Will UBI be the next big thing in crypto?
Updated: Jul 9
Thomas More wrote a socio-political Latin satire called Utopia in the early 16th century. The book primarily depicts a story about a fictional island society and its religious, social and political customs. Every person used to receive a guaranteed income in that society. Yes, truly utopian that time! But that was the basis of Universal Basic Income or UBI thought. Universal Basic Income existed as an elitist drawing-room discussion topic for a long time but nowadays it is a serious socio-economic topic of discussion. Many countries have already implemented large scale economic reforms which have traits of Universal Basic Income and the concept is not utopian mentation now.
The paradigm shift of employment structure
The pandemic has really brought the perfect storm. All asset classes are heavily hit. The economic downturn is clearly visible. All corporates and governments are focusing on cost-cutting measures. Software-driven innovations are taking away jobs. People are staying at home. AI chatbots are sweeping the call centres. COVID-19 has accelerated automation in the job while accelerating joblessness. We’ll be forced to see a long-term unemployment phase due to the emergence of the machine-dependent economy. Recession may not be permanent. The pandemic may not exist eternally. But the net lay-offs can be a permanent structural change in the economy. American economist Jeremy Rifkin predicted a devastating impact of automation on blue-collar, retail and wholesale employees in his much critical 1995 book “The End of Work: The Decline of the Global Labor Force and the Dawn of the Post-Market Era”. It is really possible that a small elite class of knowledge workers would reap the benefits of the high-tech world economy in the future. Where are we heading towards? As the machines are acquiring cognitive abilities, the human being must reinvent employment opportunities. The paradigm shift of employment structure is forcing us to discuss Universal Basic Income again and again.
UBI is already happening
“The Federal Reserve’s 2018 Survey of Household Economics and Decision Making, which took the lived experiences of 12,000 U.S. households into account, found that 40% of the respondents would struggle to come up with $400 during an emergency. Rent and mortgages payments, debt and the basic cost of weekly staples like groceries and medicine add up very quickly in America.” – Source
The above-cited survey took place in 2018. The pandemic was unimagined that time. For an underdeveloped nation or developing nation, the situation is even worse. We are taking the financial beating while the unemployment websites are crashing due to web traffic overload. The USA government has given some cash to the household. You can call it stimulus or emergency Universal Basic Fund to cope up with the situation. Many countries are paying workers who lost their daily wages. Some are offering preloaded debit cards and cancelling mortgage payments or providing loan moratoriums. Universal Basic Income kind of reforms are already initiated in different forms. But is it sufficient? Who will ensure a guaranteed income flow in your dire need?
Yes, people want UBI
As per a ground-breaking survey published recently by a team led by leading Oxford academic, Professor Timothy Garton Ash, 71% of Europeans support Universal Basic Income. 84% are in favour of a mandatory minimum wage structure. In the UK, 68% of the surveyed people support the idea of Universal Basic Income. Universal Basic Income is no more a radical idea or we can say that a majoritarian idea is the new normal. The economic climate change has also caused a change in perception.
UBI with designer money
Blockchain can be a transparent tool for the state to distribute Universal Basic Income. Except for anonymity of the asset owners, there are not any technical issues. But depending on the state for Universal Basic Income may not be a great idea. The authoritarian governments are not predictable. While fiat money controlled by the state has remained the most manipulated financial instrument, it is very unlikely that the state machinery will like to lose their control over money. The recent experiment of decentralised finance or DeFi is a great blockchain success. People really liked the idea of lending, borrowing avoiding any third party or middlemen. DeFi is growing with an astounding growth rate. Some days back, DeFi was a radical idea. Only the change is constant in this world. Are we ready for Universal Basic Income experiments using blockchain technology and cryptocurrency?
There has been a recent surge in such experiments already. Multi-asset brokerage platform eToro has begun a new experiment called GoodDollar. The project issues a stablecoin ($G) which is distributed daily to all registered users as Universal Basic Income. As per the team, $G is backed by $DAI. GoodDollar is a non-profit venture funded by donations from eToro. GoodDollar has found astonishing support in countries like South Africa, Nigeria and Venezuela. Everyone likes free money. A project called Circles made crypto twitter very excited recently. The project was launched on 16th October 2020 on Ethereum’s xDai sidechain. Founded by Martin Köppelmann of Gnosis, Circles promises to give users a certain amount of CRC token each month. But here every user needs to be trusted by three existing members of Circles through a trust line made from the wallets. What exactly drives the popularity of such schemes? FOMO factor works well. Circles website is blinking already due to abnormal traffic load from all over the world. Blockchain can provide a wonderful wide-spread and robust infrastructure for Universal Basic Income. But we don’t want a Ponzi! With the success of the recently launched Universal Basic Income cryptocurrencies, many more will be launched. Numerous Ponzi like schemes are inevitable. Yes, there is a dark side to everything. When we enter into the dark side, sometimes we emerge victorious and vivacious.
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