The Tokenization of Time: A Comprehensive Overview

The economic tokenization of time involves representing and exchanging time as a unit of value within economic systems. This concept has evolved from traditional labor-hour tracking to modern digital implementations, particularly in the realm of blockchain technology and decentralized finance (DeFi). This overview will explore the historical context, current digital efforts, challenges, and future prospects of the economic tokenization of time.

(this post includes excerpts from various sources which are cited)

Historical Perspective

(the following excerpts are from Wikipedia)

1. Labor-Hour Tracking:

  • Traditional labor systems have long utilized time as a measure of productivity and compensation.
  • Industrial revolutions formalized the notion of hourly wages, laying the foundation for the economic representation of time.

2. Company scrip is scrip (a substitute for government-issued legal tender or currency) issued by a company to pay its employees. It can only be exchanged in company stores owned by the employers.[1][2][3] In the United Kingdom, such truck systems have long been formally outlawed under the Truck Acts. In the United States, payment in scrip became illegal in 1938 as part of the Fair Labor Standards Act.[4]

              – Wikipedia

In the United Statesmining and logging camps were typically created, owned and operated by a single company.[5] These locations, some quite remote, were often cash poor;[1][2][3] even in ones that were not, workers paid in scrip had little choice but to purchase goods at a company store, as exchange into currency, if even available, would exhaust some of the value via the exchange fee. With this economic monopoly, the employer could place large markups on goods, making workers dependent on the company, thus enforcing employee “loyalty“.[5][6] While scrip was not exclusive to the coal industry, an estimated 75 percent of all scrip used was by coal companies in Kentucky, Virginia, and West Virginia.[7] Because of this, many derived nicknames for the type of currency originated in the Appalachian mining communities, such as “Flickers,” “Clackers,” and “Dugaloos.”[8]

  • Wikipedia

Coal scrip is “tokens or paper with a monetary value issued to workers as an advance on wages by the coal company or its designated representative”.[9] As such, coal scrip could only be used at the specific locality or coal town of the company named. Because coal scrip was used in the context of a coal town, where there were usually no other retail establishments in that specific remote location, employees who used this could only redeem their value at that specific location.[10] As there were no other retail establishments, this constituted a monopoly. The coal town was established by out-of-state corporations and fueled by cheap labor provided by European immigrants who came to Appalachia in search of work in the growing coal industry.[11]

Tokens were made out of a variety of metals, including brass, copper, zinc, and nickel.[8] There were additionally “compressed fibre” coins produced during World War II in an effort to conserve metals for wartime production.[8]

              – Wikipedia

3. Truck wages are wages paid not in conventional money but instead in the form of payment in kind (i.e. commodities, including goods and/or services); credit with retailers; or a money substitute, such as scripchitsvouchers or tokens. Truck wages are a characteristic of a truck system.

“Truck”, in this context, is a relatively archaic English word meaning “exchange” or “barter”.

truck system includes one or both of the following practices under which truck wages are used:

  • Firstly, the truck wages are demonstrably of a lesser market value than the amount of money that would normally be paid for the same work.
  • Secondly, truck systems limit employees’ ability to choose how to spend their earnings. For example, credit or company scrip might be usable only for the purchase of goods at a monopolistic company-owned store, at which prices are set artificially high. As long as the company store is the only party able and willing to accept scrip for needed goods, there is no meaningful competition to lower prices. Hence, a truck system relies on a closed economic system in which employees are required to become subject to a retail monopoly in essential goods.

