Universal Income Backed By The Blockchain?

Universal Income Backed By The Blockchain?

Patrick Tan 16/03/2020 6
Universal Income Backed By The Blockchain

Automation and AI will undermine repetitive procedural jobs in the coming years, so the need for a universal basic income may become more than a socialist fringe idea, but a necessity to prevent socio-economic chaos.

But money doesn’t grow on trees so what can this income be based on?

Ina quiet suburb outside of Finland’s capital Helsinki, Elias Oehman, a 26-year-old college graduate with a bachelor’s in design from the University of Helsinki, is preparing to start his day.

Except that it’s already 4 pm in the afternoon and in late autumn, the sky has already been dark for several hours.

And no, Oehman doesn’t work the night shift, he just doesn’t work at all.

Thanks to Finland’s experiment with a universal basic income, Oehman receives US$640 a month from the government, no strings attached, just for being Finnish — nothing more, nothing less.

And while that amount is not likely to make Oehman a millionaire anytime soon, it does relieve him from the pressure of the more mundane aspects of life, such as moving out of hits parent’s house, getting a job or getting a girlfriend.

Instead, Oehman spends most of his nights playing Fortnite, a fast-paced online, shooter-survival game and most of his days sleeping.

When he’s not playing Fortnite, he’s working out at his local gym or hunting elk with his father.

And while Oehman’s life may sound like the stuff of teenage dreams, he has big plans.

His obsession with Fortnite has led him to live stream his gameplay online, through platforms such as Amazon’s Twitch and Google’s YouTube.

While the growth of his following was slow at first, his dry Finnish wit and lilting accent gradually caught on.

Today, Oehman has over three million followers across multiple platforms and makes a decent living from his following and through sponsors.

And while Finland has since abandoned its experiment with a universal basic income, Oehman credits the opportunity for allowing him to “discover” himself,

“I wouldn’t have had the freedom to explore. I would have had to get a job, probably in something like advertising and I would probably have hated it.”

“The UBI (universal basic income) gave me some breathing room, some time to discover.”

Although some claim that Finland’s dalliance with universal basic income (to be fair, the experiment was conducted with 2,000 unemployed Finns) was flawed, many considered it a failure.

Flawed or failure, really depends on what measure of “success” is applied to a universal basic income.

Is the goal of a universal basic income to increase employment or to provide a basic living standard and therefore dignity for all human beings?

Because if the goal of a universal basic income is to increase employment rates, then by that measure, the Finnish experiment was indeed a failure.

Two years after Finland launched a basic-income trial in which nearly 2,000 unemployed residents were given a regular monthly stipend, many of the recipients remained jobless.

And for residents like Oehman, despite his substantial income by becoming a professional gamer, he still counts statistically as “unemployed.”

The main issue is that the global economy is transitioning into an entirely new phase, where what is defined as “employment” becomes a far more amorphous construct and where repetitive, procedural jobs become usurped by robots and algorithms.

To plummet headlong into this new economy with no plans for those left behind does no one any favors, particularly in advanced economies where huge swathes of the population become disenfranchised, becoming fertile ground for unrest, racism, insularity and social upheaval.

And it’s not that technology has upended social mobility, it’s just that there’s no denying the data that technology has had significant impact in fueling income inequality and dramatically reducing social mobility.

Which is why many have mooted the idea of a universal basic income — something that would help provide the basic necessities, to insulate people from the vagaries of life.

To be sure, the concept is not new.

In post-war Japan, the state became the ultimate provider and a welfare state was born. The Japanese welfare state was so successful that today, the Japanese live longer lifespans than people anywhere else in the entire world.

Yet the Japanese welfare state has not come without costs.

Japan has had decades of economic stagnation, a painfully low birthrate and faces a slew of other demographic problems, including rising income inequality — this from a country where the state provides a security blanket for all.

Yet amidst all of the debate over whether or not to even institute a universal basic income, no one has yet suggested a way to pay for it other than increasing taxes, typically on the rich.

But what if the answer to providing for those most vulnerable to technological change came from technology itself?

In most rich countries, access to a smartphone and mobile data are ubiquitous — even in developing economies, people have access to the internet via their mobile phones.

