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The Blockchain Technology- Much ado about ..everything

Since January, crypto currencies are seeing their market cap shrink severely. All regulation issues aside, one of the biggest criticism is that people fail to see the proper application of the technology in improving everyday challenges and therefore are just considered a mere tool for financial speculation

Although many ICOs promise products or processes that will simplify our lives , there are very immediate applications for the blockchain

2 Billion people (25% of the global population) don't have a bank account. Unsurprisingly half of them belong to the poorest 40% of the society. There are many reasons to explain this: time need to get the paperwork involved in the process, cost of opening a bank account, low income levels, financial illiteracy, inability to comply with strict KYC

Most of them live in low and middle income emerging markets, but even in high-income countries, large numbers of people are unable to use banks to meet their day to day financial needs. This means they don’t have access to the convenience, to security and to interest that banks provide.

Without access to savings and credit, these people cannot participate in the virtuous cycle of economic growth, instead of remaining in a vicious cycle of poverty.

The current alternatives aren’t optimized. Microfinance loans saw banks get in the game and the interests charged has increased dramatically. As a result, when the underbanked really need money they depend mostly on informal providers for financial services,such as unscrupulous money lenders who charge exorbitant transaction fee

Blockchain technology has the potential to help the unbanked by allowing them to create their own financial alternatives in an efficient, transparent and scalable manner.  

Property rights, long a pain point for many low-income individuals, can also be moved onto the Blockchain, allowing them to enter formal information networks and even leverage their property as collateral. And by making remittances painless and efficient, Blockchain could allow low-income individuals in different countries to save and lend together.

Blockchain provides a secure, scalable way to serve the needs of these individuals, and a number of technology companies are leveraging it to usher in a world in which everyone has access to the savings and credit that is an essential building block for economic growth.

Many interesting projects are running such as OmiseGo, Wetrust or Humaniq but one I came across that could really make a difference is Sentinel. It aims to help and service the 420 Million unbanked in Asia. The farmers whose livestock can't be monetized and are therefore locked value. They can't be legally recognized as collateral for bank loans plunging the farmers in the vicious circle of poverty. The Sentinel chain blockchain platform allows to quantify, identify and verify livestock ownership, thus unlocking their value and allowing the owners to have access to a wide range of financial solutions helping to participate in economic growth

 

It is hard not to listen to the old leaders of the financial world criticizing Bitcoin and the whole blockchain technology calling them a bubble worst than the Tulip Mania. But true innovation lies here , with transparency, speed, savings and equality for all.

 

 

Comments: (3)

Behzod Sabirov
Behzod Sabirov - Sanscrit LLP - Almaty 22 February, 2018, 09:26Be the first to give this comment the thumbs up 0 likes

It's dubious that people who can't afford themselves such a simple thing as a bank account, could start enjoying the much more complicated "blockchain" stuff.The "underbankeds" must be aided by their governments, blockchain or not.

Lilia Stoyanov
Lilia Stoyanov - Transformify.org - London 23 February, 2018, 10:00Be the first to give this comment the thumbs up 0 likes

Most of the underbanked people are illiterate and very unlikely to use complex technology solutions. Smartphones and lap tops are luxuries they can't afford.

Arjeh Van Oijen
Arjeh Van Oijen - unchain.io - Amsterdam 26 February, 2018, 10:111 like 1 like

Govenments can use blockchain technology to set up networks with payment accounts and fiat currency coins issued by the central bank. Third parties are given the opportunity to offer innovative payment and finance services on basis of the accounts in the blockchain network. Users can open accounts as well as buy/sell and transfer the coins via these 3rd parties. The settlement can take place via a bank account, but to service unbanked cash providers will allow users to buy/sell coins in cash via shops/kiosks. Users can be given access to their account (and transfer funds) via mobile phone (App or USSD/SMS). End-users are not exposed to the complexity of the blockchain technology. It is comparable with services offered by M-Pesa and others, with the key difference that it is open and not limited to one single service provider. This will result in more competition between service providers and drive innovation and put pressure on fees. The blockchain network can also be used by NGOs and government to settle medical care and other social services by issuing special purpose coins on the network. The purpose for which this coins can be used can be restricted by placing special conditions in smart contracts. In this way it can become also a valueable instrument to drive down corruption.

In this way blockchain is certainly a game changer to drive financial inclusion.

Nicolas Pocard

Nicolas Pocard

Director, Israel

Opportunity Network

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Tel Aviv

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This post is from a series of posts in the group:

Asia Financial Services

Covering all aspects of financial services in Asia from banking in China to algo trading in Japan.


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