Free money - How a basic income in crypto can boost the local economy with Alain Brenzikofer

Alain Brenzikofer00:07

well, if you, if you look at it as an investment target, then yes, it's a shit coin. Of course. Uh you know, I don't care.

care but if you look at it from its social impact, then it's quite the opposite


Hello and welcome to D fire. Fire your local crypto storytelling podcast. My name is Jonas. And today on the show, we hear the story of this tall multi-talented individual.

Alain Brenzikofer00:38

I'm Alain Brenzikofer I'm an electrical engineer, musician and father


. By the way the music you are hearing right now.

That's Alain's Jazzband the footprints. But I wanted to talk with Alain for another reason, something that is more down my alley.

Alain Brenzikofer00:59

We want to create a new money, which is issued as a basic income, and we don't accept the central authority to do that.


A community issued basic income. Yes, that's right. If you live in Zürich you can get money for free. Of course, I have to try this out.

Is it possible to pay with Leu here? Is that correct? Yes. Okay. Yes. Oh. Yes. any recommendations? They are very, very good. Oh wow. With car salad. That looks good. Yeah. They are really good. Or coffee. I don't have a coffee machine. Okay.

Alain Brenzikofer01:41

, some people even were hesitating to spend the Leu saying, I have a bad , conscious, I don't wanna, you know, enrich myself take advantage because they offer that. And then I have to say, well, why do you think they are giving you this as a present. They are not.

So if you accept that Leu is money, then it's not for free at all.


I myself Itself didn't have any such reservations my first Shopping trip if my basic income in That's the name Some of the currency yielded me too. Artismal sausage. And the delicious Uh, Chocolate yummy.

Thank you so much.

But surely Alain and his team didn't start this project so already well off swiss people can eat even more chocolate and sausages.

Alain Brenzikofer02:30

Our vision is to be more inclusive people who are unbanked, who have no access to financial services, who might not even have a state issued ID document.

So the idea here is really to offer a complementary way, how communities can prosper without relying , on the global economy for that matter.


In our conversation we dive deep into how local currencies work and Alainshows the bigger picture of such a project But before we dive into the conversation a short word from a sponsor


Crypto valley dot chops is a job board where engineers designers, analysts, traders, and community builders can find cool crypto jobs, full disclosure. I run this job board. So if you're looking for a job or you want to advertise an open position, please go and visit crypto valley dot chops.

And while you're there, make sure to sign up on the email lists. So you're always informed for new jobs are posted on the platform. That's crypto valley dot chops, and now let's start to show.


Introduction Alain Brenzikofer

thank you to coming on the show

Alain Brenzikofer03:42

Thank you for having me.


Could you introduce yourself?

Alain Brenzikofer03:45

I'm Alain Brenzikofer Most of my career I spent with , electrical engineering tasks. I learned about Bitcoin early on and was, very curious about the new space of possibilities that opens up.

And since 2016, I, I also work, professionally in the space. And so now I'm. Leading a development team here at super computing systems. I also one year ago, co-founded the company integrity, which does data, confidentiality solutions for web three and web two, actually.

And in 2018, um, I came up with the idea and the, white paper for Encointer.



How does it feel to pay in a coffee with a currency you have created?

right. not far from here, actually, where we record, we are in Zurich. there is a coffee, that is quite famous locally.

And there, you can pay with your own coin called Leu, which is a, a currency that you built. How do you feel when you go to that coffee and you pay with a currency that you have created yourself?.

Alain Brenzikofer04:47

yourself. well, it's very, satisfying in a way because this idea really seems to work and to motivate other people to, to, join in. it's also a little bit, frightening in, in the sense, whoa, now, it's really starting and, I hope, it will turn out well, so I mean, it is a very nice thing.

Now you can walk in and pay a coffee with a community income mm-hmm that I didn't do work for it. The fact that I am human was the fact that gave me this currency. And, at that to me is pretty exciting. Yeah.



How do you onboard new merchants to this system?

are going on into all of that, that you kind of hinted at right now. the, basic income and also the proof of, um, identity. I think we have another word for that, but, I wonder when you try to onboard new people, um, using that currency, let's say another coffee, or a supermarket or, a service provider.

what is your pitch? How do you go, introduce what you do and what Leu the currency is to these people?

