The first cryptocurrency designed to facilitate payment of a basic income has popped up.
A blockchain platform called Swift Demand is designed to pay users 100 tokens called Swifts every day. Swift Demand is described as an “attempt at basic income” on its website.
The Swifts are only a digital currency right now, but they are designed to become a full-blown cryptocurrency called Swift Demand at some point in 2018. The Swifts will be distributed to people that are referred to the Swift Demand platform.
Creators admit Digital Currency has no value
“Swifts have no direct connection to any form of currency and are not backed by anything,” The Swift Demand admits. “Swifts are only worth what other people are willing to pay for them. There is no guarantee about the strength of Swifts in relation to any other currency.”
Despite that, anybody can sign up to receive 100 Swifts a day, which I imagine is an attempt at researching the building of a new payment infrastructure. Temporary bonuses are available.
The platform itself would apparently make money by charging a 3% fee on transactions. The idea here seems to be to build an economy or marketplace based on the Keynesian idea that increasing the number of participants in the market can generate wealth.
Building a New Economy on the Blockchain
This makes Swift Demand one of the most interesting and ambitious blockchain platforms yet seen. Its goal is to build an entirely new type of economy based on a new kind of currency.
A whitepaper describes Swift Demand as “a transactional currency that provides a basic income.” That makes Swift Demand a basic income experiment as well as a blockchain platform.
Participants in the experiment will be called “Swift Citizens,” or “Swift Entities.” Swift Citizens are those who receive the basic income. Swift Entities are organizations or individuals that participate in the platform but do not receive the
Swift Citizens or Swift Entities will have to be approved by Identity Providers whose job is to verify their identities. Miners called “Delegated Nodes” will create the cryptocurrency and represent Swift Citizens in a sort of digital democracy. Persons that serve as Delegated Nodes will receive a “salary” of rather than profit in mining in an attempt to control inflation. The Identity Providers will also be paid a salary of Swifts of 50,000 for every 100,000 citizens they validate.
Is Swift Demand a Central Bank Cryptocurrency?
The basis of Swift Demand appears to be an ecosystem that will be built in two stages. During Stage One the platform will distribute up to 70 billion Swifts. Once that volume has been reached, new Swifts will be distributed at an inflation rate determined by the Delegated Nodes.
The Delegated Nodes will control a pool of additional Swifts they can distribute at any time. This means they will be able to distribute funds to individuals in emergencies.
This like the functioning of a central bank; that is it controls the money supply and attempts to control the rate of inflation. The Delegated Nodes will have the ability to stimulate the economy by distributing Swifts at any time. That will make many people wonder if a central bank is behind Swift Demand.
Swift Demand is trying to develop some new blockchain applications including a new consensus protocol based on a Delegated-Proof-of-Stake (DPOS). That means Delegated Nodes would be able to assign ownership of Swifts to specific individuals or entities.
How Swift Demand Might Decrease Bureaucracy and Political Corruption
An interesting feature of Swift Demand is that the Delegated Nodes will be elected by the Swift Citizens every five years. This means Swift Demand is designed is a new kind of government as well as cryptocurrency which is fascinating. The idea here is to facilitate digital democracy and replace welfare systems and central banks run by bureaucrats with something democratic.
The greatest flaw in existing social-services systems is the gatekeepers, bureaucrats with the ability to block access to the system. Such people often put up barriers that many of those who need the money cannot overcome.
The biggest reason why these barriers get erected is to justify the existence of the bureaucrat’s “job.” Both the barriers and gatekeepers greatly increase the cost of the benefits, while making them far less effective. Many poor people cannot access the system because they cannot get around the gatekeepers.
An obvious problem Swift Demand will face is that bureaucrats afraid for their cushy jobs will oppose it. Also opposed will be politicians who would presumably lose power and influence if this system catches on.
Benefits that are automatically handled out to everybody would be hard to buy votes with. Swift Demand might decrease political corruption, by taking away some of elected officials’ power to buy votes.
Is Swift Demand Technologically Possible?
The Swift Demand is a fascinating idea but it would probably be impossible with present technologies.
To successfully distribute a basic income to millions of people the system would need to be able to process thousands or tens of thousands of transactions a second. Present-day blockchain technologies simply cannot achieve that, Ethereum (ETH) can only process around 15 transactions a second.
Swift Demand’s creators claim that they can transmit 50,000 payments per second. If that is true they have solved the blockchain scalability problem and own a trillion dollar piece of technology. The scalability problem is the size limit for blockchain, units of blockchain like Ethereum can only hold so much space. That limits the number of transactions and the speed.
The fastest transaction processor in today’s world Visa (NYSE: V) can only process around 24,000 transactions per second, the Swift Demand itself whitepaper noted. If such claims were true they would make a Swift Demand cryptocurrency potentially as valuable as Visa. Visa stock was trading at $130.54 a share on 21 May 2018.
Not surprisingly, the Swift Demand whitepaper does not say how this would problem would be solved. The most likely solution would be to adopt one of the sidechain solutions designed to move transactions through an encrypted pathway outside the blockchain. These solutions include the Lightning Network for Bitcoin (BTC) and the Raiden Network (RDN) for Ethereum.
Whether Swift Demand is capable of solving these problems is debatable. When I tried to sign up for the 100 free Swifts a day, the platform was incapable of accepting my password. I have serious doubts about a platform that cannot perform a simple task. For a good overview of blockchain and the problems facing it see this excellent Medium article where Jimmy Song does a good job of explaining “why blockchain is hard.”
Can Cryptocurrency create a new Economy?
Swift Demand demonstrates the most disruptive capability of cryptocurrency, the potential to create a whole new economy.
That is a totally decentralized system in which wealth is distributed to everybody through a blockchain infrastructure on a totally equal basis. This would be revolutionary and controversial because it sounds a great deal like Communism. Given Communism’s ugly history of mass murder, slavery, and tyranny it is easy to see why people would be resistant.
The Swift Demand is not the only new economic model being pioneered through cryptocurrency. Proposed blockchain platforms like Syncfab (MFG) and Aitheon (AIC) would pay people in cryptocurrency for “work” done online. These cryptocurrencies are potentially revolutionary because they have to potential manufacturing and other jobs that are now performed in physical locations.
Syncfab plans to pay people for operating machine tools by remote control over the blockchain in its MFG ERC20 protocol Ethereum token. Aitheon wants to pay people for solving problems for AI, operating robots and vehicles by remote control and building artificial intelligence (AI) solutions and digital robots (digibots) with its AIC token.
A similar solution is offered by Yumerium (YUM) which plans to pay people for playing video games with its YUM token. Yumerium even plans to build a marketplace where anybody can design games and gamers can invest in game projects with the YUM token. Like MFG, the YUM will be an Ethereum-based cryptocurrency that can be converted into ETH.
The Radical Ideologies behind the Cryptocurrencies
“Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.” – Lord John Maynard Keynes.
Blockchain and cryptocurrency have the potential to disrupt the entire economy. Everybody needs to pay attention because a lot of people will make and lose a lot of money because of such disruption.
There are some radically disruptive ideologies behind some of the cryptocurrencies out there. If blockchain can bring those ideologies to the real world, they can be as revolutionary, as disruptive, and as destructive, as past ideologies like capitalism and Communism.