Cryptocurrencies are America’s latest capitalist
playthings—from Bitcoin’s Christmas surprise of over $14K per coin, to the Bitcoin Cash fork of August 2017 and
BitFury’s success in negotiating blockchain contracts in both Georgia and Dubai, cryptocurrencies, and the technology that powers them, went
from being anarchists’ obscure hobby to the latest shiny object
that the financial markets are drooling over. While cryptocurrencies are still
a ways off from becoming actual currencies that can be used to exchange goods,
they have proven to be valuable assets in today’s markets. Moreover, the
blockchain technology that underpins said currencies has begun to gain momentum
as an advanced application for the encryption and storage of data. Many see it
as the natural evolution in the digital age.
For those of you who don’t know
what blockchain technology is read here,
or if you’re interested in cryptocurrencies in general, read here. People much savvier than I can teach you the technical
details. Today I want to discuss practical implementations.
In the past two years, cryptocurrencies have made a lot of young people, and already rich old
people, very rich. Cryptocoins and blockchain applications are the latest
innovation to encourage the American rags-to-riches mythos, and I don’t see
their bubbles popping anytime soon. Yet is seems like all of this is creating
just another set of 1% who are wealthy, while most miss the boat completely,
and this is the complete opposite of what many of the early adopters had
envisioned—rather than creating a new cryptoclass, the blockchain was supposed
to emancipate humanity.
This has me thinking...how could blockchain technology be used
to create currencies that support a universal income? I’ve written before about
universal basic income, from both a practical perspective and a feminist perspective. Most people argue
there isn’t enough money out there to create a sustainable world where everyone
is fed. I’ve long called bullshit on this. Technologically we can now feed the
world, so what’s holding us back? The food can be farmed in labs and it can be
distributed to the most remote locations on Earth. Why then, does much of it
rot in holding areas? Or never even get planted, while children die of
starvation in our streets? Even in America, child poverty is rising with 30.4 million children daily in our country using the National School Lunch Program in their schools.
To me, the growing poverty in the “Land of Opportunity” is a universal
lack of love on every citizen’s part, not a money problem. However, if
everyone’s convinced that there aren’t enough American dollars to go around so
that we can guarantee housing, food and clothing to our fellow brothers and sisters,
then perhaps it’s time to make more money, and not the kind you can hold in
your wallet.
The way to create a new economy based on care and
commonwealth may be to create a new currency with community as its only goal,
rather than profit and greed, and what better way to do this than with a
cryptocurrency? Why not build a crypto-token that is secure, hard to hack and trackable, whose purpose was to provide liquid resources to the most vulnerable members of society?
This last feature - traceability - is very important. In principle it would be a clear advantage over fiat currency welfare systems, since the cash economy is only partially measurable in terms of mapping demographic groups to purchase/usage patterns. For fun, let’s call the new currency, LifeCoin, created not to get a bunch of miners and traders rich, but instead to be shared from person to person, growing as we all grow in wealth, a true peer-to-peer network both technically and socially.
This last feature - traceability - is very important. In principle it would be a clear advantage over fiat currency welfare systems, since the cash economy is only partially measurable in terms of mapping demographic groups to purchase/usage patterns. For fun, let’s call the new currency, LifeCoin, created not to get a bunch of miners and traders rich, but instead to be shared from person to person, growing as we all grow in wealth, a true peer-to-peer network both technically and socially.
A currency whose aim is to provide a universal basic income
would need to have the following properties:
1)
It would need to be easily distributed to all citizens
in the network 18 and over. Thus, a wallet that accepted LifeCoin, identifiable
by the currency platform would need to be created.
2)
It would need to be accepted by all businesses
that provide shelter (banks, landlords, etc.), food, clothing and healthcare.
Thus a networked payment system that accepted LifeCoin and linked up to user’s
wallets would need to be created. It needs to be seamless and provide
incentives to services providers for honoring the LifeCoins as currency, thus
the traditional fee structures in place for money exchange would need adjustment.
3)
It would need the ability to be changed into
other currencies at the owner’s discretion. Thus the LifeCoin would need to be
accepted on a decent number of exchanges.
This is a minimum list of technological needs, but at its
most basic, a currency needs to be able to flow throughout the society if it’s
going to be a true universal basic income solution.
