Though there are innumerable connotations for this revolutionary tech on finance and banking, blockchain can reduce global poverty in a wide range of areas.
How Blockchain Can Reduce Global Poverty
According to the World Bank, nearly 1 billion people around the world live on less than $1.90 per day. These extreme income inequalities could be eradicated if cryptocurrencies were adopted for global payments. We are talking about an average of 727 million people, or 16% of the global population. This would amount to a 1% increase of the global population’s living standard, and a 2% decrease in the global poverty level. Once cryptocurrencies are fully adopted for micro-payments, there will be an abundance of lower cost remittance service providers, thus transforming the lives of millions of poor people who live in developing countries.
Beyond just a financial technology revolution, blockchain offers an unprecedented way for small businesses to take part in the global economy. Financial institutions and microfinance institutions have had to work to create their own blockchain solutions. But with these blockchain solutions, microfinance institutions (MFIs) can now directly give microloans to impoverished people across the world without middlemen and banks. Blockchain could enable two-way transfers, like Bitcoin, but without all of the volatility. Bitcoin's price may jump to all time high, but microloans on the blockchain could be much cheaper, even by a fraction of a cent. The Problem With Local Loans Though international microloans are possible, they have a long history of problems.
Transparent and Secure Transactions
Using blockchain would greatly improve the system, resulting in more straightforward transactions and more incentive for those who participated. Transaction transparency would allow for automated payment systems to take place, decreasing the chances of money being lost or stolen. It would also allow for non-governmental organizations and NGOs to fund their work with more trust than they currently do. Pervasive Hard Ledger for Value Exchange Digital currency technology could allow for more open trade and exchange of value. For example, cryptocurrency could serve as a much-needed solution to world hunger by supporting food banks and charity drives. The ability for these operations to obtain a free or discounted coin, by donating to the cause through a service such as WorldGiving.
Creating a Decentralized Economy
Blockchain is unique because it allows for peer-to-peer transactions to happen between any number of parties within a set of rules defined by a set of developers. As such, it is not controlled by a single entity, but rather, by the people who are using it. This innovation is definitely taking off right now with various blockchains emerging that are growing at an exponential rate. Amongst these projects are the Gridcoin, Gnosis, and Ethereum blockchains, which have combined coin tokens with functionality, allowing users to donate assets or coins to developers to develop their technologies. With Blockchain technology evolving at a rapid rate, it is not beyond the realm of possibilities that these projects may become the largest blockchains in the world, surpassing bitcoin.
When exploring cryptocurrency and its full potential, one must not forget to be humble, look for data to back up claims, and look for data to debunk claims. Too many people rush to conclusions with little to back them up, and instead of doing their due diligence, they talk past one another. We must not allow ourselves to fall into the trap of the sensationalist headlines that have led many people to believe that cryptocurrencies are going to help us combat the problems of global poverty or end world hunger. As it stands, most people are still very much skeptical of the cryptocurrency industry as a whole, and the real research needs to begin before we can truly begin to understand the true potential of the technology.