Alain Brenzikofer05:57

Yeah. Yeah. I think in the first place, it's about the story of the Leu. we can only convince people if they buy into the story, because there, there have been other local currencies. and, some people have experience with it. Some don't, also cryptocurrency, a lot of people have reservations about it.

So we actually don't even actively inform people that it is a, a cryptocurrency, because actually it doesn't matter at all. if we talk about governance, this becomes interesting. Mm-hmm but, but in the, in every day we, we don't talk about that, but



Roleplaying: Jonas is the Merchant, Alain tries to onboard a new client

meant literally, like, let's do role playing.

I am a person. I don't know anything about you just walk in here in my shop and you say, Hey, what do you say? How do you onboard people?

Alain Brenzikofer06:49

Okay. Okay. well, are, are you curious to, to learn about, the new local currency here in Zurich? Yeah. Um, we, we have, this, this new concept where a local currency shall promote local businesses, especially by finding a circular economy so that the local businesses, support local suppliers and local suppliers, their suppliers, and so on until it comes back through the consumers again at the store.

And this way, we can keep the money and the value, creation more local, which is good for our, for you as a, as a business owner. This means, you could actually have more turnover. Well, that is our goal. It only works if you have more turnover because. You accept Leu mm-hmm because you have new clients who didn't know about you before.

And right now it's kind of more consumers that are looking how to spend their Leu. So if, if you promote your business that you will accept Leu you will get new customers, you can make more turnover.

What can a merchant do with Leu?

So, so what you're saying is like this Leu thing is a currency. that people pay me and I will hand out my goods for them. But what do I, what am I going to do with the currency?

Alain Brenzikofer08:20

That is the very critical question that we need to answer together because we need to figure out who are your suppliers? Who are your employees? What are their interests? because, well, let's start at the suppliers. for example, the coffee that, that accepts Leu now, they have a lot of local products that they sell. Even the coffee actually comes from a local. the, the roasting of the coffee is, is, is local. Mm-hmm, obviously the coffee is not,


it's not that hot

It's not that hot yet,

Alain Brenzikofer08:53

but, but the, the beers are local breweries. and the food that they serve is, is, at least manufactured locally, mm-hmm with as many local, goods as, as possible.

And that is that these are the interesting cases because if you serve, Coca-Cola, then there's no point it's an international, it's a global good. It doesn't promote the local economy. So you can, I mean, you can also drink a Coke or whatever international product there, but , it only works if you, with your store also have local suppliers that you can again, pay with Leu then they need to again, ask the same question.

What part of their, value chain, is local. and where can they get rid of the Leu I mean, it's not the nicest way of putting it, but actually that's what matters. You need to somehow again, get rid of the Leu because the Leu loses its value over time. That's something, maybe we get into that, at the later point.

How many merchants are accepting Leu already?

And then I would probably ask, okay. people come here, they're going to consume my thing. I have them to figure out also what I'm going to do with this money. Right. how many other people are onboarded at the moment with Leu where could I spend it?

Alain Brenzikofer10:17

All right. So, we have this cafe that we were talking about and we have a grocery store, which sells, local products. These are currently the only permanent acceptance stores we had different events where at a certain day you were able to buy, books or, or, t-shirts Leu.

T-shirts merchandise obviously. Yeah. Um, we were at an opener festival here in Zurich, where you could also use the currency. we started in may and that's where we are at. We have two permanent acceptance points and we are actively looking for more.

How is new Leu created?

And the people who come to my store, like where do they get their Leu from? Like, why would there even be people Leu?

Alain Brenzikofer10:58

Yeah. Like, well, right now you have, you have different kinds. The, the, the ones who are just curious to try it out and they could go to Sphères and buy Leu from Sphères. Just ask them, Hey, you actually accept Leu so you can, you can sell me some. Yeah. So that's kind of an intro and then they can come to your shop.

But at the moment, the most interesting way of, of obtaining Leu is actually the, the community issued income. The Leu is designed with its monetary design, that it is actually issued not by a bank or not by Miners or not by, any central or more powerful, authority. It is actually from the bottom up.

