I’ve
long been pondering why “poverty” still exists in the world,
given how advanced our societies have become. The per capita income
for United States, for example, is USD 57,000+ as of 2016. In a
household of four (two parents and two kids), that means an average
annual income of USD 228,000, or USD 19,000 per month before tax.
That’s
a lot of money for a household to spend!
Even
in other places such as Taiwan, where I live. The per capita income
is USD 22,000+, the above household would have an annual income of
USD 88,000, or roughly USD 7,333 per month. That’s also a lot of
money, given Taiwan’s living standard. If a household spends
just half that amount, it'd have a very comfortable life.
The
issue then, isn’t about productivity, or whether society at large
is capable of producing enough goods and services for everyone
to live a comfortable (not just adequate) life, but
about the distribution
of the wealth generated.
I
first read about Basic
Income (also
known as Universal Basic Income, UBI),
from the book Redesigning
Distribution years ago, and
have been fascinated by its potential to eliminate poverty as we know
it, while keeping the
productivity incentives of capitalism.
I’ve since found
out that many
prominent world leaders and thinkers also support the idea.
However,
whether one supports or
opposes, the consensus is
that implementing
Basic Income is
hard and will require a lot
of effort, with
issues
range from funding to public support. Although
its realization might sound utopia, reasonable estimates are that
it would be many years away
before we see any mass
adoption.
I
change my mind recently when
I learned about Crypto20,
the first cryptocurrency
index-fund. An index
fund tries
not to actively pick
investment targets,
but to simply build a
portfolio based on a known index. It’s
also the only
fund type
Warren
Buffet suggests to own
for most.
The logic is simple: index fund grows
steadily as long as the
underlying economics grow,
whereas there’s no guarantee how
good or bad a given company
stock will perform
long-term.
Cryptocurrency,
being in its infancy, has
seen some very wild
ride, with the most famous
Bitcoin
growing 17-fold
since the beginning of 2017 to
USD 17,000. There are over
1,300+ altcoins
now, with new additions
every week.
Given crypto’s
volatility, its best
bet appears to be an index fund.
There
are a few big IFs I’ll be
making now: IF cryptocurrency
is for real and will last (as
argued by James Altucher), and
IF its growth rate is
phenomenal like nothing
we’ve seen before (as
suggested by its recent growth), THEN
it means that it will create
(or shift) a lot of wealth.
A
long-term index fund on
cryptocurrency will then be
able to generate retirement fund for people, even with
a small initial
investment. If
a crypto index fund somehow pays dividends on
its profits as well
(which Crypto20 does not do), then it
could effectively act as a form of Basic Income system. If
it’s also open-end
and able
to accept new investors any time (Crypto20 is closed-end),
then it could provide
basic living support for many people.
This
is an interesting possibility
to realize Basic Income sooner than we might
have thought.