Software developer Nate Davis of Rockland, right, and Jim DiFrancesca, the creators of “DoGoods,” a brand new cryptocurrency (Photo by Andy O’Brien)
Software developer Nate Davis of Rockland, right, and Jim DiFrancesca, the creators of “DoGoods,” a brand new cryptocurrency (Photo by Andy O’Brien)
Last Saturday afternoon, Nativity Lutheran Church in Rockport was alive with the sound of children laughing and shouting at a little Christmas party held for families served by Knox County Homeless Coalition (KCHC). There were holiday treats and tables for making Christmas gifts. Even Santa Claus stopped in for a visit. And while helping out fellow Mainers is certainly its own reward, the volunteers at the event also received an additional benefit for their time — an allotment of “DoGood” tokens, a brand new digital cryptocurrency created by software developer Nate Davis of Rockland and his partner Jim DiFrancesca, a humanitarian relief director based in Washington, D.C. That evening, the volunteers were even able to redeem the new digital dollars for food and drinks at Ada’s Kitchen in Rockland.

“I was really excited to see a new incentive to get people to volunteer for projects that they might not show up at otherwise,” said Sarah Rogers of Rockland, who manned the cocoa station at the party.

Here’s how it works: first, the DoGood team authorizes a charitable organization like KCHC to issue an allotment of DoGood currency to its volunteers. Volunteers like Rogers then download a special app on their phones that allows them to sign up for the charitable event. After they complete their work, KCHC pays them DoGood tokens to spend in the community, save, or do with whatever they want. While Saturday’s roll-out was just a test run before they try DoGoods on a larger scale, the two developers believe that the virtual currency has the potential to create a “circular economy of social good.” For Davis, who is also co-founder of the Steel House technology and design collective in Rockland, there’s also another motive.

“Part of this project is an attempt to rehabilitate cryptocurrency because it’s filled with so many bad actors. It’s sort of a cesspool,” he said. “For me, it is partially an attempt to realize the promises of cryptocurrency that I don’t see have been realized.”

Cryptocurrencies (bitcoin being the most well-known) use encryption techniques to regulate the generation of currency units and transfers of funds. According to Investopedia, they use decentralized systems based on blockchain technology, “a distributed ledger enforced by a disparate network of computers.” But while bitcoin boosters like the idea of a currency untethered from the government and central banks, cryptocurrencies are also ludicrously volatile. In recent years, there’s been a mad goldrush of speculators buying up cryptocurrencies for the chance to strike it rich, sending values soaring. But although bitcoin made headlines last year for hitting an extraordinary high of $20,000, it had plummeted to just $3,790.96 as of Monday. This has led many observers to compare the craze to infamous speculative bubbles like the Dutch tulip mania of 1637, when the price of bulbs rose dramatically before collapsing.

To make matters worse, bitcoin is a notorious energy hog due to power needed to “mine” the currency. Alex de Vries, a bitcoin specialist at PricewaterhouseCoopers, told the Economist in July that the current global power consumption for the servers that run bitcoin’s software is a minimum of 2.55 gigawatts, which is roughly the same amount as Ireland consumes.

Davis, who sits on Rockland’s Energy Committee, said he was particularly interested in figuring out a way to mitigate the negative ecological impact of cryptocurrencies, so he started thinking about other ways to mine them. He had always been interested in time banking, which is a system where hours of labor are traded as a form of currency, and wondered if a similar concept could be applied using blockchain technology. But in contrast to bitcoin, which mines the currency by solving a complicated algorithmic puzzle, Davis based his model on volunteer work. And unlike bitcoin, DoGoods do have a central authority, Davis and DiFrancesca, that issue the tokens to the organizations holding the charitable events.

“The act of mining is the act of actually volunteering,” said Davis. “And so instead of a proof of work, we’re relying on the authority and the trustworthiness of the Homeless Coalition or other organization we partner with to actually verify that that person participated. We’ll be working with all of these organizations and vetting them so they can issue DoGoods if they’ve met whatever minimum standards we have. And then it’s sort of public currency that people can accept or use for payment at a location that does accept them.”

The DoGood model is also different from bitcoin in that the users will have the option of uploading their photos and names to appear on the currency. In Rogers’ case, her photo will appear on the DoGood bucks she was paid on Saturday, along with a description of the project, the date and a serial number.

“Then however many projects this cycles through over the course of its lifetime that will always be your DoGood in the sense that you mined it,” said Davis. “And hopefully you will have an emotional connection to it no matter what happens to it.”

It’s impossible to say what the value of DoGoods will be in the future, but bitcoin started off being worth just pennies in the beginning before it became more widely used. But the DoGood team says it will control the rate at which the units are issued to manage inflation and, eventually, they hope the market will adjust. They said the incentive for businesses to use DoGoods is that they will not only be able to help stimulate volunteerism in the community, but also it’s a way to get their names on the currency itself.

In the meantime, the developers say they hope to partner with universities, municipalities and business groups to further pilot the program and work out the kinks. DiFrancesca says he sees the potential of DoGoods to incentivize constructive activities in economically distressed parts of the world, such as Haiti, Ethiopia and Guatamala, where he does most of his work.

“People are very excited about what can be done with a currency like DoGoods,” he said. “So now Nate and I have to go back and take stock of everything that we’ve heard and start to build out our systems to allow for all that to happen. The level of motivation that I’ve seen from people is very high and so I think we have to keep up with it.”