You, your local government, and your book club now have the ability to create digital scarcity, which means the option to experiment with money. Since money, or the lack of it, is at the root of many of our deepest and most persistent societal issues, this an option worth exploring.

Crypto is full of spectacular scams and failures. But crypto does not have a monopoly on failed money schemes. Nearly every man-made type of money – whether issued on paper or coins – has blown up with enough time. What really scares people about crypto is you now have the same power as the Kings, Emperors, and Company men of the past. And unlike these men of the past, this technology forces you to keep your promises via smart contracts.

Sam Altman, the guy behind the company behind ChatGPT, also runs another project called Worldcoin. The idea behind Worldcoin is to implement Universal Basic Income (UBI), which is the concept of giving free money to everyone. The person largely responsible for making the public believe in A.I. is, most likely, also working on a highly ambitious and truly global UBI program because it seems obvious that A.I. is going to replace a lot of jobs. Without jobs, even soul-crushingly boring or dead-end ones, most people will have an even harder time getting by in this economy. So UBI may very soon be necessary to keep people living within some basic level of dignity.

UBI requires that each person gets paid only once, but linking one account to one human is something Ethereum can’t solve on its own. The protocol lives in its own universe with no natural link to the outside world. But once you solve this “Proof of h\Humanity” issue, then you know that people can’t double dip on UBI. We can guarantee the money is going to one person and not ten bots.

Worldcoin’s approach to Proof of Humanity is to use shiny metal orbs to scan human eyeballs. Because your eye, specifically your iris, is more unique than your fingerprint, it is a reliable, and difficult to forge, sign of your human identity.

UBI becomes easy once you can guarantee everyone only gets paid once and each person is legitimately human. In other words, any organization can create new scarce assets on Ethereum and send it to any group of verified humans.

The Worldcoin project pays people using a new money created out of thin air called worldcoin (WLD). This coin is sent to everyone who has been verified as human by the metal orbs. The price fluctuates and the amount is not very high, but it is universal. Worldcoin runs on Ethereum so is globally accessible by default. The only exceptions at time of writing are people who can’t get physically close enough to an orb to get scanned, and US residents who are protected from receiving UBI by US regulations.

But unlike Worldcoin, governments don’t need to scan eyeballs as the starting requirement. Governments are good at identifying unique humans. Birth certificates, passports, driver’s licenses, social security numbers – and their non-U.S. equivalents – are old school ink and paper methods that are trusted by most the world’s population. Democracies need a registry of unique humans to run legitimate elections. And all governments need to know who to collect taxes from. Some governments do this job better than others so some forms of government identification are more trusted than others. But if you live in an environment with trusted, high-quality forms of identification, then it is possible and fairly simple to bring the benefits of the blockchain to the masses because the Proof of Humanity problems has already been solved.

This is where governments and trusted public institutions can fulfill a role they are uniquely qualified for: identifying unique humans and providing them with private keys.

Blockchains are built on the assumption that one piece of information is kept secret: the private key. Private keys take the form of a long string of numbers and letters that look something like this: 8da4ef21b864d2cc526dbdb2a120bd2874c36c9d0a1fb7f8c63d7f7a8b41de8f

Private keys can be thought of as the ultimate password on a blockchain. They let users control their accounts, allowing them to move assets and interact with programs and other users on the network. Private keys are also the source of public addresses, which are like mailboxes or accounts that let users receive tokens, NFTs, and yes, UBI. One private key can control many public addresses on Ethereum.

There needs to be a way to keep private keys safe and there should be a way for a person to get a new private key regardless of income level and technical knowledge. If you can get a driver’s license, you should be able to get a private key and corresponding public address to use on Ethereum. It may even be a good idea to have a basic test, similar a written driving test, before getting a government-issued private key so everyone is equipped with at least some fundamental understand of digital money and best practices.

This is all meant to give more people, more options. As we increasingly move our lives online, a public option with no profit motive for how we build our digital identities and interact with digital objects seems like a basic necessity.

We live in a world of monopoly money. One entity – the US government – has a monopoly on the world’s money supply. Ethereum creates options to change this fact. We already have many types of money created out of thin air: gift cards, reward points, video game currency, etc. How much this Monopoly money is worth depends on what type of game we want to play. Things like Bitcoin, Ethereum, and crypto in general take this to the next level by guaranteeing limits on the supply, and in the case of Ethereum, adding programmability to money.

Ethereum is like a giant box of Legos. Applications are built on an ever-growing assortment of smart contracts, which can be thought of as modular building blocks. Because the platform is neutral and permissionless, developers can come from anywhere, willing to invest precious time and energy knowing that their creations can’t be arbitrarily manipulated or taken away. Code is constantly being created, used, re-used, and battle-tested in a live system. These building blocks are free for anyone to investigate, audit, and copy-and-paste, including public institutions.

It is messy, but rugged and secure pieces have already been created and thoroughly tested with more being created every day. If we started a new set of Legos, it is highly likely that no one else would use it, and it is almost guaranteed to be much more fragile than what already exists in the public sphere. A closed-off system could never imitate an ecosystem, which becomes stronger and more robust as more people join, contribute, and test it. Even hacks are productive because every vulnerability discovered means one less loophole to exploit in the future.

