The growing emergence of BlockChain technology as a force to disrupt a number of business models and industries, is leading to corporates scrambling to understand the technology and to assess the impact to the their future business strategies
The financial services industry has been quick to asses the potential of the technology with several local and overseas banks joining forces in consortiums’ such as R3 to collaborate on issues such as financial governance, fraud and security, technology infrastructure and innovation
This focus has tended to be on the banking systems located in the western economies, but an arguably greater impact of BlockChain in Third World countries has received less attention.
What is the BlockChain?
Several definitions of the BlockChain exist, but in essence it can be seen as an incorruptible digital ledger of economic transactions that can be programmed to record, not just financial transactions, but virtually everything of value. Its the distributed nature of information as well as the transparent and immutable state of data on the BlockChain, which resonates with a lot of advocates of the technology.
Its the ability of the BlockChain to provide a record of economic transactions which enables the millions of the unbanked in Third World countries to achieve financial and economic freedom
Closing the Financial Exclusion Gap
Many migrants from Africa, and further afield, embark on a precarious journey in search of economic and financial freedom. This dangerous journey all too often results in tragic endings for the individuals seeking a better life. But why do they go to such extraordinary lengths and dangers to venture into unfamiliar lands? The easiest explanation is this: freedom of action and opportunity.
The Index of Economic Freedom, compiled by the Heritage Foundation ranks countries according to how free they are in conducting economic activities. Ten out of the 20 countries at the bottom of the index are African countries.
Nearly 326 million adults do not have access to bank accounts in Africa. Such a situation makes it difficult to have financial freedom. Bureaucratic tendencies and economic exclusion have paved the way for the current paradigm denying many of financial instruments.
The BlockChain Impact
Technology is freeing humanity because it’s outpacing the understanding of corrupt governments and bureaucrats in a way that’s never been seen before thanks to Blockchain. The trend is such that poverty-stricken places like Africa can reverse their fortunes.
The Blockchain, for instance, offers tremendous opportunities to liberate the world’s economically and financially disadvantaged populations in a number of ways:
- Payment transmission – M-PESA services have been hugely successful on the African continent, providing simplified mobile payment services between its participants. BlockChain technology can take this further by providing a peer to peer payment system, whereby the friction costs of transfer are virtually nil and the transactions are evidenced on the BlockChain providing transparency for all parties involved.
- Land Title – BlockChain can provide evidence of rights to land title and property. A problem acute in many parts of the Third World, where properties are seized by the authorities and criminal gangs. There is little recourse to the owners as corrupt local councils destroy the evidence that is needed to prove entitlement.
- Microloans – Many in the Third World are subjected to the countries high interest rates due to government economic mismanagement, making it impossible for many to get credit or loans for business ventures for economic sustainability. Peer to peer microloans provide speed of transmission, as well as linking the success of the business to the ability to draw down more funds through the use of automated BlockChain contracts. It also enables the recipient to begin to build a credit history through payments which is evidenced on the BlockChain. This use case is compelling; by lifting business activity and thereby contributing to raising a countries GDP
BlockChain technology can provide the catalyst for real social and economic advancement for large swathes of the worlds unbanked. Its an opportunity that must be seized.
Also published on Medium.