The NFT Craze: Unraveling the Fundamental Challenges and Paving the Path Forward

The NFT (Non-Fungible Token) craze took the world by storm, captivating artists, collectors, and investors alike with promises of unique digital ownership and unprecedented value. However, as the frenzy has unfolded, fundamental challenges have come to the forefront, casting doubts on the sustainability of the current NFT ecosystem. In this article, we explore the reasons behind the NFT craze being perceived as fundamentally doomed in its current form and discuss potential measures that could salvage and enhance the technology for a more prosperous future.

1. Market Saturation and FOMO:

The initial hype surrounding NFTs led to an overwhelming influx of projects and tokens flooding the market. As demand surged, so did the fear of missing out (FOMO), resulting in speculative investments and inflated prices detached from the true value of the underlying assets.

2. Lack of Intrinsic Value:

The NFT market often centers around digital art and collectibles, raising concerns about the tangible value of these assets. Unlike physical artworks or traditional collectibles, NFTs’ primary worth is often subjective and heavily reliant on speculative sentiment.

3. Environmental Impact:

The energy consumption associated with blockchain networks used to mint and trade NFTs, particularly those built on proof-of-work (PoW) systems, has raised significant environmental concerns. Critics argue that the environmental cost outweighs the perceived benefits of NFT ownership.

4. Copyright and Ownership Disputes:

The nature of blockchain and NFTs can exacerbate copyright and ownership disputes. While NFTs aim to verify digital ownership, the original creator’s rights may still be contested, leading to legal complexities.

5. Lack of Liquidity:

While some NFTs have commanded exorbitant prices, the overall NFT market has experienced liquidity challenges. Selling NFTs often requires finding a willing buyer at the desired price, making it challenging to exit positions quickly and efficiently.

Salvaging the NFT Tech:

While the NFT craze may be facing challenges, there are potential avenues to salvage and enhance the technology for a more sustainable and meaningful future:

1. Emphasis on Real-World Utility:

NFT projects should focus on real-world applications beyond collectibles and digital art. Exploring use cases in areas like gaming, supply chain management, and authentication could give NFTs tangible value and broader market acceptance.

2. Sustainable Blockchain Solutions:

The NFT community must embrace sustainable blockchain solutions, such as those built on proof-of-stake (PoS) or layer 2 scaling networks, to address environmental concerns without compromising security and decentralization.

3. Standardization and Interoperability:

Standardizing NFTs and promoting interoperability across different blockchain platforms would enhance liquidity and accessibility, making it easier for users to trade and utilize NFTs across ecosystems.

4. Fair Compensation for Creators:

Ensuring that creators receive fair compensation and royalties for their work through smart contracts and decentralized mechanisms can foster trust and incentivize quality content creation.

5. NFT Education and Awareness:

Promoting education and awareness around NFTs is vital for users and investors to understand the technology’s benefits and risks. Greater transparency about the underlying assets and their value proposition can prevent speculative bubbles.

The NFT craze may have encountered fundamental challenges in its current form, but the underlying technology holds immense potential. To salvage and enhance the NFT ecosystem for a prosperous future, the industry must address market saturation, environmental impact, and intrinsic value concerns. By exploring real-world utility, embracing sustainable blockchain solutions, and promoting fair compensation for creators, NFTs can evolve into a transformative force in the digital economy. With responsible development, education, and awareness, the technology can shed its “craze” status and establish a lasting and meaningful presence in the realm of digital ownership and innovation.

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Worldcoin: Unraveling the Controversial Aspects of Sam Altman’s Startup

Sam Altman’s Worldcoin startup has garnered significant attention in the world of cryptocurrency, promising to distribute universal basic income (UBI) through its unique method of biometric identification. However, amidst the excitement surrounding the venture, a closer examination raises concerns about its feasibility and the potential ramifications. In this article, we explore the controversial aspects of Worldcoin, shedding light on why some view it as a bad and questionable idea.

1. Centralization Concerns:

Worldcoin’s reliance on biometric identification raises red flags regarding centralization and user privacy. The use of biometric data as a means of identification can lead to a concentration of power and control in the hands of a few, compromising the principles of decentralization inherent in blockchain technology.

2. Security and Data Vulnerability:

Biometric data is highly sensitive and poses security risks if mishandled or breached. The storage and management of such data require robust security measures to protect users from potential identity theft and other cybersecurity threats.

