Cryptocurrencies as a Piece in the Universal Basic Income PuzzleMay 26, 2020
However one chooses to look at it, there are many elements of COVID-19 coronavirus pandemic that make it a perfect global storm. It comes with a serious health crisis in all corners of the world, followed by an economic meltdown and a huge uplift in all manner of online activity and connectivity.
For many, this is more and more akin to the first major steps – no matter if they are made willingly or by necessity – into the fourth industrial revolution. This is in turn pushing the need for software-based innovation and cost-cutting that is only gaining pace with each passing month. Now, the same friction of the economy and the IT sector is taking the world seemingly closer to a future where the dominant force is an integrated network of connected devices.
Of course, a change like this is monumental and not just in the technological sense. It is also gearing other elements of the world-wide basic governmental systems to further change. One of them is related to money and a simple, but so profound question – what kind of new form of money would a massively interconnected global society need to function?
Loss of Jobs
The biggest economic change that is rolling towards the present is the loss of jobs – however, this will not be a cyclical process that has been a sideshow for any recession in history. This will be a permanent whipping of jobs from the employment map thanks to the new structures rising up which are must more self-sustainable employment-wise. In fact, some analysts and futurists see this as something that falls into the so-called theory of end of work.
According to this thesis, new technologies will be leaving employers with a constantly dropping need for actual human labor. The thesis is old and goes back many decades, which is why it has its strong detractors. The history of the 20th century, which also brought about massive technological changes faster than ever before, simply saw one set of jobs being whipped out, but then replaced with a new set of emerging work placement and professions.
Today, however, IT and general robotization and computer-based technologies provide a different and practically self-advancing phase of the end of work thesis. The same phase has a big role reserved for cryptocurrencies, being that these were designed, including the bitcoin BTC token, to work in unison with automated systems of all shapes and sizes, while also being accessible to regular human use. This notion becomes especially important when the case for the universal basic income is taken into consideration.
Moment for UBI
The discussion about universal basic income is a topic that has been in the public forum, like end of work thesis, for a long time. Yet, it kicked into a new gear with the pandemic outbreak of 2020 and the clear realization that things are not going back to the way they were only six months ago. With millions of jobs lost, many of which will not be returning before a medical breakthrough in either COVID-19 treatment or vaccination, the problem arises when any of these people want to find a different line of work.
Sadly, things like esports players or computer programmers – even if someone has the skills they require – are not booming in the job market. Even after the lockdown is lifted, there will be very few massive domains where job growth will appear. Things that are expanding, like for example online commerce, are already deep in the end of work domain and require very few additional workers, which are mainly niche professionals or veteran IT employees. So, the notion of basic universal income appears. Presently, some experiments with UBI are already ongoing and these include Humanity Forward nonprofit that is run by Andrew Yang, a former Presidential candidate.
It was recently supported by Twitter founder Jack Dorsey, who gave it a 5 million donation. Across the world, in places like Spain and Scandinavian nations, similar projects are now hitting the back burner. Yet, all of them face the problem of actually distributing funds. For example, the 5 million USD would mean that almost 1700 individuals could get a 250 USD basic income for 12 months. But, if the process of paying in fiat is taken into consideration, including its numerous elements like setting a UBI workforce, paying transaction fees and so much more, then that 5 million USD quickly becomes substantially less. However, crypto allows for frog leaping over all of that.
Cryptocurrencies are definitely changing the landscape of the financial world. From the hotspots of conflict like Yemen to other places in the Middle East, bitcoin and other cryptocurrencies are demonstrating just how flexible these can be. In the case of UBI, the same benefits apply. Here as well, even though these transactions are taking place (or could be taking place) in the US and other developed nations, they would still be a clear winner over fiat.
They would come with practically no fee for any of those transactions and the digital wallet system means that they could be transferred instantaneously to anyone without any high demand for a dedicated payroll (or its UBI equivalent) workforce. Using anything else than crypto makes little sense for anyone besides the central government for such a project.
Fear of Inflation
As Martin Wolf, one of the most respected financial journalists and a head figure at the Financial Times said recently, there is a chance that inflation is riding the tails of the pandemic. However, he also underlined that this is by no means a certainty. That is the main catch of a UBI in crypto – the users of basic income need to ask for it before anyone will consider paying it out.
Even with higher costs of fiat, the crypto option has too many unknowns. However, with the pressure of inflation, the number of those who would like to get their income in BTC or ETH would skyrocket. So, until that kind of pressure is in this financial melting pot, the chances of any UBI going the cryptocurrency route, even with all of its unmistakable benefits, remains drastically small.