As a teenager with a paraplegic parent, an article that I read over and over again is In Service of Life by Rachel Remen. She speaks of the subtleties that differentiate the experiences of helping and being helped, and serving and being served: helping is not a relationship amongst equals. We help from our strengths and create the ‘helped’ as inadequate and in need of fixing. Serving, on the other hand, is an acknowledgement of our mutual vulnerabilities and culpabilities as human beings. Helping, she argues, is the work of the ego while serving is the work of the soul.
Unfortunately, this story is not any different at the scale of the global economy. The story of helping is the main theme of how the world attempts to tackle poverty. Internationally, we donate, give aid, give loans, make appeals while simultaneously charging interest, imposing conditions, exploiting unprotected labour, and sending in armies disguised as peace keepers. At home, in our own countries, we complain about decay and corruption, cheap imports, lowering standards, and our own impoverishment by taxes, inflation, governance and the financial system.
But here’s the rub. The financial system is just the software that is used to govern the exchange of value between humans. And while the debt, interest, inflation, taxation model has been around for a long time, it can also be upgraded and reconfigured. Blockchain technology and the development of decentralized payments systems has been a quantum leap forward, but how can blockchain be leveraged to serve, rather than help the world’s poor?
An idea in this vein is Project UBU which aims at creating both a blockchain based financial service and a scalable marketplace for business. Birthed in South Africa, one of the most unequal countries of the world when it comes to income distribution, the project aims to tackle poverty from the grass roots. Now, before cynically claiming that this is just too good to be true, it is worth looking in detail at the ‘how’, and the complex business model with the ambition to translate this idea into reality.
First, the project aims to create a complementary currency, the Universal Basic Unit or UBU, which can be distributed as a Universal Basic Income system to all participants or UBU citizens (poor or not poor, just sign up). The currency will be distributed via a block chain based mobile phone application that works as an UBU e-wallet. Each participant will receive 100UBUs per day into the UBU wallet. The only caveat is that if they remain unused the wallet will dissipate UBUs back to the UBU treasury so that they can be reissued. Dissipated UBUs are not destroyed, but once the volumes of UBUs that are issued daily and the UBUs that are dissipated daily are equal, the number of circulating tokens will become stable.
Then, concurrent to the citizen process, the project aims to recruit participating UBU vendors whose role it is to ascribe value to the UBU in the form of goods and services. Vendors have their own application that can be used to market directly to UBU wallet holders. Jointly, vendors and citizens create the UBU marketplace; the second aim of the project. Initially, citizens will have UBUs to spend, and vendors will offer something for them. In principle, it all sounds very good, but why would vendors agree to this? Where will the UBU get its value from?
If enough traction is created and Project UBU can recruit sufficient numbers of citizens, then vendors get value from the UBU through the marketplace: The application is a powerful marketing device that could bring customers with fiat currency and UBUs to spend into stores. Vendors with moribund stock could price this stock in UBUs and thereby turn a loss into a gain. And, ultimately, vendors with accumulating UBUs could use UBU as a loyalty program. The premise is that given a sufficiently good platform for connecting people, the market will find uses for it.
Now, more poignantly, how will UBU serve the world’s poor? The project gives each participating citizen a certain amount of guaranteed liquidity per day. This creates economic inclusion and acts as a passive income. The system acts as a banking platform which micro-entrepreneurs can leverage to create businesses. In a country like South Africa where the government grant system is poorly managed and often corrupt, UBU could fill the role of a transparent payment and aid delivery platform. Effectively, UBU creates resilience in the economy by providing alternative, complementary liquidity to regular fiat currency.
So why invest in UBU? At large enough scales, for example, if the business hits the 500 million user mark in the next 10 years, the system will create value for citizens and vendors across the board. Picture this: you are taking a 14 hour flight and the airline offers a last minute upgrade from economy. The upgrade is priced in UBUs, because they couldn’t find anyone who wanted to buy the seats in fiat. You don’t have enough UBUs in your wallet, so you buy more on an exchange. The exchange pays an UBU seller on the other side of the world the fiat he needs to invest in his “spaza” shop. Multiply these types of interactions across a global economy and the effect is very powerful.
Thanks to angel funding from Globalvoice of Norway, the software for the project has been under development for 30 months and the next step is to get citizens and vendors on board. The initial token offering or ITO which allows one to buy the UBX token, a derivative product based on the UBU, is currently open. Further details may be obtained from the white paper
About the author: Viroshan Naicker is a mathematician with a background in graph theory, the formal study of networks. He is the author of the UBU and UBX yellow papers which provide the mathematical formalism for Project UBU.
Disclaimer: This article is not intended as investment advice nor will the author be responsible for any investment decisions that are made on the basis of this article. Cryptotokens are speculative investments that are not for the risk averse.
Photo by nikko macaspac on Unsplash