3. Ethical Implications:

The concept of linking universal basic income to biometric identification raises ethical questions about the surveillance-like nature of the system. Critics argue that it may lead to a loss of personal autonomy and expose vulnerable individuals to potential exploitation.

4. Technological Feasibility:

Implementing a global biometric identification system on a blockchain at scale presents significant technical challenges. The complexities involved in accurately verifying identities across diverse populations and regions may hinder the project’s practicality.

5. Socioeconomic Disparities:

Worldcoin’s approach assumes universal access to biometric identification, which may not be feasible in regions with limited technological infrastructure or marginalized populations. This approach risks exacerbating existing socioeconomic disparities.

6. Dependency on a Select Few:

Worldcoin’s reliance on individuals physically traveling to distribute UBI raises questions about the accessibility of the benefits, particularly for vulnerable and marginalized communities. Such a system may inadvertently exclude those who face geographical or mobility constraints.

7. Regulatory Hurdles:

The use of biometric identification for a universal basic income program is likely to encounter significant regulatory hurdles and privacy concerns. Navigating the complex web of legal frameworks and data protection regulations may hinder Worldcoin’s implementation.

While the concept of Sam Altman’s Worldcoin startup has generated intrigue and excitement within the cryptocurrency community, it is not without its detractors and controversies. The centralization concerns, security risks, ethical implications, and technological feasibility pose significant challenges. Moreover, the potential exacerbation of socioeconomic disparities and regulatory hurdles add to the skepticism surrounding the project’s viability.

As the cryptocurrency landscape continues to evolve, it is essential to approach new ideas and ventures with a critical and cautious mindset. While the ambition to provide universal basic income through innovative means is commendable, it is crucial to thoroughly address the concerns and ramifications before embarking on such ventures. As Worldcoin progresses, it must navigate the intricate web of challenges to demonstrate its viability as a responsible and impactful initiative in the world of cryptocurrency and social welfare.

Cryptocurrencies: Debating Securities or Actual Currencies and the Role of SEC Oversight

Cryptocurrencies have become a prominent feature of the modern financial landscape, sparking debates about their classification as securities or actual currencies. The distinction holds significant implications for regulatory oversight and investor protection. In the United States, the Securities and Exchange Commission (SEC) plays a central role in overseeing securities, raising questions about whether cryptocurrencies should fall under its purview. In this article, we delve into the complexities of categorizing cryptocurrencies and explore the arguments surrounding SEC oversight.

1. Cryptocurrencies as Actual Currencies:

Advocates of classifying cryptocurrencies as actual currencies argue that they function as mediums of exchange, stores of value, and units of account. They assert that cryptocurrencies like Bitcoin and Litecoin are designed to operate independently of any central authority, resembling traditional fiat currencies in their decentralized nature.

Monetary Freedom: Treating cryptocurrencies as currencies recognizes the potential of financial innovation, offering individuals greater control over their assets and financial transactions.

Currency-Based Regulations: Placing cryptocurrencies under the purview of financial regulatory bodies focused on currencies may lead to more suitable and effective regulatory frameworks.

2. Cryptocurrencies as Securities:

Proponents of classifying cryptocurrencies as securities contend that many initial coin offerings (ICOs) and token sales represent investments in projects or businesses, similar to traditional securities. The Howey Test, established by a Supreme Court ruling, is often cited to determine whether an asset qualifies as a security.

Investor Protection: Treating cryptocurrencies as securities could provide a higher level of investor protection, ensuring transparency and disclosure requirements.

Regulatory Safeguards: SEC oversight of cryptocurrency offerings may prevent fraudulent activities and promote fair market practices.

3. SEC Oversight and Regulatory Challenges:

The SEC has taken action against ICOs that it deems to be selling unregistered securities, reflecting the Commission’s efforts to regulate cryptocurrency-related activities. However, determining whether a specific cryptocurrency qualifies as a security can be challenging, as some digital assets may possess both currency-like and security-like features.

Regulatory Clarity: The lack of clear regulatory guidance on cryptocurrency classification has led to uncertainty among market participants and hindered the growth of the crypto industry.

Global Implications: Decisions regarding cryptocurrency regulations can impact the global crypto market, raising concerns about regulatory arbitrage.

4. The Evolving Crypto Landscape:

The cryptocurrency space is continuously evolving, with new innovative projects and technologies emerging. The dynamic nature of cryptocurrencies poses challenges for regulators to adapt and strike a balance between fostering innovation and ensuring investor protection.

