How Blockchain Can Eliminate Poverty Forever
No need for a bank: Just a smartphone and a blockchain.
Let’s face it people, blockchain is the hype these days. With Bitcoin (BTC) prices reaching new heights and financial institutions adopting cryptocurrencies, we can no longer ignore the role that blockchain will play in our future. However, the true potential of the technology remains relatively unknown to the masses. The market has been overly focused on the fairy dust that is creation of money out of thin air. The true magic that Blockchain possesses goes beyond its tokenomics, it is the future of our society.
For those unfamiliar with blockchain, it is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system. A blockchain is essentially a digital ledger of transactions of information that is duplicated and distributed across the entire network of computer systems on the blockchain. The technology has been implemented in many sectors — banking, supply chain management, healthcare, and many more. Today we will be looking into how can this technology change the lives of the poorest.
But before we can go on to discuss how blockchain works, we have to first look at some of the underlying causes of poverty in today’s world.
Financial services
Globally, about 1.7 billion adults remain unbanked — without an account at a financial institution or through a mobile money provider. The lack of financial services such as banking and insurance not only force them into inefficient and expensive methods of transactions, but also strip them off of financial security.
In 2016, immigrants working abroad sent an estimated $442 billion to their families in their home countries. Hefty transaction fees are charged when these workers send money back home through banks or other money transfer operators. These companies justify their costs by saying they reflect the price of providing reliable and convenient services.
This traditional system lacks efficiency and transparency, as the internal processes are hidden and time-consuming. The processes also involve middlemen which leads to cost escalation. Blockchain, on the other hand, eliminates middlemen and enables senders and receivers to connect directly, thereby increasing transparency and reducing remittance costs.
Though the accessibility and scalability of the technology has yet to reach the level of traditional transaction services, it is evolving to become way more efficient than current systems. There will no longer be a need for banks, people just need an internet connection to access financial services.
Identification system
Majority of the developing world do not have a proper identification system for their people. They are not provided a platform for an connected flow of information between different systems. This deprives people the access to many other services such as insurance and micro-financing.
Blockchains that build digital identification systems allow people to open bank accounts, apply for insurance plans and increase their chances of getting that loan to start a business.
Atala PRISM is a decentralized identity solution built on the Cardano blockchain that enables the issuance of digital identities and credentials that users own, control, and share easily, securely, and privately. They are targeting countries that lack proper identification systems.
Property rights
Dead capital is a huge problem in the developing world. People own houses, lands, crops and businesses but they are not participating in the economy. Either they do not have any proof of ownership or that the traditional methods are vulnerable to inconsistencies, tampering, damage, and data loss. People are unable to transfer ownership, bring in shareholders or buy rights over properties. Due to this lack of identification, many are unable to enter formal business.
With blockchain, it provides a protocol to transfer value and digital assets. Having an identification system can bring clarity to title and thus access to capital. The ability to verify property rights gives individuals access to new forms of collateral, credit, or other indicators of a financial position. On an international scale, a proper identification system can also attract foreign interest and allow for investment channelled directly to individuals.
Education & Enterprise
Qualifications given out at less well known education institutions in the developing world are nearly given the right amount of recognition they should receive. The certificates themselves lack credibility due to the high instances of forgery that are not widely controlled. Given the lack of recognition, talents are held back from their pursue in further studies internationally. Not only does this impact the individual’s employment opportunities, it also brings down the country’s workforce quality as a whole.
Blockchain make tamper proof education certificates possible with its high level of security and transparency. The establishment of an interconnected database of information allows individuals to better navigate the corporate world and allow for higher recognition of talents.
Atala PRISM recently struck a deal with Ethiopia for the usage of their application. Through their collaboration with the Ministry of Education, each student will be assigned a Digital Identity (DID) and their education progress will be synced on the CARDANO blockchain.
Governance
Most of the developing world is crippled with corruption and plain bad governance. Foreign aid from other countries often fail to reach its rightful recipients due to manipulation by authorities.
With blockchain comes trust and transparency. Given that everything is recorded on the tamper proof ledger, it ensures accountability and transparency of important government funds. People can channel taxes, loans and funds a lot more efficiently. Donations and philanthropic initiatives may also become more secure and reliable. There have also been projects carried out to transit to a voting system built on blockchain to ensure total transparency in establishing a government.
The list on the impacts that blockchain will have on the poorest is definitely much longer. With the technology still in its infancy, there are still many underlying problems that we have yet to tackle. However, with its growing community and the amount of attention it is attracting, it is never too optimistic to say that a world without poverty is nearer than we imagine.
