a UBI-generating currency: Global Income Coinpost by Jasper Driessens, Seth Ariel Green (setgree) · 2022-05-11T09:43:52.098Z · EA · GW · 7 comments
TL;DR 1 The GLO model 1.1 Seigniorage: the value that arises from growth in the money supply 1.2 How GLO uses seigniorage to generate UBI 1.3 GLO is permissionless monetary policy change 1.4 Potential impact on poverty 2 Current status 3 Outstanding challenges 3.1 The demand for GLO needs to grow 3.2 Identity verification that’s fraud-resistant and privacy-preserving 3.3 Reaching people without internet and/or functional national ID systems 3.4 Blockchain scalability 4. How we use resources: employing people and deploying funds 1. Operational costs 2. USD reserve 5. Request for feedback + how you can help A. The Effective Altruist Case for Global Income Coin B. Spread the word C. Labor/Partnerships None 7 comments
We introduce Global Income Coin (GLO), a cryptocurrency that generates universal basic income through seigniorage. GLO is conceived, managed, and distributed by the Global Income Coin Foundation, a nonprofit in Zug, Switzerland. We’re pursuing this project because we think that UBI is good and because its scope is huge: potentially $2860 billion/year (basically $1/person/day). Our ambition is for the EA community to embrace Global Income Coin as a project worth pursuing.
What questions and concerns would you need answered to consider GLO a good and viable idea? We’re going to write The Effective Altruist Case for Global Income Coin and will use your feedback as input.
1 The GLO model
GLO is a cryptocurrency that uses seigniorage—the revenue generated from the creation of new money—to pay for a universal basic income (UBI). GLO is intended to be used as normal money (i.e. for payments, savings) and has a target rate of $1.
We aim to debut GLO later this year. At that point, everyone in the world will be able to verify their identity to claim a small weekly UBI of GLO. We’ll encourage humans and companies to adopt GLO as a payment method. The more they do this, the more UBI we can generate.
1.1 Seigniorage: the value that arises from growth in the money supply
The entity creating the new money can decide what to do with it, so this can be considered an income stream. That income stream is called seigniorage. Usually, money from seigniorage enters economies top-down, from the central banks to commercial banks and into the broader economy. The goal of Global Income Coin is to do a bottom-up distribution of new money instead.
Seigniorage is a normal thing, but it’s relatively unknown and often sounds like black magic to people who first hear about it. How can money be created out of thin air? But in any modern economy, this happens continuously. Our ballpark estimate (going by 1994-2019 historicals) is that government-created money grows by about 8% a year. By 2024, this means governments will be printing approximately $2,860 billion per year.
1.2 How GLO uses seigniorage to generate UBI
GLO uses seigniorage to keep its value at about $1/GLO coin and generate UBI at the same time. Here’s how this works:
- GLO, like the dollar, has a theoretically unlimited supply. More coins can be printed at any time.
- GLO has a target exchange rate of $1. When demand for the currency rises (e.g. because more people want to use it for payments) the price of GLO will drift upwards.
- The Foundation then creates more GLO to accommodate the growth in demand. This has two effects:
- It lowers the market-clearing price back to our target of $1/GLO token;
- It generates proceeds for the Global Income Coin Foundation, which can then be distributed directly to verified humans as UBI.
That way, the printing of new money facilitates the growth in the money supply required to meet rising demand.
1.3 GLO is permissionless monetary policy change
GLO is a currency that can be used instead of existing everyday currencies. Every time someone uses GLO rather than USD, EUR, JPY, etc, they shift a fraction of top-down money creation towards the Global Income Coin model. The same ~8% monetary expansion would still happen, but the value would be used for a global UBI rather than flow into (mostly) already wealthy economies through their financial industries. It’s a wealth transfer set in motion through people switching to a different currency for (a part of) their savings and spending.
1.4 Potential impact on poverty
The goal of Global Income Coin is to alleviate (extreme) poverty, and its mechanism is direct cash transfers. Direct cash transfers require two things:
- Money to distribute
- Infrastructure to distribute it with
If Global Income Coin succeeds, it offers a solution to both. Seigniorage is the ‘business model’ by which Global Income Coin generates UBI. For distribution, we’re connecting all humans to a global payment network, verifying their identity such that everyone can only claim UBI once.
Since the UBI does not depend on donations, the value unlocked by Global Income Coin comes on top of existing poverty alleviation initiatives. At global adoption, we’d unlock an estimated $2,860 billion per year. Distributed among ~8 billion people, this makes for a daily UBI of $1 per person.
But note that Global Income Coin doesn’t need to reach full-scale adoption to be of philanthropic value. Any level of sustained GLO adoption unlocks some amount of UBI. Quantifying the impact of various non-maximal success scenarios is one of our open research questions.