The classification of cryptocurrencies as securities or actual currencies remains a subject of intense debate and regulatory scrutiny. Striking the right balance between fostering financial innovation and safeguarding investor interests is paramount. As the crypto landscape continues to evolve, regulatory authorities, including the SEC, must engage in constructive dialogue with industry stakeholders to develop a coherent and adaptive regulatory framework. Achieving clarity on the classification of cryptocurrencies and providing comprehensive oversight will be instrumental in building a sustainable and inclusive digital financial ecosystem that fosters innovation, protects investors, and embraces the transformative potential of cryptocurrencies.

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Unveiling the Risks: The Dubious Legality and Perils of ICOs

The rise of Initial Coin Offerings (ICOs) has become a magnet for entrepreneurs seeking alternative fundraising methods. Promising rapid capital generation and access to a global pool of investors, ICOs have surged in popularity. However, beneath the surface lies a murky landscape of dubious legality and inherent risks. In this article, we delve into the world of ICOs, examining the potential pitfalls and regulatory uncertainties that raise red flags for both investors and project creators.

1. A New Frontier for Fundraising:

ICOs have presented a novel means for startups and blockchain projects to raise funds, bypassing traditional channels like venture capital or initial public offerings (IPOs). By issuing digital tokens or coins, companies can attract investors globally, often without adhering to the rigorous regulatory requirements that accompany conventional fundraising methods.

2. Lack of Regulatory Clarity:

ICOs have flourished in an environment marked by regulatory ambiguity. The lack of clear guidelines has created a fertile ground for dubious actors to take advantage of investors’ enthusiasm. The absence of established frameworks has also hindered investor protection and raised concerns about fraudulent schemes.

3. Fraudulent Projects and Scams:

The allure of ICOs has attracted a significant number of projects with little substance or legitimacy. In some cases, fraudulent ICOs have duped investors with empty promises and exaggerated claims, leading to financial losses and disillusionment.

4. Legal and Regulatory Repercussions:

As the ICO landscape matures, regulatory authorities around the world are scrutinizing these fundraising mechanisms. Unregistered and non-compliant ICOs are facing increased legal challenges, with regulators stepping in to protect investors and maintain market integrity.

5. Volatility and Market Speculation:

The unregulated nature of ICOs has contributed to extreme price volatility and speculative behavior in the market. Investors, driven by FOMO (Fear of Missing Out), may engage in speculative buying, leading to price bubbles and sharp corrections.

6. Investor Protection:

Unlike traditional fundraising methods, ICOs often lack adequate investor protection measures. Investors face significant risks, including limited recourse for losses and potential difficulty in tracking down fraudulent actors.

7. Project Viability and Sustainability:

Many ICO projects lack a viable business model or a clear path to sustainability beyond the fundraising stage. The absence of regulatory oversight may enable unscrupulous actors to collect funds without any intention of delivering on promises or building a successful project.

While ICOs may have initially promised a new frontier for fundraising and innovation, their rapid growth has brought to light significant risks and legal uncertainties. The lack of regulatory clarity, coupled with the prevalence of fraudulent projects, underscores the need for caution and due diligence in the ICO space. Investors must exercise prudence and thoroughly research projects before participating in token sales.

To foster a more sustainable and investor-friendly ICO landscape, regulatory bodies must work towards providing clear guidelines and standards. Striking a balance between encouraging innovation and safeguarding investors is critical to building a responsible and legitimate ICO ecosystem. As the cryptocurrency space continues to evolve, vigilance and responsible practices are essential to weed out fraudulent schemes and ensure the long-term viability of ICOs as a credible fundraising option for legitimate blockchain projects.

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The Terra-Luna Crisis and the Inflationary Ripples: Examining the Impact of Stablecoins

In the dynamic world of digital currencies, stablecoins have emerged as a compelling alternative to traditional cryptocurrencies due to their pegged value to fiat currencies or other stable assets. With a market capitalization exceeding hundreds of billions, stablecoins have recently faced unprecedented challenges, exemplified by the Terra-Luna collapse, igniting concerns about their potential impact on inflation dynamics. This article delves into the complexities of stablecoins, focusing on the Terra-Luna crisis and its implications for inflation, presenting both potential benefits and risks.

