Cryptocurrency may sound strange, but bitcoin should not. Bitcoin is an online payment system created in 2009, in which a virtual currency is used for transactions without the middlemen of banks. Consumers can buy bitcoins with local currency and proceed to buying merchandise anonymously with the coins that they have purchased without having to pay processing fees. Bitcoin is a currency whose transactions are secured by cryptography, and thus the name cryptocurrency. Then there is HullCoin.
▲ HullCoin will be the world's first government-backed cryptocurrency. Provided by coinspeak.com
HullCoin is to be the world’s first government-backed cryptocurrency that is named after and will be used in the United Kingdom (UK) city of Hull, officially known as Kingston upon Hull, in the East Riding of Yorkshire. It will be months before it is officially launched, but the plan for HullCoin was announced this April in cooperation with the Feathercoin development team.
HullCoin will be a digitalized, virtual currency to be used to pay rent or council tax and for goods and services provided by a few participating firms. It was created as a hybrid of two different types of cryptocurrencies, Feathercoin and Ven.
Local currencies are used in towns and cities around UK such as Oxford and Bristol, but HullCoin was the first bitcoin-based digital currency. How they stand out from other local currencies is that HullCoins are not bought and sold on the market but rather earned through doing voluntary work or contributing to the local community. “They will then be used as a charitable payment or as a way of recognizing people's community activity,” Dave Shepherdson, the Financial Inclusion Support Officer from the Hull City Council, said.
HullCoins will be distributed through charities, community groups, and local enterprises. Now, with the scheme in its initial stage, the coins are being “mined,” generated, so that the coins are transferred and the transactions are recorded. They will then be stored in digital wallets in the form of a small computer file through clouding services on smart phones and computers. Upon using HullCoins, consumers can transfer the currency by simply entering in an electronic code.
▲ Hull will launch a cryptocurrency to combat poverty in the city. Provided by coinspeak.com
Coins as a Solution for Poverty
Shepherdson added that HullCoins were launched for a social purpose. The project was designed by the city council’s social innovators who not only wanted to improve the city’s economy but also remedy the impacts of Britain’s welfare reform.
For one thing, HullCoins will only circulate within the local community so their use will increase the purchase of locally-produced and available goods and services. For another, HullCoin is to tackle poverty, particularly for those who were affected by Brtiain’s recent welfare reform, which reduced many benefits the UK had previously provided.
Shepherdson said, “The idea is that we’ll provide it to people on low incomes for them to pay for things that they wouldn’t otherwise be able to pay for, particularly food and fuel. It’s a very different sort of project.”
The City’s Welfare Rights Manager, Lisa Bovill, wanted to launch a local currency as a means of providing help for those suffering from poverty. Shepherdson said, “It’s about people on low incomes, in financial distress, being able to subsidize to an extent and complement their incomes.” Because the coins are digitized and thus not recognized as traditional money, earnings in the form of HullCoins will not reduce existing benefit claims from the UK Department of Work and Pensions, or be taxed by the local government.
For now, the use of HullCoin will be limited to paying local taxes and buying from a few firms, but HullCoin in the future may be used to pay rent and purchase goods from a wider range of merchandisers, including major supermarket chains. If HullCoin proves successful, it will in the long term become used not only as a means for tackling poverty, but also as a local cryptocurrency used and accepted by all of Hull residents. Bovill from the Council even revealed that a Hull Bank of HullCoins was the city’s long-term goal.
The whole HullCoin scheme has only begun. It has not been launched yet, and it is only in the initial stages of planning and evaluating whether this new system of currency will be viable. The virtual currency, however, would boost the local economy and aid those in need, even more so because of the way it would be earned and distributed. HullCoin has a huge potential that if proved successful, should spread to other innovative cities countries in today’s digitalized world.
▲ Hull's city Council wants to solve poverty and equality through Hullcoin. Provided by nseri.com