Across the globe, our smartphones are hemorrhaging data about us, who our friends are, what we like to eat, what we’re looking to buy — and all of that data is valuable.

Figuring out how much that data is worth is the tricky part.

Last year, Statistics Canada, a government agency, tried to estimate the value of Canada’s data (its stock plus related software and intellectual property in the field) and ballparked the figure between C$157 billion and C$218 billion.

If that number is anything close (and that’s a big “if”), then it would imply the value of data in the United States whose GDP is 12 times the size of Canada’s, would be between US$1.4 trillion and US$2 trillion — or about 5% of America’s stock of physical capital.

But even this translation is flawed because it assumes a linear relationship between the value of Canada’s data with that of the United States.

Yet it’s likely that relationship is anything but linear as anyone who has ever advertised on Facebook will attest to, the value of a U.S. customer’s attention is far more expensive than say someone from Laos.

But whatever the value, there’s no denying that data and the amount of data that is flowing into the world is increasing — and fast.

Whereas the first human genome that was sequenced sits on 3 gigabytes of data, the latest self-driving vehicles produce up to 30 terabytes for every 8 hours of driving (a terabyte is about 1,000 times a gigabyte).

IDC, a market research firm estimates that this year alone, the world will generate around 90 zettabytes of data (forget about the conversion) — in other words, more data in a year than all the data produced since the invention of computers, combined.

But while the world is producing more data than ever before, as a society, we’ve yet to properly classify its nature or address how it should be managed.

In many ways, data is like a natural resource, much like oil, which can be owned and traded — a private good.

But data also has public good properties — the data transmitted by your self-driving car helps to improve traffic light timing that improves efficiency and your DNA data can help government scientists prevent the next pandemic.

Consider that recently, the U.S. government put pressure on a Chinese company to sell the gay-dating app Grindr — because of concerns that personal data on the app could be used to blackmail American citizens.

The bottomline is that data is valuable — so why do the producers of data (us) get so little from it?

Part of the problem is infrastructural.

The data economy sits at the opposite ends of two poles, consisting of huge centralized data centers packed with servers on one end and decentralized data which is processed in situ (or at the site where it is collected) at the other — the former outstrips the latter in size and significance by orders of magnitude.

And while the Facebooks, Amazons, Apples and Googles of the world hoover up our data that sits in massive data silos, there is little users across the globe can do about it, because that is the price of access to many of the conveniences of modern life (think Google maps and newsfeeds) that can be had for free.

The other problem is that individually — our personal data has limited value — because it’s impossible to draw conclusions, identify trends or make projections from a single data point.

Expand that to billions of data points and that’s an entirely different story.

Just like a drop of oil won’t change the course of the global economy, a single data point won’t change the course of technology.

Combine those data points and suddenly the data becomes far more valuable. Which is why groupings such as OPEC (a group of oil-producing nations) becomes so powerful — they get to influence the global price of oil by acting in concert.

Amazon Web Services (AWS), the highly profitable cloud-computing arm of e-commerce giant Amazon is trying to make the trade in data resemble that of the trade in oil.

AWS recently launched a marketplace that aims to make trading in data as easy as possible — functioning similar to a smartphone app where buyers subscribe to feeds, agree to licensing conditions and AWS processes the payment.

But even then, the economics of data make the exercise of trading data challenging because although data is often likened to a commodity — data sets, particularly corporate data sets, tend not to be fungible.

What that means is that unlike a barrel of West Texas Intermediate crude oil, where one barrel is the same as another — the value of data often lies in the eyes of the beholder and no two data barrels are the same.

Each data set differs in the way it was collected, its purpose and most importantly, its reliability — making it challenging for buyers and sellers to agree on a price.

And then there’s the value of personal data — because defining property rights is tricky, especially where information cannot be attributed to one person.

For instance, who owns the fact that Facebook reunited two long-lost relatives— Facebook or the two relatives?

And why should any social network buy the data of an individual when it can make quite accurate predictions about an individual by crunching the ancillary data around that individual and then serve that person targeted advertising?

Which is where the analogy of data as akin to oil starts to break down.