Essentially there are two ways the LifeCoin could be
created, either by the government, or by us, the citizens in an act of
goodwill.
How could a government create and issue LifeCoin
responsibly? There are probably many answers to this, but I think LifeCoin
could be implemented by local governments that are looking to use blockchain
technologies to manage and secure their data. Governments collect more than
taxes, they’ve long been keeping track of our data, such as births, deaths,
marriages, land titles, county employee information, driver’s license
information, school information, health information and even voting
registration and ballots. All of this information needs to be managed, and many
governments are starting to consider using blockchain technology to do just
that. Take the country of Georgia,
who has uploaded over 100,000 land titles to a blockchain network created by BitFury. They
have decided that using blockchain smart contracts will help them prove land
ownership as Russia slowly begins to occupy more and more of their land. Dubai has also decided to use the
Ethereum architecture to manage its data and bring their country into the 21st
century.
Many other countries have taken notice. In Haiti, for
example, after the earthquake in 2010, the first building to fall into ruin was
the building that held all of their public records. In seconds, all the
paperwork that documented who owned what land was gone. My own town of Santa
Cruz, CA, is always under earthquake threat, could moving their local
government data to a blockchain system help them in the long run? Of course it
can.
Money will be saved by adopting these new technologies for
data management. According to an article in August 2017, the government of Dubai expects to, “Reduce the cost of document processing by
billions of dollars through eliminating manual processing of residencies,
passport documentation and visas through a partnership with ConsenSys.”
Billions of dollars, eh? And what to do with those savings?
Why not redistribute them back into the community as a universal basic income?
This can be done by tokenizing the endeavor, and backing the initial release of
the coins with the savings the governmental entity receives.
As governments begin to implement various blockchain schemes to manage
their data it is the ideal moment for them to tokenize the blockchain ledger
they’re creating and distribute those tokens to their citizens as a universal
basic income.
Consider Santa Cruz. Recently named the fourth most expensive
place to live in the nation, it is estimated that our cost of living is 81%
higher than the national average and our housing costs are 208% higher than the
national average. When I drive down the street near town, I see tents nestled
in along the highway, back near the fences and hidden in tall grasses. At
night, when you pass our city hall, the courtyard is filled with people in
sleeping bags, trying to find a place to sleep. Beggars line our downtown mall.
Truly if any town needed a universal basic income, it’s ours.
Perhaps UBI begins at home with our local city council
opting to invest in building a blockchain ledger using Ethereum to manage all
contracts regarding land in the county as well as all legal documentation and
contracts stored in the courthouse. The project includes tokens that are backed
by the city at first with the monies annually saved by efficiently managing and
securing their data. These tokens are distributed evenly to every citizen over
18 on a monthly basis.
As time goes on, more data can be added to the ledger and
with each savings by switching from the manual handling of the data to digital
networks doing the job, that money is used to issue new coins to citizens. The
basic income could start at one number, say $500/month with the intention of
growing to a final amount that can sustain a human being within the county.
In addition, more tokens are created as incentives to
encourage people to enter the system as miners to help maintain the ledger.
This is the decentralization aspect, the data is stored across hundreds of
servers rather than just one. Thus everyone gets a set amount, but those who
mine create more coins that they can use to purchase items in the community, or
trade on the exchange, thus increasing the value of the tokens. Tokens can also
be given to businesses as a means of encouraging them to accept LifeCoin as payment
for their goods and services. With time, the currency spreads throughout the city
and county, and as a result is accepted at more and more locations. None of
this is because we “took” money from somewhere else. Using blockchain
technologies, money was freed up to invest in a new currency, one that exists
for the sole purpose of providing a living to our citizens.
Now, this is a very basic sketch of the system, and one I’m not able to
complete. I’m merely putting it out there as something to debate and discuss,
with the hopes that minds much more crypto than mine can see that their work
has this potential. And perhaps to get the political dialogue rolling. This has
to start somewhere and we can’t wait for our federal government to help. I also realize that as with any monetary system, cryptocurrencies may not be able to address the potential inflation and deflation associated with a universal basic income.
