Future First: Is Crypto the Next Frontier for Direct Aid?

In a first-of-its-kind guaranteed-income experiment, 160 low-income New Yorkers are receiving $12,000 each in the stablecoin USDC. The pilot, known as "Future First," is a collaboration between the crypto exchange Coinbase, which provided the funding, and the nonprofit GiveDirectly. The program is designed to test the viability of using cryptocurrency to distribute aid and explore how recipients manage the funds.

Participants, aged 18 to 30 and chosen by lottery, received an initial lump sum of $8,000, followed by five monthly payments of $800, all directly to a Coinbase wallet. The distribution method offers flexibility, allowing individuals to hold the funds in crypto, cash out to a traditional bank account, use a Coinbase debit card, or withdraw it as cash.

Crypto aid vs. cash transfers

GiveDirectly, which has experience with traditional cash transfers, notes that the crypto-based approach is still in the experimental phase. The pilot aims to answer key questions about whether the use of cryptocurrency in aid delivery is more efficient, faster, or changes how people perceive and use financial support.

The program also provides an educational component, with Coinbase highlighting the benefits of "crypto education" for young New Yorkers. The blockchain technology behind cryptocurrency offers a level of transparency that could help overcome some of the funding and transparency issues that have plagued other direct-aid initiatives.

The inherent risks of crypto aid

While the use of a stablecoin (USDC) is intended to mitigate the wild price swings of assets like Bitcoin, it does not eliminate all risks. One participant from a similar, previous Coinbase program reportedly lost a significant amount of money in the volatile crypto market. The pilot aims to track whether recipients make different decisions with crypto than with traditional cash.

The initiative provides an opportunity to test the real-world usability of cryptocurrency for those who may lack access to traditional banking services. The outcomes of this program could pave the way for future aid models, not just in New York, but potentially on a global scale.

Kevin Jacobson
https://markethive.com/internetmarketingproteam