Cryptocurrency, Artificial Intelligence and Basic Income as Innovative Technological System

Abstract

The common signs of development and its financing of cryptocurrency, artificial intelligence and basic income were determined. The main tendencies and problems of the development of cryptocurrency and artificial intelligence from their appearance to the present time were considered. The combination of cryptocurrency, artificial intelligence and basic income in a unified system of innovative tools for the creation of a new global financial and technological system was substantiated. These three technologies have the features of combining into one innovative system of interaction at different levels from hardware and software to the level of ultimate practical implementation and application in the future. The perception and consideration of these technologies as a single system makes it possible to significantly simplify the approach to their study, design and implementation.

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Traektoriâ Nauki = Path of Science. 2018. Vol. 4, No 8 ISSN 2413-9009
Section “Economics” 2024
Cryptocurrency, Artificial Intelligence and Basic Income as Innovative
Technological System
Lyubomyr Sopilnyk 1, Andriy Shevchuk 2, Vasyl Kopytko 3
1 Lviv University of Business and Law
99 Kulparkіvska Street, Lviv, 79021, Ukraine
2 Cherkasy State Technological University
460 Shevchenko Boulevard, Cherkasy, 18006, Ukraine
3 Lviv Branch of Dnipropetrovsk National University of Railway Transport named after Academician V. Lazaryan
12a I. Blazhkevych Street, Lviv, 79052, Ukraine
DOI: 10.22178/pos.37-6
JEL Classification: G00
Received 25.07.2018
Accepted 10.08.2018
Published online 31.08.2018
Corresponding Author:
Lyubomyr Sopilnyk
sopilnyk01@gmail.com
© 2018 The Authors. This article
is licensed under a Creative Commons
Attribution 4.0 License
Abstract. The common signs of development and its financing of
cryptocurrency, artificial intelligence and basic income were determined.
The main tendencies and problems of the development of cryptocurrency
and artificial intelligence from their appearance to the present time were
considered. The combination of cryptocurrency, artificial intelligence and
basic income in a unified system of innovative tools for the creation of a
new global financial and technological system was substantiated. These
three technologies have the features of combining into one innovative
system of interaction at different levels from hardware and software to the
level of ultimate practical implementation and application in the future. The
perception and consideration of these technologies as a single system
makes it possible to significantly simplify the approach to their study,
design and implementation.
Keywords: cryptocurrency; artificial intelligence; basic income; innovative
tools; global financial and technological system.
INTRODUCTION
The world financial system entered a new phase
of innovation transformation using new informa-
tion technologies with the development of
cryptocurrencies. The new digital decentralized
system was created during 9 years in the form of
a mining, support and maintenance infrastruc-
ture with calculations, bidding, placement and
creation of new projects. The new innovative sys-
tem of modernity was created together with
cryptocurrency and other technologies, such as
artificial intelligence (AI), that will have a deci-
sive influence on the development of the global
financial system in the postindustrial and infor-
mational economies of the world. Rapid expan-
sion of automation with AI development posed a
problem of determining the size and payment of
basic income for the population, which will be
deprived in the coming years of a large number
of workplaces. The combination of the flow of all
these processes and their consideration as a sin-
gle system is relevant to the study, which will al-
low for the development of common strategies
for their evaluation.
LITERATURE REVIEW
Researchers such as P. Vigna, M. Casey [1], J. Fry,
E. Cheah [2], O. Prymostka [3], and others were
engaged in research of cryptocurrencies. The ar-
tificial intelligence was investigated by R. Kurz-
weil [4], S. Russel, P. Norvig [5] and others. The
scientific works of A. Atkinson [6], P. Van Parijs
[7] and others are devoted to basic income. But
most scientists do not consider these three con-
cepts as a system of collaborative interaction that
allows them to more effectively study the proc-
esses of their development and find practical ap-
plication.

