Time Banking, Explained
What is time banking?
Time banking is a form of money, but the currency units are not banknotes, cheques, or, say, bitcoins; they’re hours. Yes, you read that right – actual hours.
The concept of time banking originally appeared in 19th century England. Unlike modern fiat currencies that aren’t really backed by anything, the currency units in time banking have to be backed by some kind of work performed by a person or a group of people.
For example, a cleaner works for an hour using a time banking system. It means they receive a one-hour time credit from the person they’ve done the work for. The cleaner can later pay someone else for their work with that same credit.
How is time banking different from any other currencies?
The clue is in the concept.
It is important to understand the difference between money and currency. Money always has to be backed by something, be it gold, silver, labor, etc. Currency, on the other hand, can be printed by any government at will. Dollars, or any other currency, may depreciate with time, as the government can print more of them. In the future, all you’ll be able to do is exchange the same amount of dollars for less work.
So, is it better than any other form of money?
It’s impossible to say for sure, because time banking is simply a wholly different phenomenon.
For example, it is certainly less volatile and more liquid, as time units are constant. Time banking units retain these properties even when expressed in fiat units because labor costs are very stable.
However, time banking has its downsides. Let’s say you have some amount of hours and you want to hire a lawyer. The lawyer you need might not use a time banking system, or if he does, it may be the case that you don’t have enough credits to employ him and need to find a workaround.
Overall, time banking and other forms of money are like apples and oranges – too different to determine which one is better in absolute terms.
Why not just stick to Bitcoin?
Bitcoin is indeed similar to time banking. But at the same time, it is just as different as fiat money.
Bitcoin is a unique case in that its value is secured by the technology, decentralization and people’s belief in it. Many parties tend not to trust government-owned money systems. Bitcoin has no human factor and this is what makes it trustworthy.
Similarly, labor-backed money addresses other issues such as fiat currency volatility and its overall arbitrary value. This is why people trust it.
Does time banking offer any additional advantages?
Time banking helps create stronger, more prosperous communities. It is also useful when you cannot express the value of labor with other currencies.
Using time banking requires a certain ‘leap of faith’ when it comes to interactions between participants. After all, you are inviting a completely unknown person to your house! However, after the initial step is made, it results in a community of people who are bound not by monetary interactions but by a network of reciprocal labor. This form of community would arguably be considerably freer and more welcoming.
Additionally, there are types of labor which may be difficult to evaluate and pay for in fiat money, such as community work. In those cases, time-based currencies are the perfect solution.
Why hasn’t this concept taken off yet?
Time banking has remained relatively unpopular so far due to a number of factors. The most important of these is likely the lack of global communication tools.
The success of a time banking community largely depends on its size and diversity. The more professionals there are, and the more diverse skills they have, the more likely it is that people will start using this type of service.
The problem is that so far these communities have lacked the necessary technology to expand beyond their limited scope in both numbers and diversity. In other words, they were unable to provide sufficient labor supply to really take off.
What about innovations in time banking?
Time banking is getting better with time and technology.
In traditional time banking communities, one hour of a janitor’s work is worth the same as a neurosurgeon’s working hour. Doesn’t seem fair, does it?
Chronobank, by contrast, is a company that is planning to implement a decentralized reputation system called LaborX. It ensures professionals are paid in line with experience and talent, whereas the actual rates are set on the open market.
At the same time, Chronobank is set to develop a Labor-Hour token technology in the coming months. The Labor-Hour token technology is a time-backed cryptocurrency, very similar to regular time banking money. Technologically it works like Bitcoin, making it a digital currency. Its infrastructure will focus on allowing easy interaction between community members. No distance limitations, no jurisdictions, people around the globe will be able to trade directly with each other without any restrictions and delays.
Should I get into time banking myself?
It depends on whether you are interested in the concept, as well as on the skills that you have.
Time banking may be interesting if you:
- have some kind of unique skill; your labor will always be in high demand on the time banking market
- want to have stable, inflation-proof labor-backed money
- want to use innovative solutions