As robots start to replace our jobs, society needs to find alternative methods to provide for people who are out of work. For a while now I have been an advocate of basic income. The idea is that the government would pay a certain amount of money to individuals every month no matter their income, or their job status. This, at first, sounds ludicrous to many people. However, this is a very bi-partisan idea. It has been championed by both the Left and Right. The Left likes it because it is a very simple social program that has the potential to incredibly help people. The Right also likes it because if we were to cut other welfare programs the amount of government spending would actually go down overall. Some say that it may alleviate poverty all together. Martin Luther King Jr. had this to say about it:
I am now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.
—from the chapter titled “Where We Are Going”
Currently, the state of being unemployed is stigmatised. As robot labour becomes more prevalent we have to ask ourselves if having a job, or at least working full time is even necessary. The problem, though, is that basic income is just that. Basic. People without jobs will be barely getting by. Something else is needed to support the future jobless society; the generation of automated passive income.
A lot of technologies are starting to emerge that by their very nature need to be decentralised in order to operate. Digital currency has become a huge player in this space. Bitcoin is the primary example of this. If bitcoin were to become too centralised, the platform would fail. These systems are good news for end users because it creates an opportunity for them to provide services to these networks in exchange for money.
In the digital currency space you have what are called ‘miners’. These miners are what co-create the currency and provide security to the network. In 2009, I used to have a miner running on my laptop and I could generate bitcoins fairly frequently. Today, however, it is very hard (read: impossible) to make any money mining. As an alternative to mining, new services are beginning to spring up, such as decentralized liquidity providers.
An example of a decentralised liquidity provider is NuPool. It is an interesting project that I am currently exploring that is based on the NuBits digital currency. NuBits are an alternative to bitcoin. They are needed because the price of bitcoin is very unstable. If someone wanted to buy bread for 5 dollars, how much bitcoin would they need? Firstly, they would have to check the price of bitcoin and then calculate how much bitcoin they would need for the bread. They can not simply memorise the price because it is so unstable. NuBits provides stability by allowing users to exchange 1 NuBit for 1 US dollar. In order to maintain this exchange rate, there needs to be some market making going on. This is done through the providing of liquidity at a certain price point.
This liquidity is partially provided by the NuPool platform. One role of this software is to provide liquidity to the NuBit/USD currency pair. Providing liquidity is a valuable service because markets need liquidity in order to function. If someone wanted to buy 8 NuBit from the exchange, but there were only 5 NuBits for sale they would be out of luck. Liquidity is provided by a somewhat complex method provided by several roles which will be explained. These roles have been simplified but are available in full in the discussion thread.
- Liquidity pool operator
- Sets up a pool server to verify client connections.
- Liquidity pool server
- Verifies orders placed by pool software using cryptographic technology.
- Pays out NuBits to liquidity provider every day.
- Liquidity pool software
- Creates automated NuBits sell offers.
- Liquidity provider
- Puts some NuBits into an exchange account.
- Installs pool software that controls the exchange.
Here is an example: Alice installs the pool software on her computer and deposits 1000 NuBits into her exchange account. Every day the server performs a calculation and pays Alice. This calculation is 0.25% * 1000. The 0.25% is the interest rate for the day. The 1000 is the amount Alice has in her exchange account. The result is 2.5 NuBits a day. These NuBits can be automatically sent to the exchange account and be used for compounding interest.
These emerging technologies are extremely exciting and hopefully are only the beginning of an entire ocean of possibilities that will become available in the very near future.
Photo credit: Logan Ingalls