Truck systems have been specifically outlawed in many countries by labour law and employment standards; and legislation such as the British Truck Acts.[1]

              – Wikipedia

4. More Recent Examples

From 1914 to 1924, during and following the First World War, a variety of forms of German scrip were issued, including Notgeld, Lagergeld, Gutscheine and Serienscheine. Such currencies were issued “by principalities, German colonial governments, cities, large corporations, small businesses, prisoner-of-war camps, and in some cases, individuals.”[17]

The practice has been documented as recently as 2019. On September 4, 2008, the Mexican Supreme Court of Justice ruled that Walmart de Mexico, the Mexican subsidiary of Walmart, must cease paying its employees in part with vouchers redeemable only at Walmart stores.[18] On May 21, 2019, The Washington Post published an article highlighting Amazon‘s new system of “gamification“, which rewards employees who complete high numbers of orders with Swag Bucks in a game-like system, which can then be used to buy Amazon-themed merchandise.[19]

              – Wikipedia

Incentive Programs

(the following excerpts are from Wikipedia)

An incentive program is a formal scheme used to promote or encourage specific actions or behavior by a specific group of people during a defined period of time. Incentive programs are particularly used in business management to motivate employees and in sales to attract and retain customers. Scientific literature also refers to this concept as pay for performance.[1] Incentives are an extrinsic motivator, a reward to encourage participation. They are particularly useful when a person or groups intrinsic motivation (desire to participate for the sake of participating) is weak.

Employee

Employee incentive programs are programs used to increase overall employee performance. While employees tend to approve of incentive programs, only 27% of companies have such programs in place.[2][3] Employee programs are often used to reduce turnover, boost morale and loyalty, improve employee wellness and safety, increase retention, and drive daily employee performance.[4]

Consumer

Consumer incentive programs are programs targeting the customers of an organization. Increases in a company’s customer retention rate as low as 5% tend to increase profits by 25%-125%.[5][6][7] Consumer programs are becoming more widely used as more companies realize that existing customers cost less to reach, cost less to sell, are less vulnerable to attacks from the competition, and buy more over the long term.

Points programs

Points-based incentive programs are a type of program where participants collect and redeem points for rewards. Points programs may be used to incentivize both employees and consumers.[8] Depending on the program type and the organizational objectives, points can be awarded on a number of criteria including positive employee behavior, the demonstration of organizational values, repeat customer purchases, the sale of new products, increased overall sales, or even the use of proper safety precautions. In addition to point awarding, the levels at which points can be redeemed can be customized by the organization. Points programs are a way for organizations to motivate behavior over time while improving the organizations’ overall performance. Loyalty programs are a frequently used points-based incentive program in which customers who exhibit a certain behavior are rewarded with points, reinforcing that behavior.

Sales

These programs are primarily used to drive sales, reduce sales costs, increase profitability, develop new territory, and enhance margins. Sales incentive programs have the most direct relationship to outcomes.[9] A sales incentive plan (SIP) is a business tool used to motivate and compensate a sales professional or sales agent to meet goals or metrics over a specific period of time, usually broken into a plan for a fiscal quarter or fiscal year.[10] An SIP is very similar to a commission plan; however, an SIP can incorporate sales metrics other than goods sold (or value of goods sold), which is traditionally how a commission plan is derived. Sales metrics used in an SIP are typically in the form of sales quotas (sometimes referred to as point of sale or POS shipments), new business opportunities and/or management by objectives (MBOs) independent action of the sales professional and are usually used in conjunction with a base salary.

SIPs are used to incent sales professionals where total sales are not a precise measure of sales productivity. This is usually due to the complexity or length of the sales process or where a sale is completed not by an individual but by a team of people, each contributing unique skills to the sales process. SIPs are used to encourage and compensate each member of the sales team as they contribute to the team’s ability to sell. It is not uncommon for the members of such teams to be located in different physical locations and for the product introduction to happen in one location and the purchase of such a product to occur in another location.

Non-monetary incentives are used to reward participants for highly productive behavior. Non-monetary incentives may include flexible work hours, payroll or premium contributions, access to day care centers, training, health savings or reimbursement accounts, or even paid sabbaticals. If it comes to environmental behavior, often labeling and recognition certificates are used. This may include stickers or T-shirts with banner logos and stationary with a company logo.

