Why Universal Basic Income Should be Paid in Bitcoin
Modern technologies are capable of making Utopian ideas less Utopian. How can we tune social security systems with Blockchain?
In the last few years, we have seen a boost in interest in universal basic income schemes. The idea for it is not a new nor a radical concept. It first appeared at the beginning of the 16th century in the work of Thomas More, Utopia.
For centuries governments around the world have been exploring the potential of universal basic income in easing the vulnerabilities of working people exposed to threats of transforming the labor market. The recent growing experimentation clearly shows that there is a need to find effective solutions to alleviate the perils of globalization.
Opinions are divided
Supporters of the idea strongly believe that provisions of universal basic income would be a more efficient and fair way to protect people in changing social and economic circumstances. Besides, it is seen as allowing much greater financial independence and flexibility for people allowing to balance work and education, leisure and care responsibilities, while recognizing a huge value of unpaid and voluntary work activities.
Critics, however, claim that the idea is too expensive and impossible to implement, fearing that it could actually worsen the situation by increasing inequality as it does not take into account individual needs properly.
Several cities in the Netherlands are providing basic monthly income for testing groups participants under varying conditions. The Italian city of Livorno started providing a guaranteed basic income of 500 euros each month to the city´s 100 poorest families. Ontario in Canada, as well as Fife and Glasgow in Scotland, are looking into trial universal basic income schemes that are planned to launch this year.
Finland has just embarked on a historic journey with Finnish Parliament passing the act authorizing a basic income trial. For a two-year period, a random sample of 2,000 individuals drawn from current working-age beneficiaries of unemployment benefits will be receiving an unconditional payment of 560 euros.
While the main objective of the experiment is to find ways to reshape the existing social security system, it also offers a great chance to explore ways for reducing of bureaucracy and streamline the complicated systems and processes. Modern technologies are showing huge potential in this process.
Tim Draper, an American venture capitalist investor, once suggested paying the basic income in Bitcoin:
“Some governments are starting to talk about basic income for everyone. And they can easily do it by giving everyone a Bitcoin wallet. Every week or every two weeks you could give them their basic income.”
According to Draper, Blockchain technology could help make this plan a reality. He sees Blockchain as the perfect bureaucrat, the perfect government official, as it’s incorruptible, fair, and honest. It just gets the job done. It’s the most efficient thing ever.
Paying universal basic income in Bitcoin
Why not? In theory, cryptocurrencies can be programmed to carry out certain tasks. Program them to pay dividends to a group of recipients on a regular basis and you will make a system of welfare payments much cheaper.
Greg Slepak says:
“Basic income, especially universal basic income, requires a secure, tamper-proof ledger that can be audited by anyone to ensure the safe delivery of funds. And that's one thing cryptocurrencies provide.”
However, paying universal basic income in Bitcoin still might sound Utopian, and here’s why. As Finlow-Bates, CEO at Chainfrog, explains Bitcoin is not really a good option for issuing universal basic income mostly due to its high volatility. It does have a real value, which would require an entity. For instance, the government should purchase Bitcoins in volume with fiat currency. This, however, would result in significant changes of its price.
Speaking of the key rules for cryptocurrency-based universal basic income systems Finlow-Bates emphasizes the need for a means to correctly identify every eligible citizen and issue them with a cryptocurrency account.
“Even in well-regulated information-gathering countries such as Finland, where almost every citizen has a unique identification number, this seems a tall order. In countries such as the United Kingdom where identity cards are eschewed it would be almost impossible. Possibly some biometric systems used in the generation of the private keys could eventually provide a solution.”
In addition to the identity issue, a significant problem in his opinion would be to provide cryptographic key security for every participant, in particular finding a way to handle the revocation of compromised keys and reissuing of new keys to citizens that have their keys compromised or have simply forgotten or lost their private keys.
Finally, there is one more aspect that should be taken into account. Even seeing its rapid development one cannot say that this is a real alternative for fiat money mostly due to the limited amount of service providers accepting cryptocurrency.
Ukko Kumpulainen from UKKO.fi explains:
“Implementing any currency transfer between two parties requires some kind of software to enable this transaction while at the same time applications record this transaction for legal and accounting purposes.”
Kumpulainen believes that the potential of Bitcoin or any other cryptocurrency in revolutionizing systems of social security benefits is significantly limited. The money should be easily converted preferably in real time from cryptocurrency to traditional currency. In this way, people could use fiat money simultaneously via one credit card or mobile application.
The idea of designing a cryptocurrency-based universal basic income scheme might seem far-fetched, nevertheless, we can’t help but wonder what if.