How to Distribute a World Basic Income By Collateralizing P2P Credit

Either way, the research shows that the money is there.

By Aleeza Howitt

Artwork by Mark Wagner

In the face of the unprecedented Covid-19 pandemic, a rapidly growing segment of society has launched into discussions of “emergency” basic income, helicopter drops, quantitative easing for the people, or other euphemistic programs identical in concept. Many of those who were previously resistant to the idea of direct cash transfers to citizens are now coming around to the idea, if not as an economic necessity or a stimulative measure, then as disaster relief. These have been mostly national or regional discussions, although some are instead contemplating the possibility of a world basic income.

People tend to brush off a world basic income as over-ambitious and unfeasible. It is not. There are a few caveats, but in fact we already have the tools to distribute an emergency basic income globally, and it can be done pretty quickly. Ironically, it may be easier in some ways to launch a global, privately-funded basic income than a regional, state-funded program. This is because many states will have to contend with excessive bureaucratic and logistical difficulties in order to send checks to their citizens, so even states that agree to distribute cash may end up doing so with debilitating slowness.

The system described below is feasible, but it is worth pointing out some caveats:

  1. It assumes that someday in the near future, there will exist a Sybil-proof (“one per person”) digital identity system—which is likely based on several such systems under active development. This system could be centralized or decentralized, anonymous or totally public. If you don’t believe such a thing could exist globally, but could exist regionally, then you may continue reading but instead consider this as a guide to launching a regional basic income.
  2. It assumes that someday in the near future, there will be accessible infrastructure through which anyone can securely receive and use some kind of digital money.
  3. This plan is currently inclusive only of people with access to internet and smartphones, although it could be more inclusive in the future depending on how the technology evolves.
  4. Some entity must pledge or contribute money, in some form, before we can pay out the basic income.
  5. The system could be totally automatic and trustless, although it doesn’t have to be.

Here’s how to do it:

  1. Establish a pool of funds. We can call this the “reserve”.
    • For full transparency and the possibility to make the process as trustless as possible, use cryptocurrency and assign ownership of the reserve to a DAO.
    • There can be several different reserves controlled by different entities.
    • Alternatively, some trusted entity can pledge to establish a pool of funds at a later point in time, and thus guarantee the reserve.
  2. Establish a “basic income” currency network using the Trustlines Protocol. (This would be very similar to the Circles project.) This currency network would be described by these features:
    • Each user has a global net debt ceiling: This is a maximum amount of debt any unique user is allowed to have outstanding at any point in time, across their entire set of trustlines.
    • The global net debt ceiling per user is set according to the reserve divided by some estimation of the eventual number of unique users. That number could be (at most) set according to the world’s population.
    • More realistically, there would be an independent registration system for estimating the highest number of unique users.
    • To emphasize the goal of immediate cash distributions, the number of accounts created within a set sign-up period could be the upper limit for unique users.
  3. The reserve should only be paid out evenly to verifiably unique digital accounts. The payout occurs only after these verified accounts can be linked to their addresses on the “basic income” currency network.
    • The payout process can be fully automated and trustless.
    • Alternatively, we can rely on legal infrastructure to ensure that the entity controlling the reserve will execute payouts in this manner. Hedge for Humanity is one existing nonprofit whose purpose is to distribute global dividends.
  4. Verifiably unique digital accounts will be determined at some point in the future through a global digital identity system, such as BrightID. Each reserve can use its preferred identity system.
    • We can use a trusted DAO or a decentralized oracle to determine when we are ready to prove which accounts are real, and by what method.
  5. Because the currency network is fully collateralized, users may be confident that they will be reimbursed for the IOUs they send to each other via the Trustlines AppThat means they can immediately start treating these debts like real money.
    • Having full transparency of the reserve, as well as a fully automated system for executing payouts, should help users trust the fact that they will get reimbursed.
    • Because getting reimbursed requires that each person eventually proves they are real and unique, people will not accept IOUs from users they suspect are using a duplicate account (and trying to scam them). That is because any IOU from an unverified account will not be eligible for reimbursement, and will therefore be worthless. It is a temporary, self-policing system of identity.
  6. The first five steps assume that the system is fully collateralized, so that each IOU is at least backed 1-to-1 by some kind of “real” money. However, it is possible to construct an under-collateralized system as well, which would be desirable if doing so extends the impact of the basic income.
    • One system design could be that of Project Greshm, which allows users to withdraw from the reserve only after their money has sat in their account for a period of 30 days. Every time a unit of money is spent within the system, the timer resets. Therefore, any lack of confidence in the system will result in extra spending, which protects the reserve.

This pandemic is expected to have far-reaching, disastrous effects that will be magnified in parts of the world already vulnerable to poverty. A world basic income is necessary now more than ever. We must build on the momentum of national basic income proposals, and start thinking beyond borders. It would take only 1.2% of global GDP to fund a $10/month basic income for every person in the world, including children. (For perspective, an estimated one in ten people live on less than $1.90/day.) As suggested by World Basic Income, the UN could create such a fund through international taxation, for example via a carbon extraction license fee or a financial transaction tax. Either way, the research shows that the money is there. A great way to advocate for these measures would be to jump right in and try building independent distribution systems. As demonstrated in this article, we have the tools—why not start testing it out already?

Author: Aleeza Howitt

Aleeza Howitt is a researcher specializing in social impact projects. She is particularly interested in alternative currencies and government-independent universal basic income (UBI). She is publisher at and a cofounder at

Follow her on Twitter: @aleezagroks


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