So the new money is issued as a, you can call it the basic income actually. we call it a community issued income just because if you talk about universal basic income, that means something slightly different.


and actually, um, the other day I was there, one of these, you call it ceremonies, right? Yes. And it looks like people, standing there with their phones, you could think they're probably there for, to hunt Pokemons or something. however, the clientele or the people that were there at that moment that was so different to every, crypto encounter I've ever been.

Like, usually I go to, I don't know, conferences, meetups, and there's this like these geeks there're for the tech. And then there's like the finance guys. They say that they're there for the tech, but they just want to make money. And then there's like the NFT person who is shilling a project, but there I showed up and Like half of the people there were women in their thirties I think one was a couple therapists.

She is kind of thinking about introducing Leu into her, business. Yes. And it looked like people who are not normally interested in crypto How would you describe who are the people currently interested in Leu?


Alain Brenzikofer13:00

Yeah, it it's, it's funny that you, you, you said that on, on, Tuesday at the ceremony and I thought, yeah, well actually, I think the majority of the people that have Leu now are not at all into crypto or probably don't hold any, uh, crypto. and I think that's also how we promote the project because we don't at the forefront say, Hey, this is the new cryptocurrency.

, So what you, what you said about diversity, so to say is actually, it was a very important goal for us. So we started this, currency with just 10 people and we carefully selected to have a well, as well as we could represent the genders equally the ages equally. And I mean, obviously not, where people live because that's kind of the common, the common ground, but we, also in terms of interest, so we had really developers there, but also we have, entrepreneurs or , people from the more informal sector that are more or less self-employed and maybe, offering person to person, services Be it massage or a therapy of any kind or, or, or, and also businesses. So we also wanted to have the businesses on the receiver side to, to, to experience that as well. also, if you use it, our app tries not to look like a crypto wallet. And so I think you, you don't actually have to know that it is a cryptocurrency and, and that's probably why people are not afraid to use it.

Mm-hmm who are not familiar with, with crypto. Yeah.

Why do people show up at ceremonies?

And, and I think I'm not even sure if you mentioned it now. but why do people show up at this place, at this ceremony, what is happening there?

Alain Brenzikofer14:50

Yes, yes, yes, yes. I, that, that, that needs explanation. We want to create a new money, which is issued as a basic income, and we don't accept the central authority to do that. So if it's the state, the state could give out the basic income and just say, well, you show me your I ID. and I give you the basic income.

Now that doesn't work for us because we don't care about identity cards. We don't even care about your citizenship. as long as you live in Zurich, you should have Leu. If you, if you want, if, if you go get it, but now the problem is, how can we make sure that every person only claims that basic income once?

that's kind of a very hard problem in the, in the decentralized space. It's, it's called sybil resistance. So how can you make sure that one person only maintains one claiming account? Mm-hmm

Click farms

And there comes to mind that picture. you've probably seen it on the internet versus like a, a gentleman walking around with like 50 phones. And I don't really know what he's doing, if he's hunting Pokemon and selling them or, but, but there are people who have like farms, yeah. Of phones and they would take advantage

Alain Brenzikofer16:05




Alain Brenzikofer16:06

Click farms, whatever, all, all the reputation systems that we, that we see. Not, not only in, in web three, also in web two, we have this issue.



Alain Brenzikofer16:14

it's in the online. Yeah, exactly. Reviews, ratings. we, we always have that issue.

and there have been different ideas, how we can solve this problem. And we chose probably the most secure one, but one that asks a lot of our users. We use the fact that one person can only be in one place at one. So that is why we need physical gatherings of people who mutually attest each other, that they were there.

So the kind of the attendance and we, we actually did the idea is that we do that globally, so that all local currencies, all people show up on the same day and, and meet at those at those gatherings. Mm-hmm and, and then it's a bit like a PG P key signing party. it's it's it's just, or, or less technically speaking you have your phone, which has your account as a, as a QR code.

You scan everybody's QR code and by doing so and sending that to our backend blockchain, you testify that the other people were there. Yeah. And now the, the trick is you don't know in advance. Who you're gonna meet. So you have in, in advance, you need to register. So until two days before you need to register, and then you are randomly assigned to meetups of around 10 people.

So at, at different publicly accessible spaces here in one neighborhood of Zurich, for now, the app will tell you where you have to show up at what time, and then you have to be very punctual. So you have to go somewhere, physically meet people. You don't know, you might not know, and be punctual.

