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 the potential for using blockchain technologies to manage data storage and security at a local level, while also solving the plague of poverty.
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 on the rise 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. It can’t be a HODL asset aimed at making techno-millionaires. Money is like blood, it’s best pumped into the body politic, rather than gathering and stagnating in any one group’s investment account.
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.
As part of their natural disaster plans, many other countries have taken an interest in digitizing their data in the most secure way possible. 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 streets 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 alone 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. Lifecoin is about supporting the life of the community, not an asset or financial investment tool. 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.
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 use the venture to create new systems of money that promote life and health for all citizens.