Cryptocurrency Charity Backed by Coinbase Aims to Ease Poverty in New York

In an innovative move to fight poverty, a non-profit organization, GiveDirectly, is set to distribute cryptocurrency worth $12,000 to a select group of New York residents hailing from low-income groups. This ambitious cryptocurrency project will kick off due to the generous sponsorship from Coinbase, a renowned exchange for digital currency.

As shared in a report by Bloomberg, the innovative pilot program is slated to benefit 160 underprivileged New Yorkers by gifting them USDC, a kind of stablecoin whose value is pegged to the U.S. dollar. The generous donation will be divided into an initial amount of $8,000 followed by five subsequent payments of $800 each.

USDC, the chosen medium of this financial aid, is the brainchild of Circle, a company specializing in payment technology. This digital currency tends to hold steady and is immune to the extreme volatility that usually plagues cryptocurrencies like Bitcoin because USDC is specifically designed to mirror the value of the U.S. dollar.

The recipients of this generous donation will have multiple avenues to use this windfall. They can leave it untouched inside their Coinbase accounts, transfer the sum to a regular bank account (where an instant transfers will incur a 1.75% fee), use it through a Coinbase debit card, or withdraw it as cash from an ATM.

Although this donation program will be managed by GiveDirectly, it wouldn't be possible without a previously halted initiative by Coinbase, aptly named GiveCrypto, which had been initiated by Brian Armstrong, Coinbase's CEO.

Remaining funds to the tune of $2.6 million from the now defunct GiveCrypto was held in reserve for this New York-focused poverty alleviation movement, as shared by Bloomberg.

Universal Basic Income (UBI) is a concept that has found favor in recent times, with Andrew Yang, the Presidential candidate from 2020, advocating for a UBI of $12,000 per year, or $1,000 per month, for every adult American.

Reflecting on their past work, the GiveCrypto group shared in their press release, "GiveCrypto has helped thousands by distributing cryptocurrency, which did show short-term improvements in the lives of recipients. However, these benefits could not be sustained after the handouts ended, with recipients reverting back to their previous conditions."

The primary aim behind this innovative program is to mimic a UBI model and investigate how unconditional cash relief influences poverty levels. The jury is still out on UBI's effects with mixed findings, with one group of researchers claiming it reduces work hours and increases leisure time, while another revealed that it helped recipients repay debt and lower expenses.