HullCoin: a blueprint for the regeneration of local economies joined Dotforge in Winter 2015.
Kaini Industries is a not for profit social technology company established in Hull in 2014. The company was created following research undertaken by Hull City Council’s Financial Inclusion Unit into the possibilities of a new kind of digital social currency that has subsequently developed in to HullCoin.
The design of HullCoin is simple: it uses pioneering digital technology to support a system of community reward points.
Many major retailers use reward schemes to give positive affirmation to corporate loyalty. The classic club point system used by Tesco, Sainsbury’s and Shell provides points to customers who buy from them, based on how much they spend. The customer can redeem those points in the form of discounted goods from the same retailer. These schemes seem to work. Customers are more likely to shop in places where they can redeem points and when they go into a shop to redeem them they tend to buy more. These schemes aim to make their customers feel like they are part of a club, seeing the retailer in a more positive light and identifying more with the brand.
HullCoin will work in a very similar way but it will replace corporate loyalty with community loyalty and provide a value reward mechanism for positive social action. In doing so, it will facilitate a number of measures and interventions that stakeholders and partners are seeking to move forward with the public within different contexts.
HullCoin will work with a network of local services who will act as point distributors whenever a member of the public carries out a positive piece of work for the community on behalf of that agency. The reward will focus on outcomes and will not seek to be a substitute for payment or earnings.
The public will be able to exchange HullCoin for discounts on goods and services. The scheme will achieve this by marrying under used resource with over produced surplus: aiming to work in the margins of economic activity. People will give their time and skills to the community, particularly if they have unfulfilled time and untapped skills. Retailers and service providers also have spare capacity and surplus. For example, a theatre will know when it has spare seats. Retailers often have spare stock. These things can’t be given away because that would devalue the product but, items can be donated or their cost can be reduced in recognition of social good without creating this loss of value. At the same time the brand or service will be promoted and corporate social responsibility can be demonstrated. In addition, it makes economic sense. When customers come into the store or theatre, they are likely to buy additional items. If they go the theatre they are likely to buy drinks and food whilst there.
If they go into a store they are likely to appraise other items on sale. Many retailers are facing problems in the digital world, not least because of online competition. Feedback has suggested that they are eager to engage with the public digitally. When points are redeemed digitally the cost of the transaction is close to zero.
HullCoin utilises an infrastructure to facilitate the circulation of the points. This is the element of the scheme which is aided by digital technology. The technology which underpins Bitcoin (the blockchain) is progressive and is widely recognised as having a great amount of potential. The scheme will involve the creation of digital wallets that can be stored on phones, computers or tablets. The technology will enable a speedy, low cost and secure exchange and create a verifiable automatic ledger of transactions. As it is digital, the method can be upgraded. The movement of points can be tracked and it is possible to enable each to tell the story of its progress throughout communities in Hull.
This design does not duplicate any other service in the region. The combination of digital technology, economic modeling and the packaging of social outcomes makes it unique. It is a very different type of non-monetary exchange system to Timebanks for example, which is limited to an unregulated peer to peer ‘favour’ exchange based on hours rather than outcomes.