Universal Basic Income (UBI) doesn’t suck as an idea, but the way we tend to think about it does. Instead of thinking about it in terms of gaming the tax system or engaging in some other form of wealth redistribution, we need to start considering how digitally-stored forms of value can incorporate protocols that reflect the values of society into the mechanisms governing the distribution of those virtual assets. Accounting for the creation of value in a fair way has been the goal of money since its inception, by allowing humans to “prove their value,” but the idea that people have intrinsic value that deserves to be reflected monetarily can be traced to Sir Thomas More’s Utopia, published in 1516.

Let me be clear: redistributing wealth from the rich to the poor is a stupid idea and it isn’t going to happen. The “hate the rich” mentality among millennials due to the collapse of economic opportunity in front of our faces holds us back from the work required to understand and improve the system. Losing wealth can be just as easy as gaining it (if you don’t believe me, look at Johnny Depp), and generating wealth will always be better for everyone than destroying it. Redistributing wealth will always require an expenditure of energy that takes us two steps back and one forward instead of the other way around.

The immutable nature of distributed ledger and smart contract technologies enables the development of self-sovereign identity and digital reputation along with decentralized access to financial services including the storage and transfer of innumerable forms of value. With all of these technologies available, the inevitable outcome will be a closer relationship between individuals and value. Inequity in the current economy may make this a scary proposition, but if we implement this technology properly it will not simply mean recording everyone as poor on the blockchain: the dream of decentralization is to enable individuals to realize the value in things like their data, art and/or content, attention, and personal relationships that currently generate value for centralized corporations.

Current Projects

Several projects have issued virtual currencies that aim to tackle this problem, but none seem to fully grasp the task ahead of them. Grantcoin periodically airdrops tokens to anyone who signs up but the token has no intrinsic value other than the fiat currency donated to make it work, Solidar provides monthly airdrops to those who have signed up and encourages users to sell items for the currency, and there’s also Swiftdemand and Mannabase doing similar things. UBIC is creating a system that relies on verification according to a user’s passport.

Many cryptocurrency projects aiming to provide UBI rely on donations or wealth redistribution in some form or another instead of crafting a system based on sound economic principles. These projects often provide tokens to individuals who sign up for them, but we can identify two clear issues with this: an effective system for UBI needs to be available to the individuals who would benefit from it the most and the currency used needs to be based on a substantive form of value.

Factors in Creating a UBI Token

Creating an effective digital currency does not just require a secure accounting system that prevents double-spending; it requires robust protocols to govern the distribution of funds on the network and provide incentive to those who support the development of the system. In the United States, we have a saying that our government is “of the people, by the people, and for the people,” and in the same sense we can say that the protocols governing the distribution and development of virtual currencies reflect the values of their creators.

If users simply need to sign up to claim tokens, then creating multiple accounts using different emails would be an easy way to claim a disproportionate amount of rewards and diminish the value of everyone else’s claims. Projects developing protocols for self sovereign identity like LifeID, Civic, and Sovrin promise to make it cheaper and easier for individuals to claim a digital identity and retain control of their data, making it much easier for UBI projects to verify the identity of individuals and prevent users from making multiple claims.

In addition to preventing “double claiming,” we also need to think about why a virtual currency holds value. The value of a currency depends on its potential for use as a store of value and medium for exchange as well as its popularity as a unit of account and a standard for value. Using a token to facilitate donations of fiat currency to users who will immediately sell or exchange takes more technical ability and incurs greater costs than simply giving out money in the first place. Figuring out how to include everyone should be the first step to creating a virtual currency capable of facilitating UBI.

Conclusion

Once we have figured out how to account for everyone, then we need to decide who should be eligible to receive UBI. Does everyone receive UBI, or only those who can prove they need it? There will be plenty of issues in terms of monetary policy to experiment with at that point, but a virtual currency capable of accounting for anyone who wants to be included has a degree of intrinsic value that a currency facilitating donations does not.

The main obstacle to creating a virtual currency incorporating the principles of UBI will involve figuring out how to create a system that account for the intrinsic value of individuals as well as the value individuals create. Meritocracy tends to be the ideal when creating a system to account for value creation based on the idea that those who prove themselves the best at creating value deserve the most resources to do so. While this paradigm has certain benefits that should not be ignored, it clearly poses a problem once we acknowledge the fact that meritocracy can promote inequality to the extent that it gives disproportionate amounts of power to those the system deems “capable.”

Those who prove themselves capable in a given context certainly deserve to be recognized as having a degree of authority in the field, but letting people starve because they haven’t proven themselves “capable” gets to the heart of the problem UBI aims to deal with.

Feel free to reach out on twitter @goldenchaosgod or email at perpetualgrowthcrypto@gmail.com, thanks for reading!