edway Labor Hire, an Australian training organization for the construction, hospitality and healthcare industries.
And he’ll be using his position there to leverage Edway's database of employees to test the platform.
Hourglass image via Shutterstock
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