  • Wikipedia

Tokenization of Things or Assets

(excerpts from an article on McKinsey.com)

https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-tokenization

“Tokenization is the process of issuing a digital representation of an asset on a (typically private) blockchain. These assets can include physical assets like real estate or art, financial assets like equities or bonds, nontangible assets like intellectual property, or even identity and data. Tokenization can create several types of tokens. Stablecoins, a type of cryptocurrency pegged to real-world money designed to be fungible, or replicable, are one example. Another type of token is an NFT—a nonfungible token, or a token that can’t be replicated—which is a digital proof of ownership people can buy and sell. Tokenization gives asset holders and market makers access to blockchain technology’s potential benefits. Broadly speaking, these include 24/7 operations and data availability, along with so-called atomic (that is, instantaneous) settlement. In addition, tokenization offers programmability—that is, the ability to embed code in the token, and the ability of the token to engage with smart contracts—enabling higher degrees of automation.”

  • McKinsey.com

The Tokenization of Time Itself in the Digital Age

(excerpts from an article written by Matthew Jackson (thetokenizer.io)

He says: “Time and Money are not only frequently exchanged for one another but are closely linked. Tokenizing time cryptographically makes logical sense as a blockchain use case. But is it feasible, and is it worth the trouble? Time is – in a sense – the hardest of all assets. It cannot be minted, and once burned, it cannot be recovered. It could be said that the passing of time is the ultimate encryption process. From this perspective, representing time as a cryptographic token is a logical application of blockchain technology. But what would be the point exactly? Let’s find out.”

He continues: “Time is already tokenized; One of the first major applications of blockchain was the Bitcoin payment network. In Satoshi’s vision, the aim was to create an alternative to fiat money that was beyond the reach of institutional control. Working from the other side of the equation, the American investor and futurist George Gilder has described money itself as a form of ‘tokenized time’. This is by no means a bizarre claim, as there is an intrinsic connection between the two. When we observe that ‘time is money’, we are acknowledging this connection. Money is a way of taking ownership of the time of others, be they lawyers, car mechanics, or portrait painters. By doing so, we can avoid having to use our own time to prepare a legal document, fix a car, or paint a self-portrait. Not to mention the time we would need to acquire the skills to do all those things in the first place. Gilder has a less intuitive – but more interesting – claim. He asserts that everything in the universe – not just money, but everything physical – is ultimately based on time, and hence time is itself the only ultimate currency.  As he puts it, “[Time] remains scarce when everything else becomes abundant…The Fed can print money, but it can’t print time.” If time is truly the ‘hardest’ asset, it could be seen as superior to other real-world assets that are in the process of being tokenized, such as art, real estate, and traditional stocks & shares. Tokenized time creates the possibility of two skilled but cash-poor individuals in different countries literally trading time with one another, having agreed on a relative exchange rate – thus sidestepping the need for ‘money’ (traditional tokenized time) altogether. This could be useful for entrepreneurs who are short of starting capital but rich in a valuable skill they could trade (such as coding) in exchange for a skill that they need (such as accounting). The borderless nature of the blockchain makes it possible to engage in these transactions cheaply.”

  • TheTokenizer.io (Matthew Jackson)

More Digital Era Developments

1. Blockchain and Cryptocurrencies:

  • Blockchain technology has enabled the creation of digital assets, including time-based tokens.
  • Projects like ChronoBank and LaborX leverage blockchain to tokenize working hours, allowing workers to receive payments in tokens that can be traded on decentralized platforms.

2. Smart Contracts:

  • Ethereum and other smart contract platforms facilitate the creation of self-executing contracts, inherently tied to time-based conditions.
  • Economic agreements, such as hourly wage contracts, can be encoded in smart contracts, automating payment processes based on time triggers.

3. DeFi and Yield Farming:

  • Decentralized Finance (DeFi) platforms incorporate time-bound financial instruments, where users lock their assets for a specific period to earn rewards.
  • Yield farming strategies involve users committing funds for set durations, demonstrating the economic tokenization of time within decentralized financial ecosystems.

4. Tokenized Securities:

  • Time-based features are integrated into tokenized securities, introducing elements like vesting periods for equity tokens.
  • This allows for the representation of time in ownership structures, influencing the economic value and tradability of these tokens.

