How Governments may use CBDC’s and UBI to capture public opinion

TLDR at the bottom

Introduction

The world is struggling at the moment. Fed rate hikes, looming recession fears (or recession/depression/total economic collapse depending on your country) and inflation still running rampant in most countries. People are in fear of AI, and the unbelievable potential AI has to put many people out of a job, in the next 10-20 years. So while this is all going on my thought was, “what could come out of all of this chaos, and fear, to make The People of any country actually want to adopt a CBDC?”

A thought experiment I had was, that the Government will have a lot of trouble on their hands with their Crypto competition. Bitcoin is wonderful, as it is the hardest money on Earth. However, Bitcoin isn’t necessarily the model or competition that the Government really sees as a real problem for CBDC trust and acceptance in my opinion.

The real problem for a CBDC is, Proof of Stake crypto currency. Below I will explain Proof of Stake, for anyone curious as to how it works as a rough concept (many different versions exists with their own trade-offs), so if you know how it works, feel free to skip too the next section.

Basic premise of Proof of Stake

Proof of Stake, is where holders of cryptocurrency, can choose to lock up their tokens with validators. Those holders still retain rights of ownership to this tokens, however, their tends to be a lockup period or a certain number of days for the tokens to “unbond” from a validators pool of tokens. These Validators, are the block producers and provide the gate keeping to the network via by on-chain governance in the case of Cosmos and Algorand, or by social consensus, in the case of Ethereum.

With these various systems in place, it is important to clarify that the system of incentivizing good behavior on the behalf of Validators is that if they remain honest, then part of the inflation of the specific chain is paid to the Validator. In the case of a validator doing something malicious or against social consensus, delegators can redelegate their stake away from a certain validator. Another penalty is in the case of double signing or failing to upgrade their software, a slashing and jailing penalty can be an effective way to remove some or all of the power away from the malicious validator and into validators who are proving to be trustworthy.

Understanding how this model competes with a CBDC

Now that we know why proof of stake exists, and a rough concept on how it operates. I see that with Proof of Stake, the delegators, or rather The People of the world can have censorship resistant access to a decentralized Universal Basic Income, by delegating their tokens and earning income by means of staking to these validators. That system is by far, a naturally better system as opposed to a centrally controlled and and easily censorable form of digital money.

That leaves only one option the Government really has, to compete with a more liberating form of a quasi-universal basic income. That is bribe the People who don’t realize or care about the liberation that crypto can provide, through universal basic income via easy, automatic distributions on their CBDC.

Conclusion

As AI becomes more prevalent and advanced, more jobs could be lost and people may be forced into needing some sort of UBI in my opinion. My preference is to utilize my ability to work and make money now, to enter into the quasi-UBI system that is Proof of Stake crypto currency. However, many people will be late, and the poorest of those people will be bribed into survival through the offering of a universal basic income and the convenience that a CBDC can offer.

Stay vigilant for more Universal Basic Income talk. It may come around the time of a full CBDC release in a country near you. Government bribery taken to a whole new level.

Tldr; As Government distrust persists, and the AI narrative continues to grow. It is becoming apparent that AI could begin to cause large amounts of Job loss, and force Governments to provide a Universal Basic Income to citizens, as a new major source of income for the average Joe who can’t find a job or meaningful income.

Proof of Stake as it stand, will somewhat act as a quasi-form of Universal Basic Income in the future, for those savvy enough to understand how to delegate on-chain and for those with enough money to utilize this as a viable income source. However, many people may choose to be left out of this alternative financial system, and opt-into a CBDC system. This would be, presumably if Universal Basic Income becomes the primary driver to such a system and a CBDC proves to be the more convenient option for the average citizen.