We live in a world with huge disparities in wealth from the über rich to the desperately poor. Sometimes it’s not entirely hard work or a lack of initiative placing people in their financial situations. There are some forward-thinkers envisioning blockchain technology and cryptocurrencies evening the playing field and allowing everyone to attain their basic needs of food, shelter, and clothing, to ultimately eliminate poverty.
Ed Murphy and his colleagues are behind an experimental cryptocurrency, Circles, which could potentially provide basic income to those participating in the Circles community.
The goal of the Circles community is every participant would receive a weekly stipend through the blockchain. The question is, can the mechanics of the blockchain avoid repeating the usual standards of wealth and, instead, disperse revenue in an equitable and accountable way to everyone?
Initially, Murphy and many others, had hoped bitcoin would benefit those usually left out of economic prosperity, but, the truth is, it has so far become another asset, albeit erratic, producing yet another class of financially elite. He is hopeful Circles can break the chain of inequality.
Murphy illustrates his vision by noting a Berlin community co-op providing citizens employment by producing goods and foods. These workers receive discounts at the co-op’s cafe, eatery, and garden for their efforts in the community. If the community were to adopt Circles, the co-op could pay coins to the volunteers enabling them to buy, within the community, what they need instead of bartering. This system may lead to the generation of other local necessities thereby growing the community with additional businesses and services while keeping the profits local.
Circles, founded in 2015 in Berlin, is the brainchild of blockchain entrepreneur Martin Koppëlmann, co-creator of the Bitcoin-based Fairlay and Ethereum-based Gnosis prediction markets.
Circles was initially put to the test at a tiny pop-up cafe, Cafë Grundeinkommen, in Berlin. The cafe provided a space to experiment with the currency and a meeting place for Basic Income Berlin, a local group dedicated to exploring the possibility of implementing a universal basic income (UBI) in Germany.
Unemployment, highly priced housing, and inflation are not new problems in many countries; neither is the concept of Universal Basic Income. UBI would give every citizen a set amount of money, to do with as they please, at regular intervals. Those in favor view UBI as a way of easing, even eliminating poverty by enabling everyone to have their basic needs met in both the short and long terms.
Many critics express concern over how UBI could effect a country’s economy, fearing a reduction in economic output, lessening labor’s political clout, and lowering human dignity. It is estimated to cost trillions of dollars annually if implemented in the United States, making it prohibitively expensive. Circles is not an entitlement, UBI, or barter system; rather, it is the product of a local exchange trading system, or LETS, a term coined by open society systems designer Michael Linton over 35 years ago.
Printed notes, or green dollars, are issued for work within the exchange system when so-called real money is scarce or unavailable to a member. Both Circles and LETS are reciprocal currencies designed to be used in conjunction with national currencies. Members within the system are allowed to take jobs and get paid in system green dollars. With high and low balance limits placed on their earnings, members are encouraged to earn or spend within the system. This could allow citizens within a LETS to flourish regardless of their position in society as a whole.
If it is hard to envision how blockchain technology could make Circle flourish, here is an example of the Circles exchange:
Members within the system start with a set account of “circles.” Oscar, a Circle member, has a green thumb, and has sold 5 tomatoes. Each tomato Oscar sold equals an “Oscar circle,” so, now, he has an additional 5 Oscar circles in his account. Lily grows lettuce, the sale of which add to her own “Lily circles.” Oscar wants to make a salad, so, he goes to Lily, whom he trusts, and offers her 2 “Oscar circles” for her lettuce. Lily now has 2 “Oscar circles” in addition to her own “Lily circles.” Lily wants to treat Oscar to a scone at the bakery in town accepting circles. The bakery accepts Lily’s payment of 2 of her own “circles” and 1 “Oscar circle,” so, the bakery account now has 3 “circles.” The transaction worked because everyone involved received trusted currency. If Oscar wanted to earn more “circles,” he could offer to wait tables at the bakery in exchange for trusted bakery “circles” which he could choose to spend on his neighbor Carl’s cucumbers or anywhere else within the community.
In essence, the Circles started out with no value and gained value through acceptance, allowing it to be traded for more goods and services.
There is a challenge to keeping cryptocurrencies and blockchain systems like Circles from moving forward.
Retailers could offer a percentage of their goods or services for a set amount of Circles in a given period. Retailers could test the waters by offering to put up product with a value of, say, 300 “circles” per month. The risk would be relatively low as customers and additional retailers join the system. As the system widens, the goods and services grow, enabling the system economy to flourish and benefit all involved. To keep the system flowing, a built-in inflation rate would have to be established, encouraging transactions and currency to move within the Circle system while discouraging hoarding of wealth.
With projects like Circles being tested in the cryptocurrency market, it seems there may be hope if not for financial equality, but for basic human needs being met. A world in which everyone can have value in a society is certainly something to strive for and cryptocurrency just might be a part of the answer.