Global economic inequality is on the rise, and crypto could help.
According to a UN report last year, inequality is growing for more than 70 percent of the global population. This phenomenon is exacerbating the dangers of division and obstructing economic and social progress. However, the increase is far from inevitable and can be addressed at both a national and international level. This is where crypto comes in.
After all, the very initial purpose of the mysterious creation of Bitcoin was to act as a way of bridging the gap of global wealth. During the Great Recession of 2008, the domain name “bitcoin.org” was registered online. Soon after, Satoshi Nakamoto, the enigmatic and alleged founder of Bitcoin, issued statements claiming that the electronic cash-to-cash system was created to combat centralized currency manipulation.
How can crypto help mitigate poverty in developing countries?
Currently, there are 1.7 billion people worldwide who do not have bank accounts or have limited access to financial services. Bitcoin has the ability to reach this demographic and provide these much-needed financial services to them.
In 2017, Fintech expert Anton Dzyatkovsky cofounded MicroMoney, sparking interest in expanding the crypto space in developing countries. MicroMoney is a money-lending app targeting Southeast Asian countries including Myanmar, Thailand, and the Philippines, providing services to help people create a credit history on the blockchain.
It employs machine learning algorithms and big data analytics, with the results being safely stored on the blockchain. The company raised $10 million through an initial public offering (ITO) back in 2017.
This is just one example, but there are many others. Crypto was used in Venezuela as well during the hyperinflation in 2018. After the government issued a new cryptocurrency named Petro, Venezuelans were able to make cross-border transactions without relying on cash. The coin is still being used in 2021.
The Venezuelan case is a severe example of government-backed currencies losing their value, but it is in no way unique. In fact, local currencies are designed that way, and the group of people who suffers from it the most are those with low income.
Crypto can be used as a powerful tool to help alleviate poverty, especially in developing countries.
Bitcoin has the potential to reach many more people in the 2020s, with the growing number of people who own a smartphone. Since cryptocurrency is only exchanged electronically, anyone with even a simple internet connection can instantly gain access to it and trade it.
They can safely store their wealth online, without having to worry about it being devalued because of the increase of the supply. What’s more, while currencies like the dollar are losing their value over time, the price of crypto such as bitcoin has only been increasing since its creation in 2008.
Crypto is inclusive and brings a new level of possibility for global wealth equality. If we use it as a tool to combat this phenomenon, the societal transformation that comes with that is enormous.