Banking the unbanked.
This is something that is long talked about within cryptocurrency. In fact, it was hijacked by politicians and now is the mantra for central bank digital currencies (CBDC).
There is just one problem: this is a short-sighted outlook.
Providing a digital wallet which allows people to send, receive, and store money is great. This is a major step forward but it is a bare minimum.
Ultimately, there is little accomplished if this is the extent of what is taking place.
So let us delve into this and see what can be done to rectify the situation.
Blockchains can operate essentially as banks.
Each has a wallet system tied to it. For many, this serves the purpose of what a bank is used for. The majority of the world uses a bank to simply hold money. There is little else done.
In this regard, getting people into the digital realm is helpful. It does, however, still provide the same limitations. The reason is we are looking at only a small piece of the entire puzzle.
For this reason, blockchain itself is not solely the answer. A lot more is required.
Here is where things start to diverge. It is also an overlooked aspect to the entire banking the unbanked discussion.
Getting someone a bank account is just but a start on one's financial journey. On its own, little utility is provided.
What is truly required is access to financial services. While being a part of the digital age is important, i.e. moving away from only cash, this is just the tip of the iceberg.
To truly grow economically, loans are required. This necessitates a means of using what is in the wallet as collateral. Here is where people are able to tap into the value they hold to further their financial lives. This could be to start a business, invest in other assets producing a return, or covering an emergency situation.
What about insurance? This is also something that is crucial for overall financial health. Being able to cover losses when catastrophe strikes is what prevents major setbacks. Having a digital wallet does not to protect one's assets.
Then there is the transferring of risk. One of the major use cases of derivatives is for entities (or individuals) to hedge risk.
People enter markets with different tolerances. Some are willing to take on greater risk and leverage their positions up. Others, like farmers or commodity producers, want to do the opposite. Here they are seeking to unload the risk to those willing to take it.
These are essentials for having an advancing economy. When people do not have access to these financial services, they are hindered. We can see how, if a farmer in some small nation is required to wait 6 months for payment on crops, that might result in being wiped out.
Here is where financial services can help. The individual can tokenize the crop, place it on the open market in a way similar to a futures contract, and receive payment before the crop is harvested.
All of this means the true path forward is decentralized finance (DeFi). Here is where we can see a wide range of financial services being offered. This will go a lot further to changing the plight of much of the world as compared to simply banking the unbanked.
DeFi is about inclusion. This is what makes it so powerful.
When one has some assets in a digital wallet, those can be utilized to access a host of other services which can enhance the financial life of that person. When done collectively, local economies can be transformed.
Of course, this requires the removal of the financial intermediaries. Wall Street and other financial institutions have done well inserting themselves in the middle of all financial transactions. This is done with the governments' blessing.
Here is where problems arise. To start, the existence of intermediaries means that we are dealing with extraction from the system. This drives the cost of everything up.
Another factor is the exclusionary nature of these entities. Because of regulation, they are forced to keep many people out of the system. Even the accredited investor laws prove how this is the case.
DeFi solves all of this by requiring no permission. When financial services are available to all who want to utilize them, we are looking at change taking place.
The idea of a "Hive Financial Network" is crucial. This is truly where a difference will be made.
We are dealing with something much bigger than simply being a social media platform. Instead, we are looking at changing the financial outlook of the entire world.
This is what cryptocurrency promised from the earliest days of bitcoin. Unfortunately, those tenets were lost as Wall Street started to hijack the entire industry.
Here we see those ecosystems that are truly focused upon decentralization standing out. They are the only solution. Most of cryptocurrency is going to end up being controlled by the banks. We already see that. For that reason, a truly decentralized network built from the ground up is required.
Not too many have the basis of Hive and the decentralization it brings.
This is where Hive can make a major difference. It is also where the continued long term focus should be. While social media, commerce, and a host of other sectors are important, we have to keep in mind what truly makes the difference.
A few coins or tokensas a reward is not going to drastically change the plight of large portions of the population. Instead, we need to provide decentralized financial services that can alter their local economies.
Here is where massive change will take place.
And it show be an area that many look to incorporate into their development plans.
