Crypto UBI: Experiment or Sustainable Solution? A Look at NYC’s $12,000 USDC Initiative

New York City is now a testing ground for a fascinating experiment: delivering universal basic income (UBI) via cryptocurrency. GiveDirectly, with backing from Coinbase, plans to give 160 low-income residents $12,000 in USDC, a stablecoin pegged to the US dollar. The payments will come in one $8,000 lump sum, followed by five $800 installments. This venture brings together the promise of crypto with the ongoing debate around UBI.

The core idea is simple: provide unconditional cash payments to alleviate poverty. The recipients can choose to keep the USDC in their Coinbase account, convert it to fiat currency via a traditional bank (at a 1.75% transfer fee), spend it using a Coinbase debit card, or withdraw cash from an ATM. This accessibility is key.
>

This isn’t the first attempt to combine crypto and UBI. Coinbase’s earlier initiative, GiveCrypto, funded by CEO Brian Armstrong, distributed cryptocurrency to those in need. Yet, it apparently failed to produce lasting change. After the payments ceased, recipients regressed to their previous financial state, per the announcement of the program’s shuttering. About $2.6 million in remaining GiveCrypto funds went to this new NYC program. So, what’s different this time?

One key divergence is the use of USDC. Unlike volatile cryptocurrencies like Bitcoin, stablecoins aim to maintain a steady value, making them more suitable for basic income. This choice potentially shields recipients from the wild price swings that could undermine the entire program. Still, relying on a centralized stablecoin like USDC, issued by Circle, introduces a layer of trust and regulatory oversight.

UBI itself has garnered considerable attention, especially since Andrew Yang championed it during his 2020 presidential campaign. The idea of providing a safety net, a guaranteed income floor, resonates with many. That said, real-world results have been mixed. Some studies point to reduced work hours and increased leisure time, while others indicate that UBI allows recipients to pay down debt and curb spending. It’s clear we need further investigation.
>

It is important to ponder the long-term implications of such programs. Can crypto-based UBI become a scalable, sustainable solution, or is it simply a well-intentioned pilot project? Several hurdles persist.

Here are a few considerations:

Adoption Barriers: Will recipients readily embrace cryptocurrency, or will they prefer traditional banking methods? The 1.75% transfer fee for instant transfers to a bank account may discourage some. Education and Support: Do recipients have the necessary knowledge and support to manage their crypto assets effectively? A lack of education could lead to misuse or exploitation. Regulatory Landscape: The regulatory environment surrounding cryptocurrency is constantly evolving. Changes in regulations could impact the legality and feasibility of such programs. Scalability and Funding: Can such programs be scaled to a larger population, and where will the funding come from? Relying on donations from crypto exchanges might not be sustainable in the long run. Impact Measurement: How do you accurately measure the long-term impact of crypto UBI on recipients’ lives? What metrics will be used to determine success or failure?

From my own observations of the fintech space, I’ve seen numerous initiatives with great intentions struggle to gain traction due to real-world complexities. Technology alone isn’t a magic bullet. Human behavior, financial literacy, and access to resources all play crucial roles.

This NYC crypto UBI experiment offers a valuable opportunity to learn. Will it empower recipients, improve their financial stability, and foster greater economic inclusion? Or will it become another fleeting experiment, highlighting the limitations of technology-driven solutions to complex social problems? The coming months will reveal much. We need to monitor its progress, scrutinize the data, and draw informed conclusions about the future of crypto-powered social safety nets. The answers could reshape how we address poverty and inequality in the digital age.

Read Original

Keywords: crypto UBI, NYC UBI, universal basic income, USDC, stablecoin UBI, GiveDirectly, Coinbase UBI, crypto experiment