Instead of treating data as a containerized commodity, data could be viewed through the lens of the early trade unions — as being of limited value and significance individually, but carrying great value when assessed as a whole.

To be sure, this idea is not novel. Already so-called “data co-operatives” are starting to spring up, to collectivize personal data.

Instead of giving people individual control over their data, organizations such as RadicalxChange, a data co-operative, would function similar to labor unions and protect the interests of the collective, as well as bargain for payment for the collective’s data.

Much like their labor union counterparts, these co-operatives would among other things, negotiate rates for data provision, ensure the quality of the data provided and bill data firms for the data, distributing the proceeds.

Before the blockchain became more prevalent, such an undertaking would be in the realm of science fiction.

But as more and more of our data is transmitted unknowingly via 5G networks and the Internet-of-Things, it may well be that blockchain technology will provide the platform to fuel such a data-led economy.

Today, most of the data that platforms derive, require our proactive input, either through clicking on a website, or tapping on a smartphone.

But tomorrow, the bulk of data will be generated by devices connected to the internet, wirelessly transmitting data without our knowledge or acquiescence — cranes, cars, washing machines, refrigerators and doors.

These IoT devices will not just serve as sensors, gathering data, but also eventually act in the world in which they are embedded — for instance, your refrigerator automatically ordering milk online when it senses that your supplies are low.

Yet under the current state, the people who are using IoT devices and bleeding data via their smartphones are not being recompensed for their troubles — perhaps this could be the source of their universal basic income.

As inequality grows through the skewed distribution of income towards capital and away from labor and as more labor migrates into data functions, what constitutes “work” will need to be re-imagined.

The generation of data itself is required to train AI (artificial intelligence) and improve AI services — and if that constitutes “work,” it ought to be paid for.

Using blockchain technology, the decentralized database that underpins cryptocurrencies such as Bitcoin, may enable people and companies to manage in minute detail who is allowed to access what data and to maintain an immutable ledger of who has done so and for what price.

Blockchain technology also enables micropayments — consider that most cryptocurrencies allow seemingly infinite divisions — which would allow for micropayments for the provision of data.

Smart contracts, of the sort popularized by Ethereum could then be used to ensure automatic micropayments for the provision of such data, whether as an individual to a data buyer or via a co-operative, acting as a labor union of sorts, for the provision, packaging and sale of such data.

A new data economy, underpinned by blockchain, has the potential to upend our preconceived notions of what is “value” and what is “work.”

In that sense, the provision of data itself could form the basis of an entirely new type of “work” and the fuel to provide for a “universal basic income,” which ideologically may be less offensive to simply “giving away money.”

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  • Lee Parker

    Blockchain could facilitate the implementation of universal income across developed countries

  • Amy Gledhill

    Maybe we are a little late for that

  • Lucie Wilkinson

    Fully agree with Patrick

  • Ben Thomas

    We are so lucky if this happens

  • Richard Paterson

    Dream come true.....

  • Rebecca Cooper

    Unfair for some... WE will be all replaced by machines...

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Patrick Tan

Crypto Expert

Patrick is an innovative entrepreneur and a lawyer passionate about cryptocurrencies and the business world. He is the CEO of Novum Global Technologies, a cryptocurrency quantitative trading firm. He understands the business concerns of founders and business people helping them to utilise the legal framework to structure their companies to take advantage of emerging technologies such as the blockchain in order to reach greater heights. His passion for travel, marketing and brand building has led him across careers and continents. He read law at the National University of Singapore and graduated with Honors in the Upper Division and joined one of Singapore’s top law firms, Allen & Gledhill where he was called to the Singapore Bar as an Advocate & Solicitor in 2005. He created Purer Skin, a skincare and inner beauty company which melds the traditional wisdom of ancient Asian ingredients such as Bird's Nest with modern technology. In 2010, his partner and himself successfully raised $589,000 from the National Research Foundation of Singapore under the Prime Minister’s Office. He has played a key role in the growth of Purer Skin from 11 retail points in Singapore to over 755 retail points in Singapore and 2 overseas in less than a year. He taught himself graphic design, coding, website design and video editing to create the Purer Skin brand and finished his training at a leading Digital Media Company. 

 

   

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