So that's what we are asking.


Sounds like a a dating app.

Alain Brenzikofer18:14

Yeah, well it's it's yeah, but without swiping, because you can, you cannot choose. Yeah. absolutely.




you, I was at yes, two days ago there and what we did was we were six and everybody had to, put in their wallet. How many people are there? Everybody had to say six, and then I had to scan five other people and all these other, five people had to scan me.

Everybody scanned everybody.


Then we had to basically click a button, say submit. And today I woke up and I received for the first time ever. My basic income, 22 Leu

Alain Brenzikofer18:50




Alain Brenzikofer18:51



currently are worth, 22 francs. Yes. Question. Why, where, how is the value determined of this Leu? Because, and you also mentioned that they were created out of thin air, right?

I mean,

They were just now issued the whole global amount of all Leu grew overnight by, I don't know how much, but currently we have around 3000, maybe

Alain Brenzikofer19:15

Three and a half. Yeah. Yeah.


So the, the, the market cap, we are talking about very small project at the moment guys is around, I don't know, 3003 and a half thousand Swiss francs.

Yes. yeah. So just to say that this is really early, this very experimental, just to give a little bit of context as well.

Alain Brenzikofer19:33


Why does Leu have any value?

Absolutely. And, well, I mean, you are hinting at it, but by design you will never get rich with this, with this, coin. so as a side note, but now why, why would it get value? Um, so if, we create a basic income, with a new, with a new currency, then, well, anyone can do that. Why would that token have any value at all?

what we can do is we can make that resource rare in the sense that yeah, you need really humans who, participate in this protocol regularly so that this money can, be issued. But even then, even if it's rare, why should it have value? You can, you can issue whatever, which is rare. If no one wants it, it doesn't have value.

So the idea is more or less a, social contract. Well, that's our hypothesis that everyone benefits if we have a local currency, the stores or anyone offering services or products, they can have a higher turnover, so they might accept it.

And now by accepting the Leu, the value is created mm-hmm because if we say so we, we talked to Sphere was the, the first place. And we, we said, well, look for simplicity. We just say one Leu is once Swiss franc, are you okay with that? and then they said, yeah, sure. That makes everything a little bit easier.

but this is not, this is a design choice and, and the community can change this choice, anytime. Sphere could say, you know what, from now on one Leu is two francs, because we would have rather have more, or they could say, Hey, we have so many Leu and we cannot, spend them anywhere. We will only accept them for 50 cents or, you know, so, so this is, it is really just, in the beginning, it's a social contract, which says Sphere promises, to accept Leu as one Swiss franc, but you could do it differently. You could say the baker, always accepts Leu and gives you one loaf of bread for one Leu. Okay. And then that's what gives the Leu it's value. It's the commitments to do some work in return for that currency. It's actually, it's, it's no different than with the Swiss franc.



One Leu equals one Swiss franc, at least for the moment

by design, currently it might be one Leu equals one Swiss Franc, but by design, there's nothing like stabilizing it to, it's not a stable coin.


not, it's just a cryptocurrency that is issued.

Alain Brenzikofer22:25

Um, that

happens to be stable.



to be stable at the moment with, with so few players, right? Yes.

Alain Brenzikofer22:31

Yes. Yes.

And we


have to see how this will play out into the future because, and I think this is also kind of a little bit mind bending for me because everybody who shows up with the Leus, they have gotten them for free.

Basically they just had to show up. Right. I have now 22 francs, this gives me a nice meal. Every 10 days. I could basically go to Sphere and get like a meal there. Yep.

Alain Brenzikofer22:55


If you accept theat Leu is money then you are not getting anything for free

some people even were hesitating to spend the Leu saying, I have a bad , conscious, I don't wanna, you know, enrich myself take advantage of Sphere just because they offer that. And then I have to say, well, why do you think they are, they are giving you this as a present. They are not.

So if you accept that Leu is money, then it's not for free at all. It's our social agreement that humans merit. A share in the money supply just by the fact of being human. That's different to the Swiss franc, with the Swiss franc, we don't have that with the Swiss franc, the state takes care of redistribution.

