Universal Basic Income

Universal Basic Income

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Impact Market onboarding beneficiaries of a Universal Basic Income on Celo in Brazil

Context The idea of a Universal Basic Income has been around for a long time, but discussions of UBI have picked up in recent years. As income disparity and automation threaten to exacerbate inequality throughout the world, more and more people are wondering if a UBI can be a solution. Proponents believe that UBI can guarantee access to basic needs and serve as a buffer against adverse shocks like famine, natural disaster, or pandemic.

A truly Universal Basic Income encompasses three features:

  • Universal: Every (adult) person in a population is entitled to a UBI. Unlike other social safety net programs (like unemployment benefits), UBI is not means-tested or conditional. This limits the impact of distorted incentives - people won’t be discouraged from working more or earning more income since their benefits will not disappear.
  • Basic: A UBI should meet a threshold such that an individual can meet all of their basic needs, like food, water, shelter. This may vary by geography - the cost to meet basic needs in the US is much higher than in Subsaharan Africa for example.
  • Income: UBI should be distributed over time, as income. This is opposed to a one-time or lump sum payment. Studies have shown that the modality of cash transfers has a large impact on what they are spent on. Grants given as income streams over time tend to be spent more on 'basic needs' items such as food security.

Challenges

  • Graft, fraud, and corruption. A significant portion of foreign aid and government assistance is lost due to fraud, graft, and bribery. Not only does this reduce the amount that actually ends up with its intended audience, but the risk of graft reduces the willingness of potential donors to contribute.
  • High Fees. Distributing cash aid can be very expensive, especially to vulnerable communities that often need aid the most. When considering the nature of universal basic income (e.g. small, frequent transactions) administrative costs can become exorbitant. Physical cash is prohibitively expensive. Even traditional digital distribution methods (mobile money, bank transfers) that charge a flat transaction fee can end up costing a significant amount.
  • Technical Limitations. While distributing physical cash is simple from a user perspective, it is prohibitively expensive from a program administrative perspective. Many forms of digital transfers - particularly blockchain based solutions - are complex and not user friendly.

How Celo helps

Celo offers a transparent, low cost, and user friendly solution to delivering universal basic income to those most in need. Celo was designed to be mobile first and easy to use, making it the blockchain of choice for organizations such as the Grameen Foundation, World Food Program, Oxfam, GiveDirectly, Care International to distribute humanitarian aid.

Celo can help you create a UBI program that is simple, low-cost, fraud-resistant, and customized.

Benefits

  • Low-cost global transactions. Transactions to any phone number in the world for a fraction of a penny.
  • Transparency: Transactions are traceable in real time on a public blockchain, allowing for unprecedented transparency and reducing the risk of fraud or graft
  • Immediate Syncing Even on Slow Connections: Extremely fast, secure synchronization between mobile devices and the Celo network means that even Valora users with high latency, low bandwidth, or high-cost data tariffs can use Celo. Celo removes the need to check every header before a received header can be trusted. Performance is further improved with BLS signature aggregation and succinct zero-knowledge proofs, via zk-SNARKs.
  • On-off Ramps: There are a host of cash-in and cash-out options around the world. The list of supported merchants and partners continues to grow and includes merchants, cryptocurrency exchanges, mobile money operators and more.
  • Accounts Linked to Phone Numbers: Celo maintains a secure decentralized mapping of phone numbers that allow wallet users to send and receive payments with their existing contacts and with confidence that the payment will reach the intended recipient. This abstracts away part of the complexity of using blockchain technology – users no longer need to know a recipient’s public address to transfer funds.

Case study

Impact Market has created the largest private decentralized Universal Basic Income on Celo. Since September 2020 Impact Market has reached over 16,000 beneficiaries around the world.

Impact Market

Impact Market - Global Dashboard

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