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The Bizarre Idea of HullCoin, a Local Government-Backed Cryptocurrency

A UK city wants to pay people in its own cryptocurrency to tackle poverty. What?
The Hull skyline. Image: Wikimedia Commons/Imagaril

There are now scores of cryptocurrencies out there, but occasionally one still comes along that raises eyebrows. First it was the sheer ridiculousness of Dogecoin and Coinye, then the national politics of Auroracoin and PolishCoin, and now, it’s the rather baffling idea of a local council’s effort to tackle poverty: HullCoin.

For those unacquainted with British geography, Hull is a city in the north of the UK that, despite its Yorkshire charm, has a bit of a reputation. Although it recently won the title of 2017 City of Culture, it has previously been named the worst place to live in the country and once won the dubious accolade of the top pick in a book called Crap Towns (though the author has since had a change of heart). It’s not exactly the UK’s FinTech centre, but Hull City Council, the local government office, is pushing the digital currency envelope with its own regional cryptocurrency.

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What’s particularly interesting is how the city apparently plans to use HullCoin. According to the Telegraph, which quotes the council’s Financial Inclusion Support Officer Dave Shepherdson, struggling local residents will be paid for “voluntary” work in HullCoin, which they’ll then be able to use to pay for things like rent, council tax, and food.

HullCoin: the aim is to become the UK's first digital local currency, it's purpose is to address issues re. poverty in Hull.

— HullCoin (@HullCoin) March 22, 2014

It all sounds, well, pretty unbelievable. The news was reported yesterday, but my first thought was it might be an April Fool’s joke mistakenly published too early. When I rang Hull City Council yesterday, no one was available to talk about the project—though Dave Shepherdson does appear to be a real person, appearing in agendas and minutes from the council.

I called again this morning and a media officer said that no one was available to speak about HullCoin at that moment as they were in a meeting about it. When I asked if it was a real thing, she said she couldn’t give me any information about it but that it wasn’t an April Fool’s. HullCoin has also been reported on by other national and regional outlets, and CoinDesk quoted Shepherdson and other council members on the currency. I’ll update this piece when I hear back from the council myself.

CoinDesk wrote that HullCoin was launched at a forum earlier this month as a means of tackling poverty. In some ways it brings to mind local paper currencies like London’s Brixton Pound, which encourage local spending. But being digital gives HullCoin one major difference; it’s not officially recognised as currency by the UK. That means that if people were paid in it, the income may not disqualify them from receiving benefits granted by the Department of Work and Pensions.

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With that in mind, HullCoin appears to be an attempt to combine the issuance of a local currency—like the Brixton Pound, or local scrip in the United States—aimed at bolstering the local economy with a plan to pay people for their work without having to draw on government coffers.

It’s an audacious move. Shepherdson is actually quoted by the Telegraph as saying, “We’re printing our own money, I suppose.”

Of course, there’s a whole host of questions that arise over the idea of a local currency like this. It's appealing in its daring, but it also seems rather ill thought out to say the least. How will it hold its value, and wouldn’t people just swap it for cash? What about the volatility of cryptocurrencies? What’s the point of a “decentralised” currency if it’s run by local government (though a tweet suggests this is misrepresented and while it’s council-backed it’s not council-owned)? And, as Charles Arthur at the Guardian pointed out, “So people who are poor get stuff stored in digital wallets that need comparatively expensive computers and high levels of expertise to access?”

Adding to the mystery, the kit used to mine HullCoin—which is based on FeatherCoin and Ven—was apparently donated by an anonymous benefactor.

If HullCoin is what it says it is, it's certainly got the disruptive ethos of the initial cryptocurrency boom down. Whether it will ever take off seems unlikely for now; whether it will ever really achieve the noble aims it sets out to solve even more so. We’ll update if we get any answers.