LianGuai Observation | The UBI Idea Behind Worldcoin Cannot Change the World

Author: LianGuai reporter Jessy

Preface

The success of Worldcoin is a practical application of the UBI concept in the field of blockchain. This political and economic concept, originating from the 1980s, has been practiced multiple times in real-world events. It aims to provide unconditional basic income to all citizens: without reviewing any conditions or qualifications, the government or organization regularly issues a certain amount of money to all members (people) to meet their basic living conditions, regardless of their income, work, or property.

This is a relatively left-wing political and economic trend, but compared to egalitarianism, it is relatively moderate. UBI practices on the blockchain have been implemented in projects before Worldcoin and have led trends, but they have now fallen silent.

Different experimental results of UBI in India and Finland

UBI emerged in Europe in the 1980s, but its ideological origins can be traced back to the Middle Ages. Compared to social welfare that is tied to income levels and “conditional,” it advocates that the state provide “unconditional” basic income for fairness – regardless of wealth, age, and health, all citizens are entitled to the same amount of basic income. The difference between UBI and minimum wage is that one can receive this income without working.

This idea has been implemented on a small scale in some countries and regions. For example, in India, with the support of UNICEF, an 18-month poverty alleviation program was implemented in 9 villages in central India in 2011. Women’s employment self-help groups and UN welfare organizations worked together to provide basic rupee subsidies to local residents. The principle of the subsidy was to provide enough money to improve their lives but not enough for a dignified life. A total of 6,460 people benefited from the program. According to the later evaluation by SEWA & UNICEF, about 21% of the households that received UBI increased their production and business activities, compared to only 9% for households that did not receive UBI. Evidence also shows that households receiving UBI significantly increased labor supply, indicating that the experiment did not find negative labor incentives caused by UBI. Banerjee et al. explained these results from the perspective of the widespread absence or imperfection of insurance and credit markets in developing countries, believing that UBI helps the poor escape the difficulties caused by market failures, thus offsetting the negative labor incentives caused by UBI income effects. In addition, research also shows that UBI can increase the proportion of children attending school, reduce child labor, improve the relative status of women in household production and life, improve family financial conditions, and increase the level of participation of the poor in government projects.

In contrast, the UBI experiment conducted in Finland, a developed country, did not produce the same results as in India. It is well known that Finland is a country with high taxes and high welfare. Unemployment benefits and various social subsidies even exceed the per capita income in Finland, so the unemployment rate in Finland has always been high. From 2017 to 2018, the Finnish government conducted a two-year UBI experiment, hoping to find an alternative to the existing social welfare system. At that time, this experiment was conducted nationwide, and the Finnish government randomly selected 2,000 unemployed people aged 25 to 58 as UBI beneficiaries from the entire country, with approximately 170,000 unemployed people as the control group. The biggest difference from receiving unemployment benefits is that this money will not be canceled if the person finds employment. However, the results of the experiment showed no significant behavioral impact on the unemployed participants in the UBI experiment. The 2,000 participants did not differ significantly from the control group in terms of working hours. The results of the experiment seem to indicate that in Finland, where existing policies are already generous enough, it will be difficult for UBI to have a significant impact on the work and motivation of potential job seekers. Moreover, if UBI is truly promoted nationwide, significant adjustments to the existing tax system would be necessary, and increased taxes would be difficult to avoid.

The concept of Universal Basic Income (UBI) is believed to achieve the following goals: firstly, to eliminate poverty, which is still prevalent in many developing countries; secondly, to mitigate the impact of technological changes on the job market; thirdly, to regulate income distribution and achieve common prosperity.

This concept is somewhat similar to moderate egalitarianism, but it only provides people with a basic income to guarantee their survival.

The UBI concept has also encountered certain opposition. It is not difficult to see that it would impose significant costs on the economy. If other expenditures are not cut, implementing this concept on a national scale would require increased taxation.

In the examples of India and Finland mentioned above, it is not difficult to see that this system is more beneficial for the “poor” and financially constrained population, while for those who already have their basic needs met, this money would not bring much change to their lives. Therefore, the proposal of this concept, in the view of the LianGuai journalist, is actually a “lazy” approach that avoids thinking about specific solutions to specific social problems.

