Building a New Economic System Based on UBI and Blockchain

Building a New Economic System Based on UBI and Blockchain

The idea of Universal Basic Income (UBI) has been surrounding us for a few years now, reaching over time as a strong possible answer to the uncertainty presented by the actual economic system. Whether it is the right solution for tomorrow’s problems is still a big question mark. The technology that could eventually implement UBI is now becoming a fact: blockchain.

There are many things that have been proven wrong within the current capitalist system. The never ending economic growth, the “needed” inequality as an important part of the growth equation, the massive use of non-returnable natural resources that are damaging the planet tremendously … If we take a closer look at these issues, we can see that these are cause by the system itself, and the way money is created.

In fact, money creation results from the creation of debt,  for every penny that is printed. That inherently implies a wider inequality breach and ultimately heads countries towards inevitable debt crisis. After the crisis has been resolved, the wheel starts running again as if nothing has ever happened.

With that basic problem pictured, there is another one on its way resulting from technological evolution. Automation and highly evolved AI has been used to increase production while lowering costs…  This counterpart of automation though, is that millions of jobs may be destroyed along in the process, and with it whole families can be sent out to unemployment sacks looking for jobs on other oversaturated areas.

Recent efforts made by governments and industry gurus have pointed out the Universal Basic Income as a real alternative to prevent loss of income in the lower classes of society. Along the trials in Finland and Hawaii, Scotland is now to introduce a new test in local areas. The results were better than expected and experts all around the globe have agreed on its good outcome.

Whether if UBI is the right solution or not it actually doesn’t matter if the current traditional capitalist system keeps going as it goes now. The main issue will still be there, fiat money and how it is created. How could one avoid the growing debt logic ? Fast Company experts Marting Kirk and Andy Milenus have come up with an outstanding idea which involves the most trending techs of all: blockchain.

Building a new system based on UBI -and blockchain-

And with such a negative system seemingly locked into place  there has never been a better opportunity to create a new system of money based on universal basic income. And since these currencies can be designed with today’s existential challenges in mind, we can do things like strongly incentivize local trading and disincentives exploitation of distant workers and ecosystems. This in turn has the potential to undercut the logic of cheap, mass-production techniques currently at the heart of our throwaway culture.

“We’re designing and building one example of a “positive currency” in the world of cryptocurrency, called Circles. In the Circles system, money gets created at the individual level and without corresponding debt. In other words, money starts with the person ‘creating’ it (i.e. it appears for the first time directly in their account). It does not come to us from a central authority like a bank or a government or even an employer. This means that it is evenly distributed before it enters the marketplace,” they recently said in an article.

Instead, money takes on grassroots characteristics. A smart contract creates new currency units at the same fixed rate for each user, and these users create relationships of trust between each other to exchange their newly minted money. This means that the system doesn’t need to be controlled by any one party, as the value of the currency automatically emerges from the trust relationships that users create. As with any cryptocurrency, bootstrapping an ecosystem that uses this new money system, and grows in ways that keep the specter of inflation in check, will not be easy. But it is entirely possible. And an important distinction is that Circles is meant to work just fine at local scales, where networks of trust already exist and can easily be transcribed onto the blockchain. From the user’s point of view, joining the new UBI economy may soon be as easy as downloading an app, connecting with their friends and loved ones, and heading to the nearest shop for lunch.

The idea transcend beyond the current schemes towards another decentralized and, at the same time, localized. And they stated that “this -new economic system- will require embracing an idea that some may find counter-intuitive: localization. We will not retreat back to the pre-globalization days, but we have to bring economics back to a more human and local level. We have to reinvigorate local communities. We have to stimulate and grow the informal economy upon which most of us rely in our daily lives: the caring and sharing that we automatically do with each other but which has no recognized value in the current economic paradigm because it doesn’t register as profit or loss.”