What is a Time-Based Currency
Time-based currency is type of currency, the value of which is based on units of time. Currencies have historically been based on other value measures. For instance, for many decades the value of the U.S. dollar was based on the value of gold, and Congress mandated the weight in gold for which one U.S. dollar could be redeemed. Today, the value of the U.S. dollar is based on supply and demand in a market where dollars are freely exchanged for other currencies.
Time based currencies, on the other hand, derive their value from hours of labor. Time-based currencies are typically issued and supported by time banks, which are formed by people who wish to create economies based on the principles of mutualism and equality, rather than just profit and loss.
BREAKING DOWN Time-Based Currency
Time-based currencies are issued by time banks, to facilitate the exchange of goods and services among the membership of the time bank. The concept of time banking arises from the idea that the nature of our financial institutions, marketplaces, and currencies actually determine the nature of the societies we live in. When markets are impersonal, and the value of a person’s label is determined only on what stranger thinks it worth, it can promote a community that is impersonal, and where close bonds are not formed between neighbors.
Time banking and time-based currencies require a few extra restrictions to be placed on a currency, in order to protect the values of mutual aid and equality. For instance, let’s say a time bank sets the value of one time dollar at one hour of human labor. Let’s also stipulate that there are two members of the time bank: a carpenter and a doctor. By participating in the time banking scheme, both the carpenter and the doctor agree to provide a certain number of hours of service to the community, and to do so in exchange for time dollars, which they can then trade in for services they need done. Let’s say that the carpenter builds a cabinet for the doctor, and that it takes him five hours. He will earn five time dollars, and be able to use them to purchase medical services from the doctor, even though the carpenter and doctor would earn much different salaries on the open market.
Time Based Currencies in the Modern Economy
The concept of time-based currencies has most recently been championed by the legal scholar Edgar S. Cahn, who also co-founded the Antioch School of Law in Washington, D.C.