Blockchains Instead of Beggars: Could Cryptocurrencies Unleash Universal Basic Income?

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. 

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 21^st 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."

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.

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.

Modern Money: Much Ado About Nothing

Money is actually nothing. Did you know this?

In general, when people think of money, they either feel they don’t have enough, or fear that someone might take their wealth. One of the wisest things I've ever heard was that both the rich man and the poor man have nothing but a $1 at the end of the week. The poor man might have used his money to buy bread, while the rich man bought a third yacht, but still, they each only have $1 until the next payday. 

No matter how much money we have, we never feel we have enough. Thus, humans spend most of their lives fretting about money and most of the crimes against humanity and the planet are done in the name of money.

And yet, what exactly is money? In our imaginations, we often think it looks like this:

But the US dollar hasn’t been backed by gold since 1971, when the United States stopped selling gold to foreign official holders of dollars at the rate of $35 an ounce. As of now, there aren’t any currencies in the modern world completely backed by gold, or anything else, other than promises and goodwill.

In reality, modern money looks like this:

It's kinda cool, all those 1's and 0's floating around in cyberspace. But it's certainly not shiny and you can't touch, taste, feel, or smell it. Money is now an extra-sensory experience.

This means that when we fret about the size of our bank account, we are fretting about a fictional number, one that has meaning only within the context of the story of the culture of which it exists. The cultural story of money depends on how various types of work and resources are valued. In America, if you write software, a big number gets sent to your bank account. If you teach children how to read, a MUCH smaller number is written into the bank account. And if you care for the elderly or the sick, well, your number is so small, it’s almost laughable.

It’s the same with expenses. If you live in California, a HUGE number is taken out of your bank account for your mortgage or rent. If you live in Alabama, a much smaller number is equated with the four walls and the roof over your head. In the end, the value of work and goods is completely irrelevant and totally out of any one person’s hands. Economists like to think that it's all about supply and demand, and at it's most basic, most monetary value is based on this. But demand is a fickle thing and supply can easily be manipulated. In spite of our desire for a simple equation to govern the economics of our society, the fiction of money is based on the group mind, the social order, and the will of those “in charge.”

What a strange thing to fight wars over. Numbers, written into an account by a computer. What a strange thing to covet. Numbers, arbitrarily assigned based on profit. Yet what is profit if money is merely a story? Money is a messenger, the great storyteller of our times. For the way labor and resources are monetized within a society will tell you the moral values of the culture in question.

If you look at the American story of money, it’s fairly horrific. Even though money is a complete fiction, 43.1 million Americans live in poverty according to the latest measure. According to a supplemental poverty measure, the poverty rate in 2015 was 14.3 percent. It appears that Americans have decided that a decent number of us aren’t allowed to have a number written into their bank account big enough to provide shelter, food and clothing. That’s our story, and we’re sticking to it. No food? Too bad. Even if you work, your work is devalued. No big number for you.

Yet there are some that we do value in our society. It was reported this week that Microsoft co-founder Bill Gates, Amazon founder Jeff Bezos and Berkshire Hathaway CEO Warren Buffett have collectively more wealth than the 160 million poorest Americans, or half the population of the United States. It appears that the American story of money definitely likes these three guys. They’re special. So special they get a number so big that it is equal to half the “money” number in the whole United States. Hungry? Go ask them for a hand-out. All three have foundations that will write a few numbers into your bank account. But not too many, because, well, that's our story and we don't want to disrupt it with too much generosity. That would make the numbers less valuable, you see.

There is a saying that you can’t worship both God and Mammon. I’d agree, yet God for me isn’t some old guy sitting up in heaven watching us fight, kill, maim and destroy in the name of numbers loaded onto a computer. To me, God is the Life around us: Workers who labor, animals who graze and provide us food, water that flows from lakes and rivers into the oceans, and land that provides food, minerals, and precious, oh so precious, metals. Life is people and planet. If we worship life, then profit is merely a tool to help us exchange our work for goods and vice-a-versa. If we worship profit, or Mammon, then we will kill Life. It’s really that simple.  

Take the polluting of the Earth. There is no solution until profit is no longer worshipped.  No accords, agreements or promises stand a chance against the worship of Mammon. Think about it and you’ll see that keeping the Earth alive requires some number in some bank account somewhere to go down, and damn if that’s going to happen. Thus, the Earth will be depleted, mined, and polluted no matter what an individual has to say. 

The irony of it all is that story of money is ours, albeit we have created it with a group mind that borders on the psychotic. I imagine this is the result when we worship Mammon over Life--our minds go to rot. But here’s the kicker—this just might be the only way to stop our own self-destruction. Choosing Life over Mammon and having the courage as a group to create an entirely new story that honors all three things: profit, planet and people. When we decide to worship Life, we free money to flow into the world and do its job, which is simply to allow the exchange of labor, ideas, goods and services. Money should drive innovation as an exchange, not as a weapon.

Money doesn’t want to be worshipped. Hell, it doesn’t even actually exist. All this pain is over nothing.

Nothing at all. How crazy is that?

