An alternative currency backed by labor hours promises to “uberize” real-world professions for hire and to eliminate the impact of inflation.
Australia-based startup ChronoBank has launched the beta of LaborX, a decentralized marketplace for labor hiring. As the ChronoBank white paper claims, it aims to “revolutionize the short-term recruitment of real-world professions” by practically making any kind of work available on-demand — paid per hour, per day or even per second. The company currently focuses on tech personnel, but the principle can be extended to members of any profession which are hired and fired when the necessity arises — think plumbers and construction workers, chambermaids or other auxiliary staff. The company presented the platform in June, during BlockShow 2018 in Berlin.
“What we're trying to do is to tokenize the way that people get paid, and make their work in hours or other time units tradable,” Sergei Sergienko, ChronoBank’s CEO, told Cointelegraph. The way to achieve that is a set of tokens based on the average working-hour price in the country.
Workers are paid in these tokens — this, according to LaborX founders, ensures a just pay for the workforce and better transactional efficiency for the employer. The Labor Hour tokens (LH tokens) could also protect workers from inflation — their value is pegged to average pay in a country, that normally rises faster than inflation.
This brings about the ultimate, ambitious goal of ChronoBank: It aims to go beyond streamlining recruitment, payroll and benefits. In fact, LH tokens are meant to become a stable, inflation-free currency backed by labor hours, economically different from both fiat and cryptocurrencies. LaborX aims to liberate time-based currencies from their inherent shortcomings that hamper their wider adoption.
LH tokens will exist on a parity-based sidechain, to avoid the dependency on the Ethereum network — with its fluctuating fees and congestion. LH tokens can be mined on private nodes, after having placed a smart contract deposit in TIME tokens. Tokens mined are then used to facilitate payments on the LaborX platform.
How the marketplace works
LaborX participants may act in one of three roles: Client (the one who requires labor), Recruiter (the one who facilitates the search and recruitment of personnel) and Worker (the person to do the job). Workers and Clients can join a job board created by the Recruiter, having their skills and profile validated, if they wish. The Client then posts a job on the job board, defining the compensation and terms so that Workers can apply. Alternatively, a Worker can make a Client an offer for the job in question. Subject to the application being accepted or offer approved, the Worker starts. Expenses can be added and approved by Worker and Client respectively, during the course of the job.
If the job ends to the mutual satisfaction of the parties, the Worker gets paid and both parties leave feedback on their respective experience of collaboration. If it doesn’t, parties will try to reach an understanding, with or without the help of external arbitration. Finally, if the job is cancelled or called off for reasons not related to the Worker’s performance, the Worker may receive a pro-rata compensation.
“When workers are paid in Labor Hour tokens, they will have a choice to hold them or exchange them for other currencies — initially crypto, before direct fiat conversion. LHT will primarily trade on ChronoBank’s decentralized exchange, TimeX, which will operate on the same Ethereum sidechain as LaborX,” wrote ChronoBank in a blog post explaining the architecture of the sidechain. “In due course, we will be announcing some special market-making features to ensure a stable price and adequate market depth for LHT,” the company added.
Better exploitation or better transparency?
ChronoBank founders say they stress efficiency over equality: “Making employment more flexible weeds out ineffectiveness, thereby leaving the effective employees more desirable for employers and more highly paid. That also motivates the workers who are not yet happy with their current pay to try harder. Transparency in wages and removal of transactional inefficiencies opens the door for competition and higher wages and greater job security for the effective and productive workers in any time-based job”, said ChronoBank’s CEO Sergei Sergienko to Cointelegraph.
ChronoBank expects that, on their platform, efficient workers will have a better chance of getting hired for a higher rate, thanks to a reputation mechanism built-in to LaborX.
As for workers’ rights and benefits, ChronoBank offers employers the ability to settle social contributions and income taxes with the respective government bodies for only a one percent commission. This may alleviate the rising concern over recent court decisions that recognize gig economy workers as employees, and not freelancers.
While, at the moment, LaborX looks up to Upwork.com or Freelance.com, ChronoBank has bigger things in mind: “The nine-to-five job is what we are going after. It is a dinosaur that already had its day back in the Industrial Revolution, and I think the change is long overdue,” said Sergei Sergienko.
Working class struggles against inflation
When LH tokens gain wider adoption, LaborX expects them to become a distributed form of private money, created without any centralized authority, bank or institution. Time-based money could help protect the working class from the tax of inflation, as per-hour wages aren’t volatile, grow faster than inflation and cannot be created arbitrarily by governments or banks — as is the case with fiat money.
ChronoBank envisages an alternative financial ecosystem, whose backbone will be formed by “local communities, timebanks, and labor-hire companies with excellent reputation and strong financial standing.” The increased use of time-based tokens will set people free from inflation — a hidden tax — that stimulates unsustainable, consumption-fueled growth and disincentivizes savings.
The CEO of the company said that ChronoBank is in talks with several major corporate clients in Australia — where the company is located — and expects to start offering their job openings to the public on LaborX soon.
The next step, he added, is to launch a decentralized exchange that will eventually make LH tokens ultra-liquid and a viable alternative to money. The exchange will be launched over the coming months, Mr. Sergienko said to Cointelegraph.
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