5. Labor Market Platforms:

  • Platforms like LaborX aim to revolutionize the gig economy by tokenizing working hours.
  • Workers can tokenize their time, creating a more flexible labor market where hours become tradable assets.

Challenges and Future Prospects

1. Regulatory Considerations:

  • The economic tokenization of time introduces regulatory challenges related to wage standards, taxation, and compliance with labor laws.
  • Striking a balance between innovation and adherence to existing economic regulations is crucial for widespread adoption.

2. Integration with Traditional Payment Systems:

  • Seamless integration with traditional payment systems is essential for the economic tokenization of time to gain acceptance.
  • Bridging the gap between digital tokens and fiat currencies poses challenges in terms of interoperability.

3. Smart Contract Security:

  • Ensuring the security of smart contracts, especially those involving time-sensitive transactions, is crucial to prevent vulnerabilities and exploitation.

4. Cultural Shifts in Economic Practices:

  • Shifting from traditional payment structures to the economic tokenization of time may require cultural adjustments in how individuals perceive and value work.

5. Environmental Impact:

  • The energy consumption associated with certain blockchain technologies raises environmental concerns.
  • Sustainable solutions and eco-friendly blockchain implementations are essential for mitigating the environmental impact of economic tokenization efforts.

The economic tokenization of time represents a transformative shift in how we conceptualize and transact value in the labor market. From historical hourly wage systems to blockchain-based labor platforms, time is becoming a tradable asset.

As this concept continues to evolve, addressing regulatory, technical, and cultural challenges will be essential for its successful integration into mainstream economic practice.

The economic tokenization of time has the potential to reshape traditional labor dynamics, creating more flexible and efficient economic systems. But, all of this is just a tokenization of labor from the perspective of the market economy. In time banking, we are not concerned with the market economy, but rather with the core economy – the economy of volunteering, mutual aid, goodwill, community building and collective projects. Let’s take a look at how the tokenization of time is applied to the core economy, in general, and time banking specifically.

Time Banking Is Different

Time banking does not fall into any of the above categories for the following reasons:

  • Participation in a time bank is voluntary and the participants do not feel, in any way, forced into participation. In the above historical examples, the workers felt they had no choice but to participate because they had no other way of earning a living.
  • All work done in a time bank is volunteer labor without the expectation of compensation.
  • Time banking does not replace “earning a living” in the market economy, but rather, supplements market economy earnings with the safety net of a mutual aid network.
  • Time credits are not, in any way, a form of compensation, but rather, a means of keeping track of volunteer activity.
  • Time banking, at its core, is about volunteerism, not compensated labor.
  • The tokenization in time banking, as time credits, does not promise a future expectation of financial gain. Time credits are “utility tokens”, which are tokens used to gain access to a service, rather than, “security tokens”, which provide the holder with an expectation of future financial gain.

Tokenizing labor for the purpose of profit, compensation, wages, or anything else to do with the market economy, is not what we are trying to do in time banking. We are, rather, trying to create a “tokenized boutique economy” based on the ideas of neighborliness and helping one another without the expectation of compensation. We are trying to build communities and networks where the participants care about one other for reasons other than what they can get from each other in a monetary sense.

The tokenization that we are talking about is the tokenization of goodwill. And, we don’t mean “tokenization” in the sense of value creation from a market economy perspective, but rather, tokenization in the sense of promotion of participation in what we should already be doing without the need for promotion, motivation or incentivization – helping one another just because it’s the right thing to do.

We should already be taking care of each other without the expectation of compensation but, in today’s society, people have become complacent, apathetic and just generally lack motivation or, even, concern for others.

We are trying to create a system, or “boutique economy”, for the purpose of helping those in our communities, and in our society, relearn the values that they should have already been taught. We are not creating a system for making profit, but rather, a system where the idea of profit comes second to the moral obligation to take care of each other.

Join us in the (r)evolution of time tokenization. Become more than just someone who lives for profit. Live for something bigger and better; live for doing the right thing by those in your community. Live for the core economy values of mutual aid, goodwill, volunteerism, and just plain neighborliness – and utilize the market economy when necessary, as one must.