The Revaluation of the Circles System
We are now implementing the biggest change in the Circles UBI system which we’ve had until now. As most changes in life, this won’t be easy, but it will help open up a community based basic income for many more people worldwide, especially for the ones who really need it. Here, we will explain what we address with the changes and the reasons behind them.
Circles UBI was first conceived as a “Made in Berlin” project. With the new changes in the system, we are addressing the suggested value of our UBI system, both worldwide and in Berlin. Originally, we set it to a monthly issuance rate of 240 CRC tokens, comparable to a value of 240 Euros in Berlin. The theory behind was based on Jason Hickel’s proposal that a planetary poverty line should be as high as 8 USD or roughly 8 Euros per day to actually allow people to claim the basics to live a dignified life. It was an ambitious but, we hoped, realistic plan, which we tailored to Berlin, which is where the original team that created Circles is based.
The four most important aspects of the change are the following:
1. A different issuance rate
The old issuance rate was based on a general poverty line: a daily income of less than 8 USD means a person lives in deep poverty. We converted to daily 8 CRC, assigned the daily 8 euro value, and hoped to feed the system with an equal amount of value provided by the community in Berlin.
In the newly issued UBI, we represent and value each hour of everyone’s life equally with 1 CRC token. Instead of 8 CRC, everybody will have 24 CRC per day — so instead of 240 CRC, everyone will have 720 CRC per month.
2. A revaluation of the currency
In our laboratory, the Berlin Flagship Pilot, so far, we were supporting the onboarded businesses by subsidizing the CRC tokens with Euros, with a 1:1 rate. With the new plan, we are reducing the suggested value of one CRC token to a tenth, which means 10 CRC equals €1. Since the monthly UBI increases to 720 CRC, the total monthly value in Euros will be 72 Euros, which is a third of the previous value of 240 Euros/ month.
We are confident that these changes are a needed next step in the experiment. We believe that the new issuance rate and revaluation will make it easier to sustain the creation of value within the Circles basic income system. As before, outside of the laboratory, the pricing of products and services offered in Circles is up to the community to agree upon, which determines how much value people can claim with their CRC.
3. Demurrage instead of Inflation
Another change we are introducing is to switch from displaying inflation to show balances with a demurrage. Demurrage is another way of saying that money has a life-span, or that it decays over time. So far, we portrayed balances with a 7% yearly inflation rate increase to the money supply, where the UBI amount would increase by 7% every year. Since we would like to define the issuance rate of CRC by one hour, instead of an inflationary approach, we are introducing a demurrage or decay rate of CRC by the same rate. This basically means that the 7% demurrage acts like a parking fee on money, set against the constant issuance of UBI. It motivates against hoarding, and leads to a gradual redistribution of all CRC in the system over time as people who stay longer in the system pay more into it than the UBI they receive, whereas new people get more UBI than what they are taxed with the demurrage. If you’d like to understand how demurrage works, check out our FAQ.
4. Circles becomes global, for real.
The vast majority of the work and the visibility given to Circles was “Made in Berlin”, but we are in exchange with other groups who are working on the implementation of the Circles currency in other parts of the world.
With the current changes, the hubs and the Circles users worldwide can keep the same value of 1 CRC = 1 hour. This acts as an anchor to keep the value of UBI more stable across borders, so that people can easily connect to each other, and trust relations can indeed flow through borders. We can move from the many local basic income systems to a real planetary people powered basic income system.
These changes will be effective by 27.06.2022, which is very exciting.
Making all these changes was not an easy decision, and we know these propositions are not the only possible answers. They are only the next step in this experiment we are all in together!
In Berlin, we already have functioning economical circles where people can buy organic vegetables, order food, pay delivery fees, therapy and receive care for a monthly 240 Euro UBI value. A significant amount of these CRC is truly circulated; they were paid by our business partners to their suppliers who bought services that they needed, and so on, just like with Euros. For the almost 1000 active Circles users who are currently enjoying our basic income system in Berlin, these changes might be a step back in terms of understanding the new prices and valuation — but it will allow more people to spend their UBI fully per month and businesses to have more sales from more people! We are here to support everyone in this transition.
We think this is the way forward because it allows us to open up Circles UBI for our friends in Bali, Chile, Costa Rica, Canada and other places. We Berliners need to take a step back to enable communities to join us from other parts of the world. We do this as an act of unconditional solidarity, which is an essential part of the basic income ethos.
We have concrete tools and plans to support the global success of Circles in the next phases. Here’s a flavor of a few other things we’ve been working on and that are planned.
- Our new website is coming up, where we incorporated a lot of feedback to help you understand, use and build Circles. You will find more information about how you can build a community hub and gather value in this community around you.
- We also launched a new online marketplace, where people are already buying and selling goods and services in Berlin. We will announce it publicly soon — stay tuned!
- We are working on the Circles wallet to hold other tokens, including CRC group currencies and state money to enable a system where businesses can accept partial payment in CRC (co-payment). To make the transaction process and bookkeeping easy, all of this will happen within your Circles wallet, and you will be able to directly make transactions in a single step.
Universal basic income means that we are being valued just because we exist and that we do not have to pay rent for having been born on this Earth. Circles, now as an universal basic pocket money, is a huge important step towards a future where a real basic income can contribute to a more caring and free future for all.
Blanka Vay, on behalf of the Circles Coop Team