Stablecoins are digital currencies designed to maintain a stable value by pegging them to a reserve asset, such as the US dollar or a basket of commodities. Tether (USDT), for instance, is one of the most well-known fiat-backed stablecoins. The mechanism behind stablecoins involves collateralization, algorithmic adjustments, or a combination of both. This unique characteristic has led to their growing popularity, as users seek to escape the extreme volatility associated with conventional cryptocurrencies like Bitcoin and Ethereum.

As stablecoins’ adoption grows, economists and policymakers have become increasingly concerned about their potential effects on inflation dynamics. The Terra-Luna crisis provides a stark reminder of the risks posed by stablecoins. The collapse of Terra, a prominent algorithmic stablecoin pegged to the value of Luna, triggered a cascade of events leading to liquidity issues and increased volatility in the broader digital assets market. This event serves as a cautionary tale, emphasizing the need for a deeper understanding of the implications of stablecoins on inflation.

1. Inflationary Pressures:

a. Increased Money Supply: Stablecoins, especially those that are algorithmically managed, can expand the money supply rapidly if their demand surges. In a scenario where stablecoins become widely adopted as a medium of exchange and store of value, a substantial increase in the money supply might stimulate aggregate demand and lead to inflationary pressures.

b. Competing with Fiat Currency: Stablecoins’ ease of use, fast transactions, and borderless nature could lead to a shift away from fiat currencies. As more individuals and businesses prefer stablecoins for transactions, the demand for traditional currencies may decline, potentially weakening the central bank’s ability to control monetary policy and respond to economic fluctuations.

c. Speculative Behavior: Speculative trading in stablecoins could exacerbate price volatility, leading to potential asset bubbles. As speculators flock to stablecoins seeking quick returns, the inflated demand for these digital assets might impact the broader financial markets, contributing to inflationary pressures.

d. Isolation Risk: In the event of a collapse or defunct stablecoin, particularly fiat-backed ones, there is a risk that they could become cordoned off from the economy. This isolation could disrupt financial markets, cause liquidity shortages, and result in inflationary shocks if not appropriately managed.

2. Deflationary Forces:

a. Price Stability: The primary purpose of stablecoins is to provide a reliable store of value and act as a medium of exchange. In doing so, stablecoins can counteract the inherent volatility associated with cryptocurrencies, which could result in more predictable and stable prices for goods and services. Price stability, in turn, might mitigate inflationary pressures.

b. Economic Efficiency: The use of stablecoins could enhance economic efficiency by reducing transaction costs and enabling faster cross-border payments. These benefits could lead to increased productivity and economic growth, which could, in the long term, temper inflationary trends.

As stablecoins gain traction, the regulatory landscape surrounding these digital assets becomes increasingly important. Striking the right balance between fostering innovation and safeguarding against potential risks is crucial for policymakers.

1. Clear Legal Framework: To mitigate potential adverse effects on inflation, regulatory authorities must establish a clear legal framework for stablecoins. This framework should address issues related to reserve requirements, anti-money laundering (AML) measures, consumer protection, and ensure compliance with existing monetary policies.
2. Surveillance Mechanisms: Real-time monitoring and surveillance of stablecoin transactions are vital to prevent any illicit activities and to assess their impact on the broader economy. Collaborative efforts between regulatory bodies and technology providers will be essential in developing effective surveillance mechanisms.
3. Central Bank Digital Currencies (CBDCs): Governments are exploring the idea of issuing CBDCs to maintain control over monetary policy and safeguard against the risks posed by privately issued stablecoins. CBDCs could coexist with stablecoins and offer a digital representation of fiat currencies, giving authorities more oversight and control.

The Terra-Luna crisis serves as a stark reminder of the potential impact stablecoins can have on inflation and the broader financial system. While offering attractive advantages, stablecoins also pose significant risks, including increased money supply, isolation risks, and speculative behavior that could exacerbate inflationary pressures. To navigate this uncharted territory effectively, policymakers must establish a robust regulatory framework that fosters innovation while addressing potential inflationary challenges. As the world embraces the digital currency revolution, careful consideration and proactive measures are essential to ensure a stable and sustainable financial future.

Just some thoughts: the crypto crash

So this past month or so has been quite the ride for the crypto markets as a whole, and I just wanted to share some thoughts!

Mostly, I think that this crash is actually a good thing! The bad of course being the tens of millions of dollars that has been lost by investors who were late to the game. But that’s about it in that category!

