Crypto and Universal Income: Proof-of-Identity and the Challenge of "Knowing Your Customer"

A conversation I had with some friends yesterday kind of reminded me of a project I was involved with a few years ago - back when I was still active with the Ethereum community, I had an interesting experience being in the middle of two worlds colliding - the crypto community of its time, and the YangGang - the UBI movement that was popularized by @AndrewYang during his presidential run in 2020. We had all kinds of interesting people in the mix, including one of the original ETH devs, who was there simply because he "wanted to help Andrew".

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Transcript

SPEAKER_00: 0:00

Hey everyone, welcome back to Ryan's podcast. This is number three technically. This time I'm gonna talk about an interesting project that I was involved with some years ago. Not really uh very well known to be honest, but um it was very interesting. So I think it's kind of worth talking about, especially now because the prices are going down in crypto, you know, we're we're kind of going through a correction right in the markets, and not everything is gonna be the same, but uh my perspective comes from like I've been in crypto since like 2013, I've seen a lot of things change, uh, some for good, some for bad, you know. But uh, I think after the market correction is over, a lot of people in the industry, assuming they're still around, are going to be kind of be doing a little bit of soul searching and basically try to figure out what to do next, right? So this is part of sort of like what sorts of projects they used to do back in the day of like 2016 to 2018, which was the hype cycle prior to the most recent one, right? In in 21-22. So uh back then I used to be kind of an ETH maxi, you know, to be honest. Right now I'm all in on TESLs, but um, it's mostly because they used to work on very, very ambitious projects, and this project I'm about to talk about, UBI coin, is one example. So uh without delaying it too much, you know, I'm just gonna kind of start talking about what that was. So in 2016 to 2018, um there was the crypto cycle back then, and the thing that people were talking about the most was crypto punks. And unlike today, where it's like people are paying millions of dollars at this stuff, you know, uh there were just it was just a proof of concept that Larva Labs kind of put out, and they were selling it for a few hundred dollars each, just testing to see if anyone would buy it, you know. And at the same time, though, there was some interesting thing going on with the idea of universal basic income. Uh, Andrew Yang, he's still around doing things right now. Um, I think his latest project is Noble Mobile. But uh back then he was very, very focused on trying to get UBI, get people talking about it, you know. And so that was like leading up to his presidential run in 2020. Uh the Yang Gang, you know, as I was calling it, I was very involved with that stuff at the time. And uh, but because he's still a tech guy, you know, at the end of the day, uh, there's a lot of overlap between technologists and political people talking about like how, you know, are there better ways to do the things that we're doing now, you know? So out of that kind of collaboration came the UBI call, universal basic income. So if people are not familiar with the concept, it's uh universal basic income is basically giving citizens a flat income every month, no questions asked. You know, it's different from a government program designed to help certain types of people, or uh or it's not really a charity either. This is a guaranteed income that comes into your bank account every month. Uh during the campaign, it was a thousand dollars a month, right? So imagine if you gave a thousand dollars to every citizen out there, no questions asked, you know, doesn't matter what your records are, doesn't matter what your status are. And so uh the idea was that uh this was a more fair version of income redistribution because one, it doesn't ask anyone to uh pay extra taxes for specific, you know, special special interest causes, right? And um it kind of gives it uh everyone a social safety net because there's a lot of people out there who are maybe not quite uh homeless or in poverty, but that 1k could really help them stabilize their life, you know, and and if it if for people who have more money, that gives them a little bit of extra income to go spending on things around basically anywhere, right? And the idea was that if the governments were able to implement this in a uh you know reasonable way, it should also be a boost to the economy and they'll get their money back right away, right? And so uh they've done like pilot programs here and there, and most of them have shown that they're relatively successful, you know. Uh the worry is from the critics is that oh, they're gonna be spending it on like drugs and you know other stuff, and you know, uh those things will happen on occasion, but really the the broader point of it is that most people will spend it wisely and um you know the net effect will be positive, and most studies tend to show that that really was the case. So back then, like people were excited about this idea, especially since uh Andrew was getting pretty popular, and it's the one of the rare rare cases where someone who comes out of tech actually is doing fairly well in the political sphere, right? A lot of uh people who work in the tech industry tend to be fairly apolitical. A lot of them are like libertarians or you know, it's all across the spectrum, right? Like it goes left, it goes right, uh, it just depends on who you talk to, but many of them aren't politically involved, like they don't tend to vote too often, you know, and they're not they're seen as not being too vested, right, in their community. But this guy, this guy was different. So kind of writing that momentum. Uh some people in Andrew wasn't directly involved with this, but uh people of the Yang Yang and some people from the tech industry side sort of started collaborating on the idea of doing a universal basic income coin. So it's still there, you know. We can look it up as UBI coin. Um, and the idea was actually fairly simple and actually pretty easy to implement, right? So depending on how your uh currency is set up, there's going to be some kind of um rewards, right? Like for black for uh Bitcoin it'd be like mining rewards, right? And so I just kind of imagine, like, okay, uh some percentage of that will automatically go to a redistribution fund, and that income will go into every wallet universally uh at a regular interval, right? So there was there was a pretty easy way to uh implement like UBI into a crypto coin, uh at least uh right on the protocol level. But there was a problem, and uh it's really like what's stopping anyone from creating 500 wallets and just like milking the system for what it's worth, right? The idea of UBI only really works if it's one person, one income, right? And so there's a big debate that followed where people were saying, like, oh, we need a way to identify people, right? And the most obvious answer is well, we need to verify them, right, with a government ID, because at least that can prevent uh most cases of fraud. But uh, you know, the not just crypto, but the internet itself tends to be very uh they like their anonymity, right? Um and uh there's a you know huge, huge portion of people who are who weren't willing to do go through the KYC process. KYC