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Section “Economics” 2025
RESULTS AND DISCUSSION
Cryptocurency
The rapid development of information and digital
technologies has led to the natural occurrence of
the notion of digital money and digital currency
which was implemented with the creation of Bit-
coin cryptocurrency and its analogues. The
growth of capitalization of major cryptocurren-
cies, the worldwide spread of technologies such
as mining, blockchain and ICO (Initial Coin Offer-
ing, like IPO for cryptocurrency market) has
forced most developed countries to apply differ-
ent regulatory methods to a new process, which
will now undoubtedly change the global financial
system. The study of the possibility of state regu-
lation of these processes is and will be very rele-
vant for most countries of the world in the com-
ing years. A large number of experts see signs of
overheating of cryptocurrencies market with the
extremely rapid capitalization of it at the end of
2017, with a significant risk of a crisis and a de-
preciation of their assets (exchanges, means of
property, etc.), which so far have not been met in
recent years. There is unpleasant feature of the
use of cryptocurrency for governments of the
countries, except for the impossibility of direct
regulation, is the use of their people close to
criminality when anonymity allows them to
“launder” money, trade in illicit goods and
quickly transfer uncontrollably large sums of
money to different parts of the planet. Another
problem for the governments is the process of
the mining which generate cryptocurrency cur-
rencies. Mining consists of searching for specific
data sequences rules with minimal hash value on
special hardware and software that subsequently
used as currencies. Mining has clear signs of fi-
nancial pyramids with investing real money in
equipment and electric power consumption in
the obscure rules of pricing of the data. But with
rapid increasing exchange rate of Bitcoin mining
acquired a mass character and has become popu-
lar in many countries. Mining has also become
especially popular in Ukraine, as evidenced by
the high prices, quick sales and lack of graphics
cards, motherboards and ASIC for mining on the
Ukrainian market. Now cryptocurrency in
Ukraine not adopted any laws, although some
miner has been arrested on charges of illegal use
of electricity [9]. Some Ukrainian politicians also
began to declare their income in Bitcoins that al-
lows them to use these amounts in the future to
avoid taxes [10]. The probable path of the evolu-
tion of the means of payment for the monetary
system during the development of mankind can
be depicted in the following figure (Figure 1).
Figure 1 – Evolution of money
OUTPUT
CONTROL
Gold
Gold coins
Paper money, coins
Credit Cards
Cryptocur-rencies
Smelting from
mined ore
Printing, chasing
Printing
Mining
Controlled by the state
Controlled by banks issuers
Distributed system of circulation
without control centers
Speed and
Globalization
Funds will be credited as
soon as they are
transferred to any point
on the planet where the
Internet is available
Irrevocability
After verifying the
transaction, it will be
documented and
cannot be cancelled
Security
The funds on an
electronic purse are
protected by a private
key
Anonymity and
uncontrollability
Users can use funds
anonymously, they cannot
be blocked, additional
emissions or prohibited use

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Most countries began with the menacing growth
of Bitcoin to try to ban the further development
of cybercriminals - restrictive laws passed in
China, Russia, the United States. They are trying
to detain the owners of electronic exchanges in
the US, prohibit the use of ICO (Initial Coin Offer-
ing, startups sold to early backers of the project
in exchange for legal tender or other cryptocur-
rencies, but usually for Bitcoin) in China, and out-
sourcing the property process in other countries.
Some governments have been thinking about us-
ing cybercriminals and even announcing the
creation of their own. Obviously, the need to
regulate this process is unquestionable. Govern-
ment’s regulation of cryptocurrency in our opin-
ion should take place in three dimensions: – Take
advantage of cryptocurrency goods, and to use
them in their financial system, attract invest-
ments and prevent the state from lagging behind
in a very important process of transforming the
world financial system; Prevent the use of
cryptocurrency in illegal operations, money
laundering, trade in prohibited goods and ser-
vices; Regulation of the process of investing of
citizen’s money in technology related to crypto-
currency lures (mining, ICO, etc.) to prevent cri-
ses and impairment of invested assets.
A clear position of the countries governments at
this stage in the issue of supporting the innova-
tion component of cryptocurrency and the de-
velopment of a strategy to prevent possible nega-
tive effects from their active use and implemen-
tation is extremely important. The main advan-
tages of cryptocurrency against fiat money gen-
erated by high demand for them were the speed
and globalization of the transfer of funds, docu-
mented and irreversible transactions, security,
the possibility of anonymity in transactions. The
rapid growth of the capitalization of Bitcoin and
the main cryptocurrencies will be considered in
the figure (Figure 2).
Figure 2 – The capitalization of Bitcoin and other cryptocurrency market in 2016-2018 (US $ billion) [11]
The figure shows that, since mid-2017, the mar-
ket capitalization of Bitcoin has increased signifi-
cantly and reached the maximum value of 800 B
dollars US at the end of the year, after which a
decline or correction began. Distribution of the
market cryptocurrency in the top ten can be ana-
lyzed from Figure 3.
Bitcoin has the first place with an index of 38% of
the total capitalization of cryptocurrency, in the
second place coins Ethereum (23%) and the
third Ripple (8%). Bitcoin has shown over time
the use of certain disadvantages, among which
the high cost and longtime of the transaction. So
can be predicted that its share will continue to
fall, at the same time, will increase the share of
other cryptocurrency and in the future will be
the growth of capitalization of currencies, which
will be devoid of major shortcomings and devel-
oped with the help of modern digital and net-
work protocols. The Bitcoin has the greatest
growth during 2017, at the beginning of 2018, its
rate dropped almost doubled from $ 20,000 to $
11,000 [11]. Leading financiers around the world

