As crypto-enabled technologies continue to gain an increasing amount of mainstream traction, it stands to reason that their use will continue to expand into realms previously thought to be unimaginable (such as various basic income schemes).
From the outside looking in, universal basic income (UBI) can be viewed as a socio-political fiscal transfer policy that seeks to provide individuals – living in a certain region – with seamless access to a legally stipulated stipend without any caveats involved. Such a scheme is applicable on multiple levels, i.e. nationally, regionally, or locally with the idea having garnered a lot of interest from governments across the globe.
However, despite this growing interest there have been no countries that have actually been successful in implementing a UBI model for a considerable length of time, even though some governments have launched similar-themed programs in order to provide for the neediest sections of their respective societies.
For example, back in 2011, the middle-east nation of Iran rolled out an unconditional cash transfer scheme – worth approximately $45 – for its population in an effort to phase-out subsidies on bread, water, electricity, heating, and fuel. The amount was about 29% percent of the nation’s median household income on average. However, the program had to be dialed back as some Iranians came to believe that it was disincentivizing people to work.
The largest and longest-lasting UBI experiment in the world is currently taking place in Kenya, where a charitable organization called GiveDirectly has been doling out monetary handouts to a little over 20,000 people, spread out across 245 rural villages, since 2016.
That said, one of the key criticisms of UBI has been that it often gives too much money to families that don’t really need the assistance while providing little help to those people who really do.
Crypto, DeFi and UBI – The Larger Picture
There’s no denying the fact that the cryptocurrency industry – the decentralized finance (DeFi) market, in particular – has been able to accrue a lot of wealth for its early adopters, with many of these individuals now looking to give back to the underprivileged. Infact, just recently many seasoned industry personnel such as Ryan Selkis, Dan Matuszewski, Haseeb Quresh, amongst others promised to donate 1% of their wealth to charities through a project called The Giving Block.
In this regard, the idea underlying a crypto-generated UBI scheme too has garnered a lot of attention recently. For example, GoodDollar is an initiative that uses yield farming to dole out digital asset-hinged stablecoins for free so as to promote financial inclusion on a global scale. To elaborate, the project creates and issues a stablecoin ($G) which can then be distributed daily to its users in the form of a universal basic income (UBI). To date, the GoodDollar has helped distribute a total of $223,673.27 as free income to its backers.
The model is propagated by network participants who continue to deposit assets onto the platform and subsequently yield farm them using decentralized finance (DeFi) protocols including Compound or Aave. A majority of the accrued interest is returned to its supporters while the rest is used as collateral for new $G tokens which are then distributed on a daily basis.
It is worth mentioning that late last year popular digital asset investment platform eToro announced that it was going to be committing $1 million to the protocol, thereby supporting the nonprofit’s effort to help close the wealth parity that exists across the globe using DeFi and smart contract technology.
Other similar initiatives include Global Income Coin, a crypto non-profit that delivers a universal basic income of $1 a day to any person in need situated in any part of the planet. The initiative was recently able to raise $2M worth of funding from Sid Sijbrandij, the co-founder and CEO of GitLab Inc. Lastly, since the start of the year, ex-Twitter CEO Jack Dorsey has been talking about the possibility of a Bitcoin powered UBI platform that can help combat global poverty.
UBI on the Horizon Thanks to Crypto Tech?
As crypto-enabled technologies continue to gain an increasing amount of mainstream traction, it stands to reason that their use will continue to expand into realms previously thought to be unimaginable (such as various basic income schemes).
In this regard, as more and more corporations from the realm of traditional finance start to become more conscious, they can donate small sums of money to protocols such as GoodDollar and Global Income Coin to help those in need using blockchain technology. Thus, it will be interesting to see how the future of this financial niche plays out from here on end.
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