Blockchain And World Poverty

Blockchain And World Poverty

Blockchain And World Poverty

One of the questions frequently under discussion at the current time, is to what degree blockchain could assist, if at all, in alleviating world poverty. As Michael Casey, writing for Techonomy points out, it is estimated that as many as five billion people do not have adequate records. This lack of documentation causes no end of problems of these people. It means that they cannot access the traditional financial systems They cannot get loans or access to credit. They also cannot get insurance. Worse, they have a much weaker situation in terms of bargaining. This is a problem at a massive scale, and it has been proposed by several that blockchain could be of help.

This is not just a developing country problem. Poverty is everywhere. Sarah Varney of Kaiser Health News explains that , “One in five households in the United States, or about 51 million adults have only a tenuous relationship with a traditional bank, relying instead on check cashing stores and money lenders.” This created a real problem in the USA in 2013 when, as a result of health care regulation, most Americans were required to have health insurance, yet signing on to most plans required these individuals to have a credit card for the first month’s payment, and, to pay via electronic funds transfer or via a check from then on in. With limited or no access to bank accounts