Providing more money to more people is possible. We have a foundation to build on. We have materials to build with. What remains to be done is best captured by an FDR quote from 1932: "The country needs and, unless I mistake its temper, the country demands bold, persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something."

Money is simply a story shared by a group of people. There must be common faith that the numbers they are passing around are either worth showing off, worth keeping, or worth trading for some other type of money. This story can quickly evaporate, but when it endures or the story spreads widely, it can become a powerful tool for creating leverage and getting resources into different hands. What Ethereum helps do is pass this tool around to more people.

It’s hard for us to think about money as anything other than the all-encompassing water we swim in, but there’s no physical law that defines money. So let’s think of money like books. There are many different types with many difference authors for all sorts of audiences. But it wasn’t always like this. Writing is a human invention and for most of its history, the power to read and write was limited to a few select people. Even as more people learned to read, their access was limited to books like the Bible. Now we have children’s books, comic books, novels, and whatever it is you’re reading now. The possibilities and options have exploded in a relatively short amount of time. The same could happen with money. We could have a multiverse of money. Custom currencies for distinct communities. We won’t know until we try.

The full effect of these options won’t be known until more people have access to the technology. Right now, users must be sophisticated enough to navigate an increasingly complex landscape of applications, protocols, networks, chains, layer 2s, etc. They not only must decide who to trust, what to use, and how to use it, but also where to even begin. A public option for Ethereum could provide a kind of trustworthy gateway – a safe first step – into the world of Ethereum and digital assets.

We have Amazon, large corporate bookstores, and independent bookshops, but we also have public libraries. And the public library for money is what is missing. Libraries are free services for anyone with an ID. They help people gain access to books. They fill a need that the market on its own would not provide, yet libraries enrich every community they inhabit. A library for money can do the same thing in spirit.

The first step is an ID system tied to an Ethereum account for each person. Then you would start filling the library with many different forms of money from different authors. And like a library, some books and authors would be allowed while others wouldn’t be. There would have to be a careful curation process. Eventually you would have many different types of money, all carefully validated, that could be accessed by the public. On top of this, there would be constant efforts to provide education and financial literacy about this quickly evolving world.

Many of the problems we face have been created by an economic system we have inherited and have had little power to change or escape. Blockchains give us the power to tinker with the rules governing how money is created and how it flows. We are in the middle of many different crises with many different causes that blockchains alone will not solve. But when the technology of blockchains becomes widely understood and accessible, then radical experiments involving money become possible, which might lead us to the methods we need.

The idea isn't to come up with a perfect solution that works for everyone. The idea is to create pathways to new options that did not exist before.

Epilogue: Disclaimers

Experimenting with money can have unintended consequences, but there are three ways to keep us from going too far off the rails:

1. Protect individual privacy

2. Make the system transparent

3. Use a Layer 2

Privacy

At the level of the user or individual, privacy must be preserved. As private keys are linked to people’s identities, financial histories, and control their funds, the responsible management of private keys, and general protection of privacy, is the most important responsibility of organizations managing private keys.

Transparency

At the level of the system itself – at the layer of its governing structure – there should be as much transparency as possible. Who has power and who leads can change drastically. No matter who is in charge or what their agenda is, transparency keeps public institutions auditable and accountable. The public should always be able to tell what is going on and this is especially important when money is involved.

Transparency is not for the purpose of surveillance over citizens, but accountability over the system itself. Transparency is for the powerful. Privacy is for the weak. Anyone in the world should be able to look at the code and be able to tell how it works. If you can’t read code, trusted engineers can translate the code to English. A.I. systems like ChatGPT make it increasingly easy to copy-and-paste code and ask for a translation in any language. The A.I. has no incentive to lie. And a truly transparent system has an incentive not to cheat because it will be caught.

Transparency can also mean more efficiency. Over time, bureaucratic systems tend to get more complex and difficult for people outside the system to navigate and reason about. The levers and control valves get rusty from neglect and misuse, or simply become outdated. Starting on a new foundation means a clean slate for the entire system, and if transparency is built-in, it becomes possible for everyone to follow along with how the system changes over time. It’s easier to fix things when we can clearly see what is happening.

Layer 2

Worldcoin is built as a Layer 2 on Ethereum. What is a Layer 2? It’s a smaller more customizable and controlled blockchain that sits on top of a bigger, more permissionless and neutral layer. Whereas a Layer 1 is accessible to anyone with an internet connection, a Layer 2 can be more permissioned with more control over who and what can come in or out. In other words, it’s more centralized. Unwanted users or programs can be blacklisted. Only high quality, approved programs could be allowed into the system through a transparent and democratic process. The control valve could be loosened or tightened depending on how the publics wants to balance safety and opportunity – access and protection.

The basic security and consensus properties of Ethereum Layer 1 are inherited by the Layer 2. The existing, battle-tested, and composable Layer 1 code – the Legos – can also be re-used. Since the Layer 2 is smaller and more localized, it would be faster for the user and cheaper to maintain overall. Fees could be subsidized or abstracted away. Privacy preserving features could be added as modular pieces.