A provocative local solution for Reparations and Universal Basic Income.
Quite recently the city of Evanston passed 126-R-19, “A Resolution Establishing a City of Evanston Funding Source Devoted to Local Reparations" where the Chief Financial Officer is authorized to divert all adult use cannabis funds received by the Illinois Department of Revenue for sales of adult use cannabis to a separate fund in a City account for local reparations, referencing “housing assistance and relief initiatives for African American residents in Evanston” and “various Economic Development programs and opportunities for African American residents and entrepreneurs in Evanston.”
Obviously many questions remain especially on the constitutionality of reparations themselves if the disbursements are based on race. At the end of the day, who receives such local disbursements is left to city politics.
What the IDPCS is interested is to discuss creative solutions to the other set of questions of how do we even go about dispersing such payments, whether in the form of reparations or universal basic income (UBI). A revolutionary blockchain solution could provide the answer, called the Intercoin platform where local communities can implement their local currency and control the communities fiscal policy by creating a community economy without having to rely on intermediaries. This is a solution that any city or government should take notice of, especially if it's interested in Universal Basic Income.
Inside most payment systems, payments with internal currency are frictionless, and often carry no fees (think of PayPal or Venmo). Intercoin technology enables communities to release their own local currency, to behave much the same way. Intercoin acts as the bridge currency between every Community Coin as well as external ledgers such as fiat and crypto. People (ex. shop owners, tourists etc.) who wish to engage in commerce within some community simply deposit Intercoin to the Community Network by transferring them to the community’s account on the global Intercoin Network. In exchange, the local Community Network automatically issues them local currency. The local currency consists of internal tokens (liabilities) of the community, redeemable for Intercoin (assets) held on reserve.
In this way, people can “cash in” and “cash out” of a local economy, trading Intercoins for local Community Coins, and back. Community members and businesses will be able to pay one another for goods and services using the local currency. Community apps will be able to integrate the community’s currency the same way they integrate payments with Stripe or PayPal.
Over time, as more people start to use the currency, merchants may start to cash out less often, as money circulates internally within the system. Businesses may begin to pay their employees in this currency. At this point, the community reserves are magnified by a multiplier, and it can exercise discretion with regard to monetary and fiscal policy, for example issuing more internal currency (this is similar to how fractional reserve banking got started).
Intercoin is designed from its inception to enjoy very real demand. At the core of this demand is the uniqueness of each local currency within its own community.
Communities use the Intercoin Currency Kit to issue their own currency, and integrate it into their local Community Apps. Each community promotes their Community Coin internally to its members, until it is widely accepted in exchange for local goods and services. That network effect of being widely accepted is what makes the Community Coin valuable in the local community.
As mentioned above each Community Network keeps Intercoin on reserve, in order to cash anyone out from the local currency into other currencies. When merchants want to import goods, people want to make online purchases, travel or invest abroad, they will exchange their local currency for Intercoin, which can then be exchanged into anything else. Thus, Intercoin represents the “asset side” equal to the value of all the local Community Coin economies. When community members, visitors, foreign investors etc. buy local Community Coins, they deposit Intercoin with the Community Network. This will always create demand specifically for Intercoin, as it must be held on reserve. This is similar, for example, to how the US Dollar is used held on reserve by banks throughout the world, creating demand for it as a reserve currency.
Intercoin’s Adoption in the Community
If someone sends you money via PayPal, you need to open a PayPal account to get it. If you want to pay someone (a friend or a merchant) with PayPal, you ask them to install it. The more people have a PayPal account, the more frictionless payments with PayPal become. And thus, more businesses begin to accept it. Same could be in the city of Evanston.
Communities that use the open-source Qbix Platform can install social apps built by Intercoin or from other, third party developers. These apps will have Intercoin built in as a payment method alongside Stripe, PayPal and other payment SDKs. The Intercoin allows people to pay in the community’s local currency, seamlessly. All the prices are conveniently denominated in the user’s home currency (dollars, euros, yuan, etc.) but internally, the money is being moved by the Intercoin system, hosted by the community’s own network.