UBI Concepts in Blockchain Practice Beyond Worldcoin

With the development of technology, especially with the increasing possibility of most people becoming unemployed due to technological advancements, the UBI concept has once again gained popularity. Some believe that providing a basic income to everyone can give most unemployed individuals a buffer period to update their skills and adapt to the changes in the job market brought about by new technologies.

In addition to Worldcoin, there are several other UBI projects in the practice of blockchain, which is not a new concept.

CirclesUBI

Officially launched in 2020, led by Gnosis founder Martin K√∂ppelmann after 7 years of development. According to the whitepaper, CirclesUBI is based on personalized encrypted tokens and the trust social graph constructed by these tokens. The purpose of this monetary system is to distribute currency in a fair manner and achieve wealth equalization over time, similar to a globally available “universal basic income.”

The design of Circle’s promotion system is clever and down-to-earth, using a similar approach to the Pi project’s network-building movement to maintain its spreadability.

In simple terms, users need to invite 3 people for credit to create their own Circles. Within this circle, users can mint a personal Circles token. Interestingly, the tokens between different users can trust each other, and their tokens become interchangeable. Behind this interoperability is the overlap of social networks and an attempt to shape a new global currency system.

Each person needs 3 people to help activate their account, and in order to build their own network and make their tokens more valuable, more people will trust each other.

However, the problem with this project is that according to the rules, each person can create multiple individual accounts through multiple devices and email addresses, thus creating more Circles token rewards, which is actually contrary to the concept of UBI.

ENUMIVO

This project was launched in early 2018 and is called “Avocado” in the Chinese community. The project developed a UBI dApp to provide a regular income in the form of UBI tokens for everyone. The technology used by this application, a dedicated oracle verification system, runs on the Enumivo blockchain system. The Enumivo blockchain system is a complete copy of the EOS blockchain system developed by Block.One. It also provides an affordable alternative for developers who want to take advantage of the features of the EOS blockchain technology. The founder’s idea is to create a poor man’s version of EOS.

A total of 500 million ENU tokens, with 400 million allocated for airdrop. Users only need to send 0 ETH to a specific address to receive ENU. The first user can receive 4,000 ENU, and for each subsequent airdrop, the amount of ENU received by users will decrease by 0.001%.

When this project was launched, it was during the peak of EOS, so ENU, which is known as a clone of EOS, received a lot of attention. It was also known as the “number one airdrop coin” in the crypto community. However, in August 2019, the official website of Enumivo (ENU) stated, “Enumivo is dead, sell your ENU, but never buy. The entire project has been controlled by a few people who want to manipulate the token price.” At the same time, the founder of Enumivo (ENU), AidenPearce, has also closed his Telegram account and left the project.

ENU is in crisis. According to media reports, the direct reason for the founder’s departure was that one node controlled 6 out of 21 super nodes and backup nodes.

In fact, this project, which is built on the concept of UBI, has more than 95% of its chips highly concentrated. Apart from the initial airdrop, as the project operates and develops, ENUMIVO has deviated further and further from the concept of UBI. This may also be the main reason why the idealistic founder left disappointed.

Humanity DAO

Launched in 2019, it is an experiment for unique identity, governance, and universal basic income. It is open to everyone. People registered in Humanity can receive a monthly universal basic income of $1 (before the end of Dai supply). The first 10,000 people will also receive Humanity voting tokens and access to the smart contracts that refer to this registry to fight against witch attacks.

It is deployed on the Ethereum mainnet because there is no standard definition of “unique identity” in Ethereum, and it wants to confirm the identity of each person in this way to avoid witch attacks.

Summary

Comparing the above-mentioned three blockchain projects that apply the concept of UBI, it can be seen that Worldcoin’s application of the UBI concept seems to be more in line with the demand for the UBI concept under technological development. The development of AI technology has filled people with fears of mass unemployment caused by AI, and Worldcoin’s behavior of “giving money” to everyone seems to alleviate people’s anxiety in the face of technological revolution. Moreover, Worldcoin uses red envelope scanning verification to confirm the identity of each person, which not only distinguishes between individuals but also distinguishes between humans and robots, which seems to solve the problem that may arise when AI develops to a certain stage in the future.

However, when we compare the various UBI projects that have been implemented in reality, we can see that the funding for these projects comes from governments and organizations, and the money of governments and organizations also comes from the redistribution of wealth created by society. But where does the “money” in Worldcoin come from? Is it still relying on future generations to take over? LianGuai reporters believe that the implementation of the UBI concept in blockchain projects is still too early.

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