2 Current status
- We’re very early: Global Income Coin started this year and is now a team of six
- GLO came out of stealth mode in late April with a press release and a Show HN thread
- We’ve secured $2M in initial funding from Sid Sijbrandij, CEO of GitLab, to pay our bills
- We plan to launch the coin later this year
- We’re hiring across the board
- We’re looking to partner with crypto exchanges who are excited about crypto for good
- We’ve got a public draft white paper containing our latest thinking (comments and contributions welcome)
3 Outstanding challenges
This is an ambitious, long-term project—think decades—but there are some short to medium term problems that we’ve got to solve if we’re going to get off the ground. To not make this forum post too in-depth, we’ll just list the issues here. If you’re interested in learning about our solution directions, please see our EA case draft.
3.1 The demand for GLO needs to grow
Our ability to generate sufficient demand for the GLO token is make-or-break; if everyone immediately sells their GLO for other currencies, its value collapses. Kickstarting demand is especially difficult early on.
3.2 Identity verification that’s fraud-resistant and privacy-preserving
3.3 Reaching people without internet and/or functional national ID systems
The people who need the UBI the most often live in places with little internet access or countries that have no reliable national identity system.
3.4 Blockchain scalability
4. How we use resources: employing people and deploying funds
As a non-profit organization, Global Income Coin can grow to deploy funds at megaproject scale and employ people in domains like software development, economics/econometrics, trading, data science, policy research, security, marketing, partnerships, community management.
While the UBI generated by GLO is eventually donation-independent, the Global Income Coin Foundation does use donations in two ways:
1. Operational costs
The Global Income Coin Foundation wants to be a ‘slim organization’. Our aim is to incentivize for-profits to build infrastructure and provide services rather than becoming a full-blown tech company ourselves. Still, we expect to eventually employ hundreds of employees.
2. USD reserve
During times with low natural demand for GLO, the Foundation will use its existing supply of USD to purchase GLO and artificially support the value of the UBI. This should only be necessary in the early phase; eventually GLO should sustain its own value. The USD reserve buys us time to get to that point. It can theoretically deploy an arbitrarily large amount of funding.
5. Request for feedback + how you can help
We’re soliciting ideas and participation on a few fronts:
A. The Effective Altruist Case for Global Income Coin
That’s the title of an upcoming document (see draft) that should explain why GLO is worth pursuing from an EA point of view.
What would it take to persuade you? More fully-fleshed out intermediate plans? Some early successes? Strong, Ulysses-tying-his-hands-to-the-mast commitments to Do No Harm? Endorsements or oversight from certain people?
- Let us know your biggest reservations in the comments and we’ll use them as input for what to write about.
- Additionally, we’re looking for volunteer reviewers from within the EA community as well as volunteer writers/researchers.
If you’re excited about Global Income Coin, have relevant expertise, and want to help us answer some of the subquestions, please reach out!
B. Spread the word
- Grow our reach: join/follow Twitter / Discord / LinkedIn / Youtube
- Retweet our announcement tweet
- Send our website to a couple of friends
- If you work at a forward-thinking crypto exchange, we’d love to hear from you.
- We’re hiring across the board!
The Foundation is in the process of officially being set up.
n.b. slide 22: “Normal economic growth requires a certain amount of money supply growth to facilitate the growth in transactions.”
Classically, seigniorage referred to the difference between the face value of physical currency and the cost of producing it. There’s a nice illustration of this in Chapter 4 of HPMOR, in which Harry goes to Gringotts and asks how much the Goblins would “charge in fees, as a fraction of the whole weight,” if he were to bring in a ton of silver for them to convert into Sickles. Those fees are seigniorage. With digital currency, the cost of producing money is practically zero.
This is in contrast to how currencies like bitcoin work: if their demand grows, the number of coins stays the same, so the value per coin goes up (and early investors profit).
In fact, these initiatives may use the Global Income Coin network as their payment rails.
That’s assuming GLO replaces all government-created money. That’s not all money on earth; the majority of money is created by commercial banks. Replacing all money on earth would allow for an estimated UBI of $3.78 per person per day.
Note that it’s not as simple as saying "100% adoption gives a UBI of $1/person/day, so X% adoption gives X% * $1". At lower adoption, seigniorage is distributed among fewer people. Additionally, the 8% money growth is an estimate based on the 25-year average across all countries and industries. Actual seigniorage highly depends on what specific parts of the global economy Global Income Coin finds adoption in.
Here’s a model illustrating how far a $25m reserve would take us under various circumstances.
Comments sorted by top scores.