My good friend and fellow Medium writer, John Eden, put it perfectly:
"My view is that the real worry about crypto-powered UBI has nothing to do with the power of the blockchain from a tech POV. The problem is that any economic system with a fixed or variable amount of tokens can and will experience inflation and deflation. To me, this basic economic fact can't in any way to neutralized by blockchain. The implication of this is that the token one designs for UBI must be created in partnership with some pretty thoughtful economists so that a method of adjusting the value of the token relative to the wider economy is built into the token infrastructure. After all, you don't want to create LifeCoin only to see inflation ruin it's core purpose - i.e., giving the most vulnerable members of society the ability to live a decent life."
My good friend and fellow Medium writer, John Eden, put it perfectly:
"My view is that the real worry about crypto-powered UBI has nothing to do with the power of the blockchain from a tech POV. The problem is that any economic system with a fixed or variable amount of tokens can and will experience inflation and deflation. To me, this basic economic fact can't in any way to neutralized by blockchain. The implication of this is that the token one designs for UBI must be created in partnership with some pretty thoughtful economists so that a method of adjusting the value of the token relative to the wider economy is built into the token infrastructure. After all, you don't want to create LifeCoin only to see inflation ruin it's core purpose - i.e., giving the most vulnerable members of society the ability to live a decent life."
I'm not sure where we'd find those thoughtful economists. Can our local governments implement a token system to help the poor while keeping in mind the long term economic monetary policy goals? The blockchain might not save us from this issue, but the currency created can be set up with a new set of rules than our regular fiat, especially since it would be it's own new market, individualized at the local level. We've been manipulating the markets forever, is it any different for a township to create it's own currency to establish a standard of living?
We could also leave the government out of this and instead take responsibility as private citizens, creating a universal reward token ourselves. Private citizens can create a coin that is then given to those who need it. This work has already begun. GrantCoin was established in 2015 with the intent of providing a UBI to those who meet their criteria. However, this feels more like charitable handouts than a true UBI, for it’s still based on need, which requires judgement by a group of people who get to determine whether or not you really need it. Universal Basic Income is not only about providing the basics to all in a world of plenty, it’s also about freeing us from the judgments of others. We all receive a universal basic income, that’s what makes it universal, and we’re trusted to do what we should with it. Still, GrantCoin is a good start.
We could also leave the government out of this and instead take responsibility as private citizens, creating a universal reward token ourselves. Private citizens can create a coin that is then given to those who need it. This work has already begun. GrantCoin was established in 2015 with the intent of providing a UBI to those who meet their criteria. However, this feels more like charitable handouts than a true UBI, for it’s still based on need, which requires judgement by a group of people who get to determine whether or not you really need it. Universal Basic Income is not only about providing the basics to all in a world of plenty, it’s also about freeing us from the judgments of others. We all receive a universal basic income, that’s what makes it universal, and we’re trusted to do what we should with it. Still, GrantCoin is a good start.
Another idea that caught my eye was the concept of gamifying
cryptocurrencies as a means of deploying them. In an incredibly passionate plea
to save cryptocurrencies from big business, author Daniel Jeffries writes,
“By gamifying money distribution, we spread it far and wide across the
playing field, as fast as possible, and guarantee that the system becomes
viable. We bootstrap the system from banana republic to global powerhouse. That
will bring powerful economic players into the system, who will then be
incentivized to protect it and expand it.
If we move swiftly, we
can unleash the true power of the blockchain to unlock the frozen reserves of
human potential, rise from the ashes of our crumbling political systems and
rocket into a whole new level of economic potential and development.”
He goes on to explain how by using a killer gaming app along
with a universal reward token, one could possibly build a cryptocurrency that
is completely decentralized with the possibility to not only fund life, but
allow the movement to build into smart contracts and other aspects of civilization.
Instead of the government initiating the move to the blockchain, private
citizens do it for each other, via games so fun to play, we play them for a
living. His article on Medium is a
worthy read if this sort of idea floats your boat.
This may seem a bit pie in the sky, and on some level it is,
but when thinking about the future of money we have the ability to write a
whole new story, so why not base it upon joy and games?
Regardless, as financial firms explore the possibilities
that platforms like Ethereum bring, it may benefit us to begin to probe our
local governments into doing the same. However, instead of keeping the profits
for themselves, they could the adventure to create new systems of money that
promote life and health for all citizens.
