Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche


Ethereum Basic Income Planned

An Ethereum blockchain platform designed to provide anybody anywhere a basic income is on the drawing board.

Horizon.NGO plans to build an Ethereum platform that would accept donations and pay anybody who asked a basic income in Ethereum (ETH) or ERC20 tokens. The idea is to create a trustless and nonjudgmental charity that simply pays money to people who ask for it.

Giving without the Middlemen

An obvious hope here is to eliminate the layers of bureaucracy and middlemen that plague traditional charity. Almost everybody has heard the horror stories about professional charity administrators drawing huge salaries and living lavish lifestyles while little or no money reaches the poor.

The idea behind Basic Income Tokens like those that Horizon.NGO is planning to create a conduit that moves money straight from donors to recipients. The system is similar to the donations that GiveDirectly has been testing in Kenya and elsewhere for some time.

Unlike traditional aid organizations, GiveDirectly simply sends money to people in certain locations via the M-Pesa payment app. The thinking behind GiveDirectly is that most people are smart enough to run their own lives without direction from an aid bureaucrat.

The Basic Income Factory

The most fascinating plan at Horizon.NGO is the Basic Income Factory. The Factory is envisioned as a platform that lets anybody build a system for the distribution of Basic Income.

The Basic Income Factory would take Ethereum to its logical conclusion. The most disruptive feature in Ethereum is the “build your own currency” capability. The Factory proposes to give everybody a “build your own basic income” capacity.

It is not clear if this would work because there are a host of problems. The biggest is liquidity; that is would the basic income money have any value and could you spend it in the real world? There are a number of liquidity solutions for cryptocurrency that might help make the Basic Income Factory a reality including Bancor, and Rubius’s Currency Switch.

Is a Cryptocurrency Basic Income Possible?

Distribution of a basic income might be technologically impossible with today’s blockchain technology.

Existing blockchains are not big enough or fast enough to disperse payments to tens of thousands or hundreds of thousands of people at once. Such dispersal would be necessary for a successful basic income scheme to work.

Many smart people are trying to rectify that flaw including the folks at the Raiden Network (RDN), the Lightning Network and Vitalik Buterin’s Plasma proposal. Most of those solutions utilize sidechains which would create a bigger and faster shortcut to move payments around the blockchain, solving the blockchain scalability problem.

A solution to the blockchain scalability problem is needed to make basic income on the blockchain a reality. There is no evidence that the Horizon.NGO team or the proposed Swift Demand Basic Income cryptocurrency have solved that problem.

A Plan for Basic Income on the Blockchain

Instead what Horizon.NGO has is a plan to try and build a basic income on the blockchain system.

The first step in that plan is to launch the Testnet for Horizon.NGO in 2nd Quarter 2018. The testnet is supposed to be followed by a beta test of the Horizon.NGO mainnet in 3rd Quarter 2018.

A Horizon token, presumably an ERC20 (Ethereum-based) cryptocurrency, will be made available at that time. Testing of the Basic Income Factory is also planned for 3rd Quarter 2018.

If the Mainnet test is successful, Horizon.NGO plans to launch its decentralized autonomous organization (DAO) in 4th Quarter 2018. The Horizon DAO will give participants in the Horizon.NGO voting in power in Horizon.

Once the infrastructure is built, Horzion will launch a cross-platform app, a wallet for managing Horizon tokens. The app would presumably allow people to receive and spend the tokens.

A Potentially Incredibly Disruptive Blockchain Platform

This system has some potentially lucrative uses including next-generation welfare and benefit systems. Governments might use it to distribute Basic Income, Social Security, or pension benefits. Nongovernmental organizations (NGOs) might Horizon to distribute funds.

Some of the potential uses would be incredibly disruptive. A government might use blockchain to distribute money directly to citizens of another country, which would undermine sovereignty. Large amounts of cash might be distributed to poor people all over the world which would have incredibly disruptive effects.

There are some commercial applications for a solution like Horizon.NGO’s platform. An obvious use of it would be for blockchain-based or smart-contract based annuities. The annuities would enable private individuals to provide a basic income to the needy or a loved one from an insurance policy, annuity, or investment account.

Other uses would be to distribute lottery winnings, pensions, or tax refunds. Tax refunds and credits are used as basic income payments in the United States.

Horizon.NGO which is based in Rogatz, Saxony-Anhalt, Germany is a blockchain startup to watch. The solution is building has the potential to be incredibly disruptive and do a lot of good.

Many more articles about basic income, cryptocurrency, blockchain, and economic insanity in general can be found at Market Mad House.