JUSTICE COIN ADVANTAGE #1: LOCAL CPI
Having a local digital currency would allow the community to have much more insight into the prices of things. Stores or manufacturers could tag certain products with certain categories (e.g. “food” or “cleaning supplies”). During checkout, information about how much was spent on each category could be anonymously added to the community’s aggregated ledger of transactions. From there, a deeper analysis can be done by various apps and products, who may hire data researchers to identify trends and make suggestions.
This kind of insight into the community’s buying aggregate behavior can help communities make smarter decisions. The community owns the data, but could give others access to it on a limited basis. It could provide daily reports for its own residents, who can see the distribution of money being spent in the community. It could also be used to respond to price signals.
Increases in price could be analyzed with neural networks to see whether they indicate a cartel, or a genuine phenomenon such as a shortage. All this becomes possible when each community issues its own currency.
JUSTICE COIN ADVANTAGE #2: BASIC INCOME
Basic Income is a “holy grail” of social safety nets, eliminating much of the bureaucracy and perverse incentives associated with means-tested welfare (which is dominant today). The idea is that there are necessity goods which everyone requires to buy basic amounts of even if times are tough, such as food, water, shelter, etc. Thus, members of the community should receive a certain amount of money every day, to save or spend on necessities.
Safety nets allowed people like JK Rowling and Jan Koum to create billion-dollar enterprises with Harry Potter and WhatsApp, respectively. Without them, they might still be working at a dead-end job, waiting for their social security paycheck.
Local communities powered by Intercoin allow us to efficiently implement basic income. From the outset, it is designed to tolerate inflation of local community currencies, without lowering the value of the main Intercoin blockchain. As prices of goods rise with respect to the local community currency, local vendors simply get paid larger amounts. This, in turn, affects the exchange rate of the local currency to the global Intercoin. Consumers don’t have to worry about the details when shopping – prices can be easily denominated in a familiar currency such as dollars, or Intercoin. Under the hood, the community currency can be used to implement local fiscal policy as a community, including how much to issue for Basic Income.
Basic Income can only really work if each local community controls the amount it issues, and
to whom. Both features will be implemented out of the box in the Community Kit. Our platform already allows communities to determine who is a member and who isn’t. This was designed to prevent overload of the community web resources, such as denial of service or sybil attacks, but can be easily adapted to other resources, such as money.
Using the Governance feature, the community could determine the product categories and
fraction of the Local CPI to issue to everyone as Basic Income. Then, every day, people would receive that money based on the previous day’s costs. This would, for example, allow everyone to buy food after a shortage, and then the community could figure out what to do with the excess money later, including removing it from circulation via taxes and fees. People have asked for crypto-currencies supporting Basic Income. We have a chance to actually do it right!
JUSTICE COIN ADVANTAGE #3: IDENTITY
Qbix, the company launching Intercoin, has developed an open protocol for identity that’s compatible with everything else out there. It lets people use native apps running on their personal devices to securely authenticate with any website. Unlike password managers, it eliminates the need for passwords completely. Passwords are “something you know,” and if someone else knows it, too, they can get into your account. It is far better to store large private keys on personal devices, which you secure with a passcode or biometrics. These devices now have secure storage areas that even hackers can’t access. Other devices can be authorized with QR codes or Bluetooth, while each private key never leaves its device. Qbix builds on recent innovation in this space by venture-backed companies such as Keybase.
The Qbix Auth Protocol goes much further than just authentication, allowing each user to manage their identity across communities without being tracked by third parties. Your personal information and address book is kept private on your phone, rather than being given out to every website to “find your friends.” When a friend joins a community and wants you to know, you get a notification. You can see your friends discovering new websites, restaurants, and other communities, and get an instantly personalized experience when you arrive, without the site knowing anything about you. All this “magic” has already been implemented as part of the open source Qbix Platform, ready to use by communities, websites and app developers.
Ultimately, over the last several years at Qbix, we have finally solved all the architectural issues required to give people control over their own identity and data, while simultaneously providing a social experience across communities. It is part of our mission to empower people and unite communities.
On top of this, we have already built social apps that any community can install, and any user can seamlessly use with their friends across communities.
It is now time for Intercoin to build on top of these cryptographic innovations to implement payments across communities, governance within communities, and much more.
