COVID-19, UBI and Cryptocurrencies

During this interesting time of a potential pandemic, each municipality should create scenarios that they need to follow in the case of a quarantine. While a fire drill does not predict a fire in a school, it does train the students on how to react for a low probability event.

There are two aspects of a pandemic that needs to be addressed: how to prevent the spread of the disease and how to prevent a breakdown of the social fabric. The most widely used tool to prevent the spread of the disease is by quarantine. This disrupts society because people continue to need to eat, pay bills and work despite the disease. We can see the solution to part of the consequences of quarantine in Hong Kong is by debt postponement. The banking sector has placed a moratorium on debt collection during this period. This means that mortgage payments have been placed on hold for the interim.

What if you are an average person who is unable to work during this time. Families continue to need to eat, drink water and heat their homes. Implementation of the Universal Basic Income strategy can be put in place to assist in this area. One of the criticisms of UBI and a minimum wage is that the costs of living in large cities differ from rural areas. With that in mind, transfer payments to assist families to cover their costs would best be handled at the municipal level or even at the neighbourhood level. Taking it a step further, the best way to account for the transfer of funds (preventing malfeasance) would be to use cryptocurrencies as the mechanism.

Imagine each municipal district would have its own cryptocurrency. As an example, if Sometown has a "Sometown Coin". The stores, landlords and other appropriate businesses within a community would need to accept the "Sometown Coin". Individuals would register a wallet for this coin at their appropriate municipality. The Federal Government could pay coins into those wallets directly, without having to transfer funds to the municipality. The individuals could then pay their expenses with these coins. As it is on the blockchain, there is an instant transactional record kept.