“How is this a good thing,” you are almost certainly asking, and that’s a pretty fair question, especially with those markets tanking alongside the stock market, it just seems like there’s no good news to be had.

Well, the first piece of good from this is the pruning of a number of griftcoins, non-fungible griftcoins, and cryptocurrencies that have too limited and unnecessary use-cases.

The stories of the pump-and-dump ICO are rampant, with many simply being impractical, badly implemented, or just a scheme to make a few people a bunch of money selling air to suckers. With many of these crashing, losing most of their value or even nearly going to $0 in some cases, there will be in general, more oversight, if not from government regulators, from investment firms, before a fund now simply decides to incorporate crypto into their holdings.

Also with some of the more frivolous, or badly executed NFTs, there will hopefully be reforms in the way that the system works, as the carbon footprint for an NFT on the ETH blockchain is simply too high at the moment to be practical in the long term, and such projects should only be added if they bring or create some kind of real value.

A final thought on NFTs before I finish this ramble today is about the use of those that only serve to be collectible cards or art-without-rights should be removed, or be severely limited. To get ownership of an image on the blockchain, but to not actually get any rights that would normally be associated with that ownership, other than the ability to resell it I think is a destructive model to the crypto community. NFTs while they do have potential use cases that could really be… well… useful, they have become a laughing stock, with many outside the community poking fun, or even getting angry about them. I’ve been around since the beginning and I really do believe in the possibilities that blockchain technology can bring, but we should really keep some limits in mind.

On an (almost) unrelated note, I recently discovered my crypto-pamphlet available for sale on Google books! I thought that it had been lost to the sands of time, but you can get it in all of it’s sage and cringe here!

And if you’re more interested in works of fiction, you can get the first two books of my series here and here respectively!

See you next time I have some thoughts! (It’ll be soon)

Why Bitcoin is Not A Hedge

Well, it’s happened, the adoption of Bitcoin to the point where it has become mainstream enough. The problem is that the vision that Satoshi had for the digital currency has failed. Bitcoin is not the border-less currency that was envisioned, a decentralized system that would be separated from the pitfalls and difficulties that traditional currencies would be. Now, of course, there has been a fierce debate on what role Bitcoin should play, a borderless currency, a decentralized fiat, a new class of asset in the vein of gold or other precious metals, a harder-to-hack currency, but it seems that the market has decided for the community which role that it is going to play as it becomes more ubiquitous: a stock.

See, investors don’t spend cryptocurrency like the typical crypto-adopter might. For the investor class, cryptos have now just become a new class of asset, like dollars or euros, the yuan, bonds or ETFs. However, unlike many of those other assets, which are chosen for their stability, their consistent yields, or their dividend returns, bitcoins and other cryptos are purchased for their instability, and their relatively low trading volumes, at least when compared to the market cap of any given blue-chip stock. For example, the total market cap of bitcoin at the moment is roughly $67 billion. By no means is this small potatoes compared to where it has come from, but that is nothing compared to the market caps of Apple, Microsoft, Amazon, Alphabet, or other major players, who all have market caps over ten times that. Even including every cryptocurrency, the numbers are still small overall, with a total crypto market cap of just a bit over $300 billion, with much of that being distributed across a large number of even more volatile currencies, with even smaller caps.

As a result, when investors trade on crypto, their sheer purchase power as a percentage of the availability means that bitcoin cannot maintain independence from the rest of the investment markets at large. When markets move now, bitcoin is destined to move with those markets as investors trade it as they might with a mid-cap or small-cap stock. The downside to trading currency though is that for the currencies, you only realize your profits when you actually sell or use the currency, meaning that rather than holding onto stocks for their dividend benefits, to actually use the benefits, a person must either actually use the currency, or sell it off, with the second being far more likely for those who are buying large amounts of crypto for investment. Bitcoin and other cryptos now have the problem that they have been adopted by the investment class as an investment before it was used more widely as an actual currency, with much of the adoption being driven by the insanely-hyped stories that come out every once in a while about someone whose early purchase of bitcoin has now made them incredibly wealthy, with a lot fewer businesses and consumers using it on the streets, where usage would keep the prices more stable and resistant to the effects of market movements.

