Why Universal Basic Income (UBI) is finally feasible from the private sector

As many of you know, tech advancements in AI and robotics may replace many jobs soon. Obama’s White House published a report in 2016 that up to 3.1 million jobs will be lost to automated driving in US. An ever elaborate army of robots could redefine most factory scenes. The effect is not limited to labor work, medical doctors may be supplemented by AI diagnostics capable to perform 80–90% of basic/routine examinations. Many entry-level jobs in legal firms are already being automated.

The irony that as productivity (and overall wealth) increases, the number of good-paying jobs might actually decrease, indicate a polarizing society where the majority of the wealth and income generated will soon be held by an ever smaller segment of the population.

In some ways this could be a positive future: one where humanity no longer needs to work so many hours just to make ends meet, thanks to the massive productivity boost. However, if the wealth created is not well distributed, the imbalance might create social unrest and dissent unlike what we’ve seen in the past.

Social activists and economic theorists have postulated a potential solution called Universal Basic Income (UBI), where as a citizen’s right (similar to rights to education and voting), every citizen beyond a certain age is entitled to a non-discriminatory monetary support for basic living.

To avoid the costly admin effort in social welfare systems, UBI is designed to be given regardless of work status or wealth. So people can still keep any money earned with their own efforts. Unlike welfare, where the benefits are often lost when one starts to earn, causing dis-incentives to work. UBI provides a basic protection on which one may develop other interests or professions.

For example, people caring for youth or elders at home, aspiring artists or entrepreneurs (both share the same difficulty when starting up), may thus have more power to choose. The protection also offers wage earners a base against what employers would offer, so that jobs with poor work conditions are rejected, and people won’t be forced into labor just to earn a basic living.

One major question is of course the funding, while most existing proposals require the government to step in to provide wealth collection and redistribution (via taxation or readjusting existing welfare programs). Due to the high amount of capital required, most efforts for UBI have been limited to pilot runs in small geographic regions.

While this definitely helps to raise awareness and answers questions (for example, whether people receiving “free money” will become lazy, many studies have shown that contrary is true), it’s likely that it’s something that will happen only regionally, and not any time soon.

That may change, however, if we utilize new technologies and approach. Instead of relying on governments, if enough people could pool capital together into a safe long-term investment vehicle, then the required funding for basic income could be accumulated over time, entirely due to private efforts.

Additionally, what’s even more desirable is that the verification of recipients status (a living natural person), and even the calculation and re-distribution of wealth, can be conducted automatically and transparently, so not only the administration costs are kept minimal, the benefits can reach out to the largest percentage of people possible.

Such ideas may seem like fantasies in the past, but thanks to technology and over 40 years of financial market validation, we believe that the tools to realize it are in place and ready.

Index fund is a way to invest in a portfolio of assets (often stocks) based not on the judgment and selection of fund managers, but simply by tracking an index (for example, the S&P 500 that composes of 500 top U.S. companies). This way as long as the underlying assets collectively increase in value, the compound effect of the fund would increase its value over time, without having to rely on any specific fund manager’ judgments.

Warren Buffet has mentioned publicly that index funds most of the times, is the best investment vehicle for both individual and institutional investors (pension funds, for example). He even mentioned that after his passing, he would rather his wife to buy index fund (than shares of his own company). It’s because index funds do not trust nor rely on the success or failure of any single assets, but rather, on the collective growth of a class of assets.

So if we utilize the proven index vehicle on a potentially high-growth asset class such as cryptocurrencies, it could have the potential to generate massive wealth over time due to the compound effect. It would actually be the safest way to invest in cryptocurrency and its long-term success relies only on the growth of various blockchain applications but not on any individual crypto (not even Bitcoin itself!)

Our team has been building a crypto index fund called Joint Commonwealth Fund (JCF) to realize UBI since the beginning of 2018. Our main goal is to build an investment vehicle that would generate wealth on one hand, and re-distribute the wealth automatically on the other, so that society as a whole, may have a way to benefit from this impressive new technology, instead of just the few people who’re in-the-know.

We do this by issue our own crypto token JCF, and by holding one, you’re essentially holding the top 10 cryptocurrencies on the market (by market cap). You can buy JCF token any time at its current Net Asset Value (NAV), which is simply how much a token is worth if you were to sell off all the 10 cryptos it represents at market price. You can also redeem the token back to a given cryptocurrency (currently only etherum, ETH).

So far everything works and looks just like buying and holding a piece of a traditional index fund. However, JCF has two designs that separates itself due to a different purpose:

1) Each year at a given time (Oct. each year), the net increase in NAV over the past year (above the issue price of USD 100) is turned into new tokens into a “dividend pool,” which is designed for re-distribution. A specific percentage of the pool (currently at 25%) will become “dividends” paid to all token holders that year. But only 50% of the dividends are given back according to the relative ratio of “shares” held in the fund (this is like how traditional stock dividend are paid), but the other 50% is equally split between ALL verified token holders.

2) When new participants join with new funding to JCF, we create an additional 7% of tokens that is to be donated to a social or charity organization chosen by the participant. This way JCF tokens can be held by not just people with assets, but also can be on the hands of people who need basic income.

The fund might start small, but over time, if the underlying crypto assets grow in value, and participants grow in size and diversity, this will become a mechanism that could re-distribute wealth, efficiently and automatically, all based on private sector efforts.

By building a fund that invests in cryptocurrencies, we intend to build wealth for the investors, while the profits are re-distributed automatically by a predefined mechanism. If you’re interested, please visit our site at https://jcf.world to learn more!