Here are 5 practical approaches to actually implement Universal Basic Income with Web3 technologies.
To implement Universal Basic Income on the blockchain, you need to be able to shave a tiny amount from a large number of transactions, similar to Bernie Sander’s Financial Transaction Tax. Unlike Bernie Sander’s tax, this “shave” would need to be voluntary and the way the money spent 100% transparent.
Most of Web3 happens using so-called “Proof-Of-Stake” algorithms. These algorithms create a number of possibilities for implementing such a system.
#1: Cosmos SDK & Cosmos Blockchain Ecosystem
Cosmos is a unique area of the cryptocurrency ecosystem due to it’s composition, size, governance and technology. Compared to Solana, Ethereum, Avalanche and Bitcoin – Cosmos is relatively small, self-contained and agile while not being controlled centrally by any entity or startup.
While Cosmos blockchains are run independently from one another, they all share in common a reliance on the Cosmos SDK. All that would be needed to implement Universal Basic Income in the Cosmos ecosystem would be to add it as a feature to the Cosmos SDK. It should be possible to enable all Cosmos blockchain users, validators, stakers to voluntarily donate a small fraction of all transactions to a cause or causes of their choosing.
The total value of the Cosmos ecosystem is around $170+ billion. This would be a market of sufficient size to represent a good test.
Strategy #2: Helium Network
The Helium Network allows a global network of users to provide IoT connectivity to their neighbors by setting up “Hotspots.” Helium has grown to 500,000 such hotspots forming a global grid, who “mine” the Helium token and earn money from their hotspots on a daily basis.
The Helium user interface has a clean, easy to understand way to visualize way to see who around you is running Helium nodes. It should be immediately possible and easy to implement a system to voluntarily donate part of your Helium hotspot earnings to people in your surrounding area who are in need of financial assitance.
This would be a practical method of UBI on the Helium network.
Strategy #3: Validators For Good
The way Proof-of-Stake networks work is that network security is provided by having a set of “Validators” who check the validity of blockchain transactions on their local machines. Proof-of-Stake is set to replace “Proof-of-Work” as the leading technology used to enable decentralized economies as Ethereum is set to transition to this algorithm approach in coming years.
Proof-of-Stake networks rely on Validators, who provide higher-performance machines that do the heavy lifting of checking blockchain transactions. These Validator nodes are compensated for their time by receiving a sort of “tax” from the network in exchange for their “good deeds.”
These Validator Nodes appear to be the ideal way to implement UBI because all PoS transactions must flow through them. It should be possible to form a global ecosystem of Validator node operators who agree to voluntarily donate part of their earnings to support good causes locally. This is a practical and feasible method of actually implementing UBI in Web3.
Strategy #4: Ethereum Virtual Machine or Custom Virtual Machines
The Ethereum Virtual Machine is a universal computer which is replicated across the globe. In the future, it is likely that new, application specific, virtual machines may become more common in order to accelerate processing of certain classes of blockchain enabled workloads will run.
It should be possible to design virtual machines which can implement UBI-like voluntary transaction fees on all compute jobs they are compensated to run. This represents another great potential entry point for funding UBI.
Strategy #5: DeFi Ecosystem & Protocol Providers
The Decentralized Finance ecosystem represents an extremely high growth new area where very large amounts of financial transactions are occurring. If you really desire to implement a Universal Basic Income system, it would be extremely logical to build an alliance or coalition of DeFi protocol designers to include UBI support (as a voluntary checkbox) in their user interfaces.
By building UBI into protocols from the start, it should provide a scalable way to actually implement UBI.