Our user identity system is decentralized and architected like the internet. Instead of having one identity across a giant, monolithic community, people have a different User ID in each community, and it’s up to them whether they want to let others know about it. Their private keys never leave their devices. We implement the Qbix Auth Protocol which allows Anonymous Instant Personalization. Your contacts stay private on your phone. From your own devices, you control your identity across various communities, and choose which friends can find you in those communities.
JUSTICE COIN ADVANTAGE #4: GOVERNANCE
As people form organizations, they need a mechanism to arrive at a consensus before the organization takes action. Many mechanisms have been used, including various types of direct democracy, representative democracy, and so on. When it comes to community policies regarding its internal money supply, local ordinances, or projects to fund as a community, the mechanism starts to play a vital role in how the community evolves.
Having a local blockchain with Intercoin, enables all kinds of great governance mechanisms to be implemented. You can pay from your phone (just like you do with your app). But you will also be able to vote from your phone, securely and privately, without anyone knowing how you voted, yet being able to actually verify that your vote was counted. (See Proof of Corruption below).
You will be able to see at a glance how your communities are doing, see what the cost of necessity goods has been in the last few months, and have your voice heard. You’ll see a breakdown of how the community feels about an issue, and you’ll be able to make decisions as a community that are implemented the very next day (at least when it comes to fiscal policies around the local currency).
Many more innovations can be developed over time. For example, we plan to implement Provably Random Anonymous Polling, which has better statistical properties than voting. It doesn’t have issues with voter turnout or gerrymandering. Third parties will be able to build on this all with further innovations. Communities will make their own choice as to what to install.
JUSTICE COIN ADVANTAGE #5: FUNDRAISING
One of the most exciting areas where Intercoin can increase innovation is fundraising. With Intercoin, these processes can be democratized, allowing anyone to fund a project. By having an NGO, like the The Institute for the Development and Preservation of Culture and Self-Sufficiency, we will be able to raise money from outside the community and (i) pledge money for projects that users can vote for based on their understanding at the local level. Even donors could also have an input on what they see as beneficial – a true community-based choice.
People in the network could indicate their desire for certain apps or projects, and pledge money (or future subscriptions) to those who develop those apps or implement those projects. Developers and teams can take on the challenge, knowing that the money has already been pledged. Each project can go through different stages – design, architecture, etc. – in which the teams compete and are judged by the people who pledged the subscriptions, or their elected delegates / experts.
Teams that are selected receive funding to complete the subsequent stage. Once the final results are out, those who pledged automatically get a (discounted) subscription to the result. And the fruits of the entire process can be public, including the projects which were not selected.
We will make sure to integrate project proposals in the app used by the community to start gathering proposals. This could steer innovation and boost the local economy in unimaginable ways.
JUSTICE COIN ADVANTAGE #6: PROOF OF CORRUPTION
It should be stressed that there are many good open-source Distributed Ledger Technologies that can be used for both the Intercoin network and the Community Coin network. Our project aims primarily to enable local commerce and fintech innovation. In this context, it can be thought of as “Wordpress for Currencies,” while the choice of underlying DLT is like a choice of open-source backend database engines, such as MySQL, Postgres, MongoDB, SQLite, etc. In other words, our project is like Apple and its Mac – which took the new Personal Computer technology and developed a new breed of easy-to-use software that opened up a world of possibilities for regular users: graphical design, fonts, home publishing, and more. We believe there is a great deal of room to innovate by bringing Crypto-Currency technologies to communities. Also, Intercoin’s novel techniques allow us to eliminate the double-spending problem entirely without requiring consensus. Consensus comes at a serious cost. First of all, it is slow and requires eventual knowledge of all participants and transactions: any time a group of participants achieves a consensus, it may be overturned when they later learn of a larger group of participants that achieved a conflicting consensus, invalidating previous payments. And secondly, the process can completely break down when more than ⅓ of the participants are “dishonest,” allowing them to prevent any further progress in the system indefinitely. The DLT we are building is completely decentralized and can scale to communities of any size that want to run their own payment network.
In conclusion, we cannot rely on the Federal government to endorse national Reparations. Any Reparations or Universal Basic Income will need an infrastructure ready and it should be tested at the local level. By building a local economy where you can directly support local businesses, fund local entrepreneurial projects based on local needs, and have everything in one centralized application on a decentralized network, Intercoin and the Justice Coin look promising to boost local development and boost the morale of the community, a true preservation of culture.