Blockchain’s Potential Impact
Technological advancement is a vital indicator of a nation’s development and economic competence. Each day, new technology comes to life and becomes something of greater relevance. But what sets breakthrough technology apart is how it can profoundly affect our lives such that it can solve some of the world’s biggest problems. Such was the potential of the Blockchain technology, that experts believe it would make the most impact in emerging economies.
More than half the world’s population are citizens of so-called ‘developing countries’, which by definition, are nations that fall within low to middle-income economies based on the Gross National Income (GNI) calculated using the World Bank Atlas method. By the year 2016, the International Statistics Institute (ISI) listed a total of 139 developing countries with GNI per capita of $12,476 and below. In varying degrees, these countries are the most vulnerable to a myriad of socio-economic challenges like poverty, conflict, and environmental concerns—all of which are further inflated by poor governance and faulty systems that are prone to manipulation and corruption.
Despite the bleak situation, developing countries provide the best vantage point for Blockchain to reveal its real potential. Primarily, developing countries have become increasingly adaptive to technology. In a study conducted by the Pew Research Center in 2015, 54% across 21 emerging and developing countries now have access to the internet and smartphones, and this figure continues to rise. Furthermore, internet users in developing countries are reported to be the more frequent users of Internet-based applications and social media networks compared to developed countries. With this, Bitcoin, Ethereum, and other cryptocurrencies powered by blockchain technology are also gaining traction in developing countries which still do not have any existing financial systems that can provide faster, more secure, and more affordable ways to acquire and transact money.
What is Blockchain, and how is it a breakthrough technology? First, its structure is decentralized, which means that instead of having a central hub which has the sole authority to store and control information to be retrieved by users who has access to the network. Blockchain’s design allows it to distribute information directly across all members of the network. Second, any data recorded in a blockchain is encrypted and can no longer be altered or deleted. With these main features, blockchain is geared to make the following improvements most especially in developing countries as of the present.
Faster, Cheaper Remittances
In a documentary by Bitcoinfilm.org, titled ‘Bitcoin in Uganda: Empowering People,’ a college student living in Kampala, Uganda receives Bitcoins from his family in the US, which he can sell for hard cash to pay his school fees. Unlike sending money through remittance centers which rates reach as high as 11% and the process take days on end, sending Bitcoin entails no cost other than his internet connection and time to sell the Bitcoins. And because there is a demand for Bitcoin in Kampala, this way of remittance is proven to be sustainable.
Greater Financial Inclusion
Economist Hernando de Soto pointed that poor people have very little access to the formal economy because existing record-keeping systems in most developing countries are just unreliable, thus, failing to establish enough trust for citizens to subscribe to these services. Furthermore, the lack of identification requirements and paperwork make setting up bank accounts or transacting payments difficult. Not to mention that putting their meager salary they have painstakingly earned through formal channels entails a high cost. Add in the high risk for loss due to security threats targeting small rural banks and even major banks worldwide. As a result, more than 2 billion people, the majority of which residing in developing countries around the world, do not have a bank account and have never transacted money through electronic channels.
Using blockchain technology, millions of unbanked people can avail financial services through smartphones and computers connected to the Internet. And because of its simplicity, it can empower rural banks, local remittance centers, and even small enterprises to integrate technology for them to expand their services to support both domestic and international transfers and strengthen security with just a fraction of the cost.
Better Government Services
Tim Draper, venture capital investor and businessman involved in different crypto projects based in California, USA, firmly believes that it is the government that needs Blockchain integration the most. According to him, “Government is affecting the most people, and it is providing the worst service at the highest cost. Blockchain can remedy that by creating a whole virtual layer of governance.”
Blockchain gives power back to the people. Due to transparency and incorruptibility as the principal features of a blockchain database, developing countries can strengthen their documentation systems wherein people can easily monitor and even prevent corruption and fraud even before it starts. And with faster accessibility to identification requirements or payments transactions, long queues to avail government services will soon be a thing of the past.
This is very arena that Pearl Pay will be addressing. Pearl Pay goes beyond money remittance. We offer an ecosystem of products and technologies. We believe that by enabling the adoption of technology and offering a better way to do things, we can empower people better especially those in the developing nations. Here’s more information on what Pearl Pay can do.