is uh know your customer, but it's basically uh a buzzword for like yeah, you gotta show your ID, right? You've probably done it before in in like banks or other places that require verification. So there was a need to combine some sort of ID system with UBI, or it wasn't gonna work like at all, because you know there'll be too much fraud, and it's way too easy, right? Set up bot accounts and just like you know, create yourself what 1,000 wallets and just milk it, you know, if you're getting free money, right? Basically. So, um so that kind of went on for a while, but what happened was it actually spurred an idea called Proof of Humanity, which was basically an attempt by the tech community, you know, through this collaboration, to figure out is there a way to identify someone as being a real person without having them fork over a government ID, right? So they came up with all these strategies of how to do that, which is like, okay, um maybe we can check their social media accounts, right? So if someone signs attaches their wallet to various accounts on social media, or maybe their um, you know, whatever, it doesn't have to be social media, it's really like it's just checking for activities, right? And like maybe search histories, um uh things you have posted on YouTube or whatever, and right, and and if you can run all of those things through some kind of verification process, you know, you have to show that you are indeed the owner of uh said things, but if you can kind of like combine all those things into like a nice little package, you can have like beyond reasonable doubt, right? That oh, okay, maybe this person is for real, all right. And uh so unfortunately, um, as far as I know, um it didn't really go anywhere because it's kind of unreliable, right? And part of it has to do with uh lately the a lot of the platforms and uh social media platforms, especially has been kind of falling apart. And trying to get reliable data from them is challenging, even now, right? Especially since they're a private company and they're not really obligated to, right? And the other part is like people treat their just it's just just because there's bots and AI stuff everywhere, and people treat their accounts and even emails kind of disposable, right? And if everything's disposable and temporary, it's like how can you really build a history, right? That that really was the thing, like the lack of history on the internet made it very difficult for these projects to take legs, you know, and that's kind of where it where it's at right now. So um unfortunately, at least when I'm looking at the uh Proof of Humanity project now, it kind of basically is a regular KYC process that you see anywhere, right? And doesn't it's hard to make a differentiation from what other places are doing, so so there's not much going on. But I wanted to kinda end this with kind of a more hopeful um perspective because I don't think this project is over yet, you know. Like there's some legitimate claims to be made by people who don't want to be identified, right? Especially in like politically unstable regions. That's like uh deal worker, right? Like if people some people need to remain amo anonymous, and if that's possible, uh they should have that right, right? But um the logistics of it is just too difficult right now, just because there's not enough data out there to like build something that looks credible, right? So even if you like this happens all the time, even in uh like the arts, which I'm kind of getting getting into, is that you know there's a lot of art artists out there whose names you don't really know, right? Even uh like the gorillas, for example, right? Um most people don't really know who's behind it, right? Uh you have to do a lot of digging to just like find out. But the idea of the band is still there and it carries weight just because of all the things they've done in the past, right? You can kind of aggregate it, even with an uh without an ID. So interestingly enough, the people kind of moving the needle on these issues are actually NFT artists right now because they're dealing with the same kinds of problems that uh the UBI coin did back in the day, and it's like, well, how do I know you're for real? Right? Just recently I've been seeing a lot of drama over on Tesla's about um copy minting. Well, they basically someone uh plagiarized the work of someone else someone else without giving them credit. Oh, excuse me. Um and that's a big no-no, right, in the art world. And if you get caught doing that, your reputation is basically over, you know, and so that's that's unfortunately someone just did that to themselves, and you know, that's it. But ideally, we wouldn't have to do that to begin with, because the way NFT artists are identified, or at least should be identified, is through their wallet, right? The wallet is very secure and that can't be spoofed like like other things. It's just that the industry itself hasn't gotten to the habit of doing that. Um the Tesla's people at Tesla's are pretty good about like validating their claims with like records, right? Um, every time someone pays for something, uh at least from what I know is like they do send ledger records. That doesn't really happen in other places right now, you know. And even and even now, like they still kind of struggle with it because this latest fiasco uh is a show the sign that you know not everyone is doing their due diligence. So until we start like taking the idea of wallets being as part of someone's history seriously, it's gonna be very hard to like do anything like UBI where you know getting it right is really really important, right? Because uh yeah, if if you let fraud run rampant, the whole thing falls apart. So, you know, being being identified correctly is important. So uh yeah, so I just want to kind of like uh talk about that a little bit because it kind of is showing like yeah, you know, in in our space things are still very, very early. And uh in order for crypto to really be used for like uh serious applications, you know, we got a long way to go. But at the same time, it's uh I think the efforts done a few years ago uh will not be in vain. It just might take some time before the research and people's uh practices kinda catch up, right? But again, I do think that artists are the ones paying paving the way. And I've been in this space long enough to see that, like uh even with uh crypto pumps, right? NFTs really was the trigger for the bull run in 21. Um and what is it? What is NFTs? It's art, you know. All the other applications of NFTs there are there are applications you can use for NFTs other than artworks, but uh that really wasn't what caught people's attention. So I as an investor, you know, and I did okay with my investments throughout the crypto era, you know, it pays my bills now. But I've always paid attention to what the creatives are doing in this space and uh has done me well. And I think it's gonna be the same thing again. Even uh yeah, in the next few years, but uh but honestly like forever. Is uh yeah, even in real life, right? When you look at uh uh look at neighborhoods, right, that that are called arts. District, it's usually a called that because there's a lot of growth going on. Artists go to where it's affordable, they make the place nice, the place becomes more desirable, people go to it, price goes up, and the similar pattern can be seen really, even in uh the web 3 world as well. So, okay, well, thanks for hearing me out, and see you in the next one.