Bitcoin’s price “Stickiness”, or Why it Won’t Exceed $13k for a while

I see so many articles about bitcoin, many of the ones that I have seen lately have all been saying more extreme versions of the same thing, that any day now, bitcoin is going to blast off from where it is to record highs. For many of the estimates that I have seen, numbers like $17k in 2012 would be the bottom of the barrel. I’ve seen estimates saying that bitcoin is going to blast off to over $400,000 between the halvening and increased adoption. However, despite people making these predictions since at least October of 2019, it has yet to come to pass. It seems that every time the price gets just over $10,000, something happens that causes the value to drop, in particular, large sell-offs.

I predict though, that it will be a while before bitcoin actually can start such a meteoric rise. However, there is a major price hurdle in the way first $13,000, which is about where the price was before it dropped last year, and is still recovering from. As the price of bitcoin was increasing during that time, there was a bit of a purchasing fervor. I strongly suspect however, that there are many who have since the price dropped, have held onto the coins that they purchased at that time, and are waiting for the price to get back up to where they purchased it before cashing out. Therefore, it would be reasonable to expect to keep seeing large sell-offs at around that price for a few months, until the pressure of increased adoption catches up to the freed up coins from the large injections.

My suggestion is to hold onto your coins for now, and when the next correction comes, buy while it’s discounted!

 

 

Technological Governance: Token Benefits (Encouraging Good Behavior)

It’s quite a mouthy title, to be sure, but the idea in and of itself is actually fairly straightforward. People work best under positive incentive structures, but setting up those structures in such a way as to encourage people to use them without abusing them is tricky. The benefits to cryptocurrency tokens though, is that you can pretty much put any restriction one could imagine on them.

I was considering the problem of roadside trash, and how much of a blight that it is, both aesthetically, but more importantly, ecologically. Part of me just wanted to pull over on the highway, grab a trash bag out of my car, and pick up some of the debris. However, I was presented with a number of reasons why it just wasn’t super feasible, the largest of those being that I did not have a trash bag in my car. Among others though were the sheer inconvenience of trying to pull over to park on the side of a busy, traffic-laden highway, and the one that caught myself off-guard, I had no tangible incentive, other than vague notions that my actions would “help save the environment”. However, that last reason, the lack of tangible incentive, gave me an idea. A cryptocurrency token, distributed to citizens, that had a unique property, it could not be used by the individual who receives it. A bizarre idea, to be sure, but here is the gist of how such a currency token would work.

These “Samaritan” tokens would be connected to contracts on the blockchain, which would be created by citizens. These contracts would include things like roadside trash pickup, park maintenance, or other issues that citizens desire to have taken care of. Citizens could place a “bounty” on the task, which would be searchable by location. Multiple citizens can place bounties on the task, raising the value of the task, until someone accepts the contract, and performs the work. They would then provide proof-of-work in some appropriate form (most likely photos from the contract location), and then the people who placed the bounty (some percentage or numerical threshold) would release the funds to the person who performed the work. With the tokens transferred, the individual would be able to use the tokens for anything the main governmental currency would buy.

So, what would be some of the benefits of such a type of token be? The first is that it facilitates community change from the ground level. People in communities see the needs of their communities most closely. This creates a sort of market for public works, which would be able to be undertaken by an individual, a group of individuals, or an organization, with the greatest needs in the community rising in value, to the point where it would attract the attention of those who could complete the task. The cleanup of a particular street, for example, may raise $20-50 before it becomes worth it for someone to take the contract. An pothole, on the other hand, that a city has neglected, or has been unable to fill, though, because of what it requires to fix, and depending on the severity of people’s annoyance with it, may reach hundreds of dollars before it is taken care of. The other beauty of such a system is that these numbers may be reached through the annoyance of a few people a little bit (hundreds of people putting up small bounties), or by a large annoyance by a few (a handful of people putting up $100 or more bounties).

This model is somewhat a reflection of the flexibility of the gig economy, but with the government as the issuing entity. These contracts could also be applied to privatized tasks, such as providing cleaning service for someone. Each task would be the equivalent of a tax-funded small-scale gofundme campaign. A benefit of this is that tax payers would actually see the benefits of their tax dollars at work, this would also help areas with a lot of general labor that is unused, and would be a boost to the un/under-employed. Another benefit to such a system is that it would highlight areas that need more general laborers, and would also highlight areas that need a lot of work. Areas that need a lot of work, but with little available labor would have contracts that could reach such high bounties that they could attract labor from surrounding areas, or even distant areas, which could help revitalize some communities.