American Society is Too Immature for Capitalism

While I drank my coffee this morning, I stumbled upon the above post in my Facebook feed. As the various commentators, myself included, argued the benefits of sharing verse stealing from one another, of which evidently socialism and taxation are forms, it became very clear to me that the issue at hand isn’t socialism vs. capitalism, but the very fact that Americans are children wanting to play with a very grown up idea, and failing miserably.

I love money. I’ve always loved money. I studied economics as my undergraduate electives and fell in love with money even more while pursuing my MBA in International Business. While I stuck with technology as a career, and then eventually homemaking, I continued my love of money, or more importantly, the story of money. I regularly read books written by economists just for fun. To me, money is beautiful, not because supply-side economics looks nice as an equation, but because money is the truest historian of humanity. Money is our scribe.

            If you want to know who you really are as a person, then study your bank statements. Where do you spend your money? Whom do you spend it on? Why? How do you feel about your purchases? How did you earn your money? How do you feel about that?  Do you ever take the time to think about this? If you do, you will know more about yourself than any shrink will ever tell you. Money never lies. Money is pure. Money will tell you the story of your heart.

            Go deeper, look at each purchase and ask, what’s behind it. What did it take for that car to be in your garage? What resources were needed? What amount of labor? Where was it built? Why do you need it? What does it say about you? The story of money is rich, and deep, and never, ever false. What you see might make you uncomfortable, but it’s still the truth of who you are as person, both emotionally and intellectually, at the time the money is spent.

            Follow the money and you shall know the truth.

            Money tells the story of our society. A peek at the government budget for the United States of America tells us who we are as Americans—fearful, warmongering, self-interested juveniles set on the acquisition and hording of money and profits at the expense of human lives. Why would I say that? Because any country that spends more than half of its resources on war is afraid. And people who are afraid don’t make very good capitalists.

            Capitalism is the golden jewel when it comes to money. Free trade allows humans to invest, invent and imagine. A strong merchant class allows the flow of information in and out of a society. A strong labor class allows for the creation of high quality products to improve the lives of the community. This ideally happens within the structure of freedom. The freedom to choose your craft or trade, the freedom to acquire capital and investments and the freedom to spend your money according to your values. When viewed this way, what could go wrong?

            There are three components to the creation of goods—raw materials, labor and capital. Where do we get our raw materials? From the earth. Where do we get our labor? From humanity and technology, which has been invented by humanity. And where do we get our capital? From banks, family members, profits, venture capitalists, Kickstarter campaigns, crowdfunding, rich guys with nothing better to do and the sale of stocks. When a human is empowered and living from a place of ingenuity, these three things are in balance. The higher the person or society moves up Maslow’s hierarchy, the clearer their thinking and the ability to plan long term kicks in. This is what capitalism requires—healthy adults who are secure enough to see the bigger picture and operate from a place where the relationships between raw materials (nature), labor (humanity) and capital (money) are in harmony. One is not focused upon to the detriment of the other.

            A person who lives in fear, who’s afraid of losing something, whether it’s their yacht, their stock options, their job, their house, their hot girlfriend, or even their national identity or status among peers, will not be able to keep the three in balance. And since capital eventually produces profits, which is what remedies the person’s fear and insecurities, then that is where the short term, fearful human will focus. How do I get more capital? How do I pay my investors and still make a buck? How can I implement a system of trade laws that maximizes capital so I can have never ending growth? This person will not consider what happens to nature when its resources are over-mined for production, nor what happens to their workers when benefits are reduced in order to increase the bottom line. Capitalism becomes CAPITALism.

            Many Americans claim the government should stay out of the economy. But yet when business leaders pay the government to create labor and environmental laws that enable them to make more money, that’s progress. Why? Why is it progress to operate from the mindset of a child? A toddler can’t understand why he needs to share. His parents show him that. Sharing isn’t about taking from the 1% and giving back to the 99%. It’s about implementing capitalism in a way that keeps all three things, nature, labor and capital in balance.

            And it takes an adult mentality to do that. America, unfortunately, doesn’t have what it takes. We’re the selfie-stick culture. The mine, mine, mine culture. The individual reigns supreme culture. America has become the place where adults think its fine to throw a tantrum in public because they’re tired of being politically correct. America is a place where on one hand, Donald Trump is a contender, and on the other Hillary Clinton deserves to be the president because she’d be the first female president, and she's wanted it all her life. Seriously? Donald Trump is the trope of our time and who cares if Hillary is female and has wanted to be president all her life? Both of these candidates soothe the American insecurity and fear of not being good enough.

             Which is a problem, because unruly children often require authority to behave, and historically authoritarianism is the opposite of freedom. So we're at an impasse--on the one hand we're a democracy that requires a capitalistic economy and on the other hand we still can't manage to stop bullying one another on the playground, which requires someone of a higher authority to step in and tell us how to behave.

            Capitalism requires a certain emotional and intellectual advancement from its people. Money itself has always required this from us. To me, money isn’t the root of all evil, it’s the refusal to grow up and see the connections between all of us that causes all the evil in the world. Money is just the messenger.

            And everyone knows you shouldn’t kill the messenger.