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are now raising questions about whether crypto-
currency and Bitcoin, in particular, are a financial
pyramid and a bubble that can be devaluated at
any time and lead depositors to bankruptcy. Ob-
viously, the new financial system is undergoing
repeated transformations and corrections, but in
our opinion, impairment is impossible to zero.
This is due to the fact that the crypto coins un-
ambiguously found their scope of application in
the form of rapid and safe transfer of funds from
one point of the world to another, anonymous
and documented transactions. The event of a
bankruptcy of a particular crypto project will in-
evitably be redeemed for future use, and thus the
complete collapse of the new system is unlikely.
A bankruptcy of some crypto project will lead to
the fact that it will inevitably be redeemed for
further use, and thus the complete collapse of the
new system is very unlikely. It is important to
understand that without further development of
a new financial system based on new technolo-
gies, everything can quickly lose its growth rate.
The new financial instrument with the use of
cryptocurrency and blockchain technology has
actually been created. It is even backed up with
hardware: computing power for mining and
transaction support. The sphere of direct use of
the most crypto of money and the products and
services that can be purchased for them is not
formed.
Figure 3 – Capitalization of Bitcoin and other cryptocurrency by the beginning of 2018 (%) [11]
Іt should also be noted here that the present re-
search may be aimed at developing a theoretical
and methodological approach to the diagnosis of
the system of interaction between the govern-
ment and business in terms of public e-
procurement [14].
Artificial Intelligence and basic income
Obviously, the next step will be the formation of
the market of goods and services, where the
main means of payment will be not fiat money,
but digital. In our opinion, the main product in
such a market in the future will be artificial intel-
ligence. This is due to several reasons: the rate of
investments in artificial intelligence correlates
with the volumes of money invested in crypto-
currency; the computing power created in the
form of trusts for property financing, for prod-
ucts for fast calculations using CPU and GPU
processors, the increased speed of distributed
computing through the Internet becomes a large
computing power, the only real means for which
the use of which remains the training of neural
networks for artificial intelligence; these two
new innovative tools (cryptocurrency and AI) are
very closely interconnected, which determines
their mutual use in the future. Another important
instrument of the new innovation system that is
currently being formed in our opinion should be
the basic income [6], [7]. There are now well
founded reasons to fear the rapid development of
artificial intelligence in the world which will
eliminate the work of a large number of people
through the automation of simple monotonous

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Section “Economics” 2028
labor. Among the examples of what has already
been practically done is the development of the
autopilot program for cars in the United States
and the fear that a large number of truck drivers
will lose their jobs through this innovation. Thus,
compensatory mechanisms must be developed
that smooth out significant transformations in
the areas of human activity with the develop-
ment of AI. This compensatory mechanism in re-
lation to employees who lose their jobs should
become the basic income, the volume of which in
the future should determine and regulate by the
AI on the basis of constant accumulation and
processing of data. So as for reliable data proc-
essing on financial operations will require tech-
nology blockchain or similar, then obviously paid
the basic income will be crippled (Figure 4).
Figure 4 – AI, cryptocurrencies, basic income and human interaction diagram
The defined scenario in the diagram is as follows:
AI determines the size and address of the basic
income payment using the algorithms of neural
networks, smart agents and fuzzy logic. Pay-
ments are made in cryptocurrency and recorded
further expenses by the population. Amendments
are made according to the money spent by peo-
ple on the priorities of self-improvement, train-
ing and health improvement in the next steps.
Developed societies for now were not ready to
enter the basic income and voted against on the
referendum in Switzerland but it is unknown
whether the choice will remain in case of trans-
formations of the whole branches of activity and
the loss of employment of a large number of
workers in it.
Thus, now the whole direction of economic activ-
ity is formed, the new industry is based on inno-
vative transformations of the existing financial
system in the form of application of cryptocur-
rency and related technologies. Crypto projects
create a new sphere of economic activity along
with other related technologies where the prod-
uct is the digital means of exchange analogous

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fiat money, means of manufacturing equipment
for the property and service of transactions. New
technologies in the new system are also used in
the form of blockchain, new protocols of interac-
tion between equipment and users of the Inter-
net that create the sphere of consumers. Signifi-
cant investment in projects in 2017 made it pos-
sible to develop and improve the software and
hardware necessary for the functioning of the
industry, which has very large prospects for the
transition to a new level of its use for creating a
software base of AI. Our assumption is partly
confirmed by the necessity of having computing
power for the development and operation of AI,
which have already been developed and im-
proved due to the development of cryptocur-
rency with hardware and software for its func-
tioning. Otherwise, the question of the size of the
basic income and the addressing of it may not be
trivial and require certain calculations and cor-
rections, and all stages of payment, which will
require AI. Therefore, it is natural to assume that
all these elements are in a certain interconnec-
tion and at the stage of development and forma-
tion in the modern global financial system.
CONCLUSIONS
Consequently, the global financial and economic
system is currently in the process of global trans-
formation, which is associated with the devel-
opment of new technologies in the form of
crypto-currency, AI and basic income. We found
that all these three technologies have the fea-
tures of combining into one innovative system of
interaction at different levels from hardware and
software to the level of ultimate practical imple-
mentation and application in the future. This is
evidenced by the pace of development and fi-
nancing of cryptocurrency and IT technologies,
the direct link between these technologies in
terms of using joint tools and implementation
and their direct assignment. The perception and
consideration of these technologies as a single
system will make it possible to significantly sim-
plify the approach to their study, design and im-
plementation. Further research should be aimed
at developing a theoretical and methodological
approach to modeling processes of the transfor-
mation of the global financial and technical sys-
tem with the help of cryptocurrency, AI and basic
income.
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