Of course, there are some potential drawbacks to such a system. The first is that tax payers could end up paying more for some services than they would if those services were just performed by government maintenance on some level. This is certainly possible, though the point at which some people will perform those tasks is a lower threshold than others. This would lead one to believe that , so long as the labor efforts were not 100% coordinated, that there would be equilibrium prices that would come about for certain tasks, based on willingness to perform them, the needs of the individual, etc. Since also there would be the ability for anyone to take the contract at some point, it would be difficult for forces to extort money out of the system, unless they had a monopoly on labor. Even then, these projects would include things like, “planting trees in the local park”, or “cleaning up the streets”, “help so-and-so with their lawncare”, “host a local hobbyist group”, or other acts that aren’t necessary to continue running society. There could be some instances of trying to cheat the system that could occur, such as trying to create contracts within a family, to then give the contract to another family member. The problem with such an idea is that this could happen, but since the contract would show up to compete with the entire labor market, the amount would either be small and insignificant, or the project would be snatched up by an outside force. Even in a more complex situation, for example, a group of construction workers/families, who put their tokens into a project to fix a road or sidewalk, and then take that work themselves, yes may get the benefits of their own tokens, but they of course would also need to complete the work (assuming that they were not the only contributors to the contract), meaning that the area would get the benefit of the contract being completed anyways.

Of course, the benefit to attaching the proof-of-work and the contracts to a blockchain is also that it becomes much easier to investigate and suss out fraud in such a system, as pretty much anyone would be able to find that contract, and would be able to verify that the contract had been valid in the first place, then that the work was actually completed as stated. This reduces the amount of fraud and the scale of corruption possible under such a system.

As for how much should be actually given to citizens each month to allocate to these tasks, and what should be done about benefits that are unused over long periods of time, those are problems for a system that is more seriously considering the proposal, and would need to be based on the amount that individuals would receive in other benefits. However, a number around $100/month in current year terms would probably have enough distributive force to allow for this to work on at least small-scale projects, as would be appropriate for the general labor projects that these would likely cover.

What do you think? Would you clean up your streets if your neighbors paid you to? Would you use such a benefit? See anything I missed? Tell me what you think.

A Blockchain Government: Voting

Blockchain technology has the possibility to secure information, to create transparent government, and to reduce bureaucratic overhead. One of the ways this can happen is by assigning blockchain identities to citizens, giving them a unique fingerprint, like a social security number, but more secure. This would act somewhat like a cryptowallet, specifically one with tokenization capabilities. This would allow for tokens to be created for a large variety of different kinds of projects. It could be used to distribute specific categories of welfare that could only be used for those goods or services, such as a housing token that could only be used for paying rents, or a food stamp-like token that could only be used for the purchase of food goods, etc.

It could also though, be used for voting.

There are a number of ways that you could design the system, depending on how transparent or secretive the ballot process is decided to be. Of course, the more secretive methods could be used by authoritarian states to theoretically rig elections, though that level of control could be made difficult.

One way that such a voting system could work would be that citizens were given “vote tokens”, an amount of tokens representing the number of categories to vote for, or could be used in a ranked-choice voting system. The citizens would then vote for their desired choices of candidates or policy decisions, and those tokens would be transferred to the appropriate “vote wallet”. Simply, between the vote wallets, the options with the most tokens win.

Now, how the votes are verified could be done a number of ways, and on different levels, depending on the level of ballot secrecy required. The transaction records could be encrypted, but the token totals available for view, with the system itself verifying the transactions on the network behind the scenes, which has the benefit of an attacker required to hijack the whole network to make any changes to the transaction records, though if this did occur, there would be no way to verify it until after the fact. Another way this could be done is by allowing the transaction records to be seen, which would allow individuals to verify their own vote records on the blockchain, though this has the drawback of making it possible for other people to potentially see another person’s voting record given the right set of information. Lastly, you could just open up the whole system, so that you can see the ID numbers of every person who voted for what category and at what rank. This has the advantage of total vote transparency. A discrepancy between someone’s vote and their record of that vote would be readily available, though this does provide lists of people who might have voted for the wrong person in the case of a more oppressive regime.

So it matters how these technologies are implemented greatly, if we want to leverage the power of technology in government, but this one example  shows the ways that such a technology could be used to both make democracy transparent, or to create an all-knowing techno-fascist state.