In the wake of COVID-19, many have been left destitute, relying on a government that isn’t poised to help quickly.
Few day traders of bitcoin rarely think about the power of the tokens they’re dealing in. Instead, loading up their Bitvavo dashboards and focusing on the money to be made that day. But underneath every cryptocurrency currently being traded, lies the power of blockchain technology. A technology that could easily solve many of the world’s biggest problems.
What Is UBI?
UBI, or Universal Basic Income, is a system in which a government, whether local or national, gives its citizens a monthly stipend. The money comes with no strings attached and no caveats-providing you’re a citizen of that area. The thing that sets UBI apart from sporadic stimulus checks is that it is enduring, once a month, every month, for a lifetime.
While no country in the world currently holds a long-term UBI plan, many pilot programs have taken place and been suggested. In places like Spain and South Korea are heavily considering these programs in the wake of COVID-19, and the former Democratic Presidential nominee, Andrew Yang championed the idea for the United States- before the coronavirus tore through its borders.
Arguments Against It
What stops many people from wanting to adopt UBI is generally due to misconception. A large number of Americans believe that the implementation of the system would encourage people not to work. Putting a further damper on the economy. However, most pilot programs have shown that this isn’t actually the case. One county in California produced a UBI scheme for a number of years, with favorable results. Stating “Poverty results from lack of cash, not character.” Researchers who introduced a similar system in Namibia in order to study the effects noted that recipients began to eat better, attend better schools, and crime rates decreased. While a pilot program in Finland had recipients reporting a higher standard of living and more overall satisfaction in their lives.
The other common issues with UBI have to do with the sheer scale of implementation. As the money may not be difficult to find (Andrew Yang suggested consolidating welfare programs and implementing a VAT of 10%), getting it to where it needs to go in a manner that is difficult to exploit and doesn’t put citizens at risk is another story.
What Does It Have to Do With Bitcoin?
This distribution idea is where cryptocurrency and blockchain technology comes into play. Bitcoin, perhaps the most recognizable form of cryptocurrency, is a decentralized, pseudo-anonymous currency system which exists entirely in the digital world. Cryptocurrencies could reasonably address many of the problems that go hand in hand with the distribution of large-scale UBI programs. Particularly if a government was keen to set up centralized crypto dedicated to the program.
Monitoring inflation, cost of living, and prices of goods is a bit of a nightmare. Oftentimes, the way these fluctuations in value are tracked is through Secret Shopper programs that are expensive and a data collection headache. By implementing a centralized cryptocurrency UBI token, the information on the costs of goods and even consumption patterns could be calculated near instantaneously. Creating a system in which fair distribution is built-in.
Because blockchain represents Distributed Ledger Technology, corruption, or scamming practices that could rise from UBI would be eliminated. The public ledger allows monitoring by any invested party, and once a transaction is put into the ledger, it’s time-stamped and immutable. Making it impossible to duplicate transactions or get them to go anywhere besides where they are directed. It allows for complete transparency of payments as the currency can be tracked from payment to deposit.
Another big concern of UBI detractors is that of immigration. Should a citizen of one country with UBI move to another with UBI, then they will enjoy double payments. Alternatively, if someone legally immigrates to a country with a UBI system in place, but is not paid that country’s UBI, the welfare gap will only widen. Creating unnecessary social tension. Where cryptocurrencies step in is they are capable of supplying selective UBI payments, using geolocation and VAT revenue. So only people paying directly into anyone UBI scheme would be capable of accessing it.
Traditional banking structures come with a near cost-prohibitive amount of fees. Just ask anyone who has a mortgage. Cryptocurrency can drastically reduce this intermediary leakage through an automated process, requiring far less in administrative cost consumption. Making the total transactional cost a fraction of what it would be with traditional methods.