Mm-hmm with Leu it's the algorithm that takes care of redistribution.



Leu is slowly slipping through your fingers - Demurrage

with the algorithm comes also great responsibility right,

Alain Brenzikofer23:48

Absolutely, yeah



I think one thing we haven't touched upon yet, is, the other day I was looking into my Leu account and I've noticed that literally the amount of Leu I have has somehow overnight. you know, diminished, I think it was like I had at the time five Leu and suddenly I had like 4.9, eight Leu yes.

And I thought I have, I had interacted with the blockchain and therefore I paid some Leu for gas, basically for the, for the decentralized system. However, you told me that's not the case. you make the money by design flowing out of your wallet.

Why is that?

Alain Brenzikofer24:28

so that's a thing, we call it Demurrage or, or it is commonly known under that name. it's it's a concept that, originates , from, Silvio Gesell already. Well, A long time ago. and the idea is to keep the money flowing. So if everything we are used to in our world is perishable money isn't.

And why is that? By introducing demurrage we say that money is perishable, like everything else, and that actually incentivizes people to spend the money rather than to save. And if you wanna promote the local economy, that's exactly what you wanna do. If you wanna get rich with a crypto asset, that's exactly not what you would like to see, but that's not our goal.

So here, the idea is really to keep the money flowing. You should never think you have to save. That money. And if you think about it, why are we saving? Because we think we will need it, someone in the future. but if there is a basic income, which I mean, 22 Leu will not be enough, but I mean, just like speaking on the concept of basic income, if you know that for the rest of your life, your essential needs will be covered.

Then the need to save is not so urgent. and so this is a design choice that money loses value over time, but we go pretty far in that sense because, other local currencies, they have something like you. 2% every quarter or something like that. And the Leu Of

demurrage of demurrage? yeah.

Yes. so maybe you are, or in the order of maybe 10%, a bit more per year, that your money loses value for us. We have a halfing rate of a year. So if you, your 22 Leu that you got, today after the ceremony on, on Tuesday, if you don't spend them, if you just leave your phone as it is, and then a year from now, you check your balance, it will be 11.

So it will be half the amount. And


quite quick. It's quite

Alain Brenzikofer26:44


It is a very aggressive demurrage



Alain Brenzikofer26:46

and the idea is that this actually, enables us a sustainable design of basic income. Because if, if you think about it, if, if we issue, a basic income. Every 10 days, that's a very, very inflationary design because the money supply will grow and grow and grow every 10 days.


Especially as a lot of people

want to get

that money and onboard. Yes. And, and start to

Alain Brenzikofer27:17

start to use it. Right. But that, that is adoption. That's fine. If you have inflation because of adoption, then actually I'm fine with that. Okay. But if we have, let's say 10,000 people here, participating a steady, population, then we don't want the money supply to increase all the time because then, then we would be in, in the state of inflation. So somehow we need to limit or, I mean, it's our choice to limit it because we would like to see more or less stable prices.

and. Now this can sustainably be done with demurrage because as soon as these 10,000 people have attended, I don't know, let's say 50 ceremonies or something like that. Then the amount of demurrage will burn the same amount of tokens that will be issued. So 10,000 basic incomes will be the same, which is burned from every, from every account.

And then the money supply will be stable and therefore, we can also, well, this is no guarantee for stable prices. So there are other factors in economy about that, but at least we have kind of a sustainable model, how we can finance the basic income mm-hmm and now you can tune that. So, so, so you, now you now have a, a parameter that you can tune to.

How important should the basic income be? Because if you have less, demurrage, then the amount of basic income will be smaller in respect to the money supply, which is there. And if you have a higher demurrage, that means, the real value of your basic income is higher compared to the money supply

And so that's for all communities to decide. So if someone else wants to do the same with our protocol, they can choose different parameters. Yeah,



What is the vision of Leu?

I think, that that's important and we have to stress that, that here in Zurich, people are banked and they don't actually need Leu right. you didn't build it for Zurich. You want to test it


what is , the vision? Who should use this system?

Alain Brenzikofer29:31

Our vision is to be more inclusive globally speaking. People who are unbanked, who have no access to financial services, who might not even have a state issued ID document. So in a sense, they will be cut off of a lot of financial services, and, and that will hamper the growth of their,