In a widely reported development, Coinbase is teaming up with the charity Give Directly to provide $12,000 worth of stablecoin USDC to 160 New Yorkers over six months.
The first payment is worth $8,000, and recipients are set to receive $800 each month thereafter.
Coinbase and GiveDirectly are calling this a pilot program for what is known as Universal Basic Income (UBI). This is the amount of money that will be provided to everyone so that they can afford shelter, food, and other necessities as jobs begin to decline due to advances in artificial intelligence and robotics.
But is this actually a UBI pilot program? The short answer is no.
UBI has been investigated and experimented with many times before. In fact, negative income taxation was tested in the United States and Canada in the 60s and 70s, with mixed results.
Pilot programs have since been launched in many countries. Iran also fully adopted the concept in 2010, but with mixed results (subsidy revenues produced mostly positive results, but runaway inflation due to Iran's sanctions, war, and civil war offset those benefits).
Corporate AI executives, venture capitalists and other billionaires have suggested that UBI not only needs to be considered, but fully figured out within the next few years. Because many of the jobs we rely on as a society, from garbage collectors to doctors, therapists, programmers, writers, and artists, will soon be completely replaced by AI, leaving humans with very little to do.
Of course, the fear of the super-rich and powerful is not that people will not be able to afford shelter or care for their families, but rather that “lazy people are the devil's factory” and that large swaths of the unemployed are likely to revolt against the ruling class.
It is impossible to know whether this is a pipe dream of government contracts and amassing more personal wealth for individuals living in the upper echelons of Western civilization, or whether there are actual, serious concerns behind the desperate calls for a UBI.
Nevertheless, a 160-person experiment giving $12,000 to impoverished New Yorkers is not the answer.
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Universal Basic Income: The problem is in the name
The term “universal basic income” means that the most basic expenses, such as rent, food, and transportation, will be covered by subsidies.
The reality is that $12,000 for six months barely covers the median rent in New York City ($1,600 even with rent stabilization and public housing policies).
Those who receive $12,000 in USDC can only expect to use the remaining cash to pay for a portion of their food and transportation expenses for the next six months. With the right UBI experiment, New Yorkers could earn well over $12,000 in six months, but the exact number is difficult to determine.
If you add up median rent, average food costs, and subway ride prices, this number will likely go down. Around $16,000 — probably even more when you factor in other costs like utilities, cell phone bills, and home internet prices.
If this number is more accurate, it would appear that Coinbase's UBI program falls short of New York City's appropriate UBI by at least 30%, and perhaps as much as 50%.
If not a UBI pilot program, what is it?
What Coinbase is offering is more like a $2 million marketing campaign than any kind of UBI pilot program.
While the company is certainly working with very real and noble charities with Give Directly, the requirements to have a Coinbase account, accept payments in stablecoins rather than cash, and the incentives offered to keep stablecoin payments on Coinbase rather than taking them off the platform suggest there are fewer altruistic reasons for the program.
Recipients of stablecoin payments are subject to few, if any, restrictions on receiving assistance.
In fact, this allows them to instantly scatter or gamble their free money on shitcoins, NFTs, or other speculative investments that often go to zero through the required Coinbase account.
Alternatively, you can choose to keep your USDC in the form of a stablecoin and lend it out on Coinbase, which offers an insane interest rate of 10.8%. But with extraordinary interest comes extraordinary risk This is probably something that poverty-stricken New Yorkers are unfamiliar with.
These two spending avenues alone provide a huge opportunity for Coinbase to recoup the large amount of funds it is giving out to these individuals in the first place. But that's just the beginning.
Since the announcement of the pilot program, dozens of positive articles have been written about Coinbase and its new plan to help New Yorkers in need. Even many of the more skeptical posts focus on recipients hooked on the possibility of receiving $12,000 in unconditional stablecoins.
These people will definitely be telling their family and friends about this great gift from the US crypto exchange. This is the exchange you should sign up to because it provides money to Americans and helps New Yorkers who don't have enough money.
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However, the program could also be a not-so-subtle attempt to erase the memory of Coinbase's past sins.
These include leaving customer funds on Bitfinex when Bitfinex was hacked, acquiring controversial Israeli security firm Unbound Security, and Brian Armstrong. Do not allow employees to discuss politics and openly base company decisions on personal politics.
This is not just a government-run program designed to provide goods to those in need.
This is the company's marketing and propaganda campaign, specifically tailored to the fast-moving news cycle, and designed to help Coinbase cover for its previous failures.
Protoss has reached out to Coinbase for comment and will update this article if we receive a response.
