Time is an absolutely limited resource. Even the maximum possible number of bitcoins may be changed if the network agrees, but nobody can change how many hours there are in a day.
For that reason, time is the most valuable resource. Amazingly enough, working time is still not a highly demanded commodity on markets. There are many people seeking to be useful to society, yet they fail to find demand for their time.
Globalization has brought about crises and unemployment for local economies. Transnational corporations don't leave money in local economies; they move it where it may be most profitable or provide better returns to its owners.
As a means of opposing this trend, several complementary local currencies emerged in the last quarter of the 20th century. Those currencies were seeking to support development of local economies, fight unemployment and negative consequences of globalization, and maintain social connections within local communities.
Some of those currencies aren't based on national currencies but on time, as the latter cannot devalue, unlike national currencies. A working hour of a gardener, a driver or a teacher will remain the same regardless of any inflation or currency exchange rate. This article reviews basic types of modern-day complementary time-based currencies.
Edgar Kahn devised time dollars in 1986 for several social projects in the U.S. Now they are employed as a means of exchange for various services beyond the United States. The system's participants open accounts at Time Bank with zero balance. In order to gain Time Dollars, users will have to render some service to a different registered user.
When a participant renders a service, like mending a leaking roof or walking a dog, they record the number of hours spent in 'credit' as a revenue, while the serviced party records the same number of hours in 'debit' as a debt. The purchased hours may be used to buy services from any customer of the time bank.
Thus, the system members may exchange their time, and have the desired services without using any actual money. As time bank customers issue time dollars via double record (credit revenue of one participant is a debt of the other's debit), the system's overall balance is always zero.
The system's basic risk is the possibility that dishonest members could have their services on credit without doing anything in exchange. Still, the social effect of time banking proved to be serious enough to cause the U.S. tax service to announce that time dollars are not subject to taxation. Time banking has proven its efficiency as a social policy tool.
Another kind of complementary time-based currency is Ithaca Hours, a local currency used in the U.S. town of Ithaca and designed by Paul Glover in 1991. Those Hours are paper money issued by the system's central authority. As opposed to time banking systems, Ithaca Hours involve no debit/credit accounts. However, all participants of the system agree that their services or products may be partially or totally paid for with Hours.
Adoption of Ithaca Hours is about provision of some amount to each participant upon registration and consent to accept hours as a local means of payment. It also involves interest-free loans and financing of social projects. The received Hours may be used to buy a wide variety of products from hundreds of the program's participants. One may even pay rent with Ithaca Hours, or amortize the interest at the local credit union.
The currency works for the benefit of the local economy, not transnational corporations. It enhances the feeling of community among the locals. Notably, local prices denominated in Hours often are lower than those in national currency: effectively, it's a discount for those who use them.
One Ithaca Hour is nominally worth $10, which means that the minimum hourly rate recommended for local exchange is $10. The ratio of 'maximum hourly rate / minimum hourly rate' denominated in Ithaca Hours is drastically lower than in the national economy.
As hours are issued in a centralized manner by trusted parties, there is a risk of excessive issuance due to mistakes or misconduct of the administration. In reality, however, Paul Glover's conservative issuance policy caused the first run's banknotes to be sold at a price twice as high as collectible items, while the demand for Hours in the local economy was steadily higher than the supply.
Complementary currencies have much greater opportunities now that blockchain technology is here. This certainly involves time-based currencies as well. The first project of the kind is announced to kick off in 2017: Labor-Hour Tokens will be issued via Chronobank.
LH-tokens will be national, not local. Each country will issue its own national tokens denominated in working hours and pegged to the average hourly rate in said country. The project resembles Ithaca Hours in some respects; however, the price of a token is not fixed and will grow as hourly rates increase.
The tokens will be issued by major companies specializing in hiring and training workers. The issuing company will undertake to amortize the tokens by rendering services to the amount of the token's current price.
ChronoBank states that its basic goal is to revolutionize the short-term employment market. Will local communities use LH tokens as an alternative to existing complementary currencies? Blockchain makes issuance and turnover of LH-tokens transparent, while the issuer's legal obligation to amortize them at the current (and steadily growing) price makes them more reliable than cryptocurrencies.
However, the question of whether local communities will be able to create LH tokens, or whether it will be the prerogative of major HR companies, still remains. There is also the question of whether they will be able to purchase them without money, just for services and products of their labor, or whether it will involve buying tokens at an exchange. In any case, as long as people still endeavor to mitigate the shortcomings of capitalism by reforming the mechanism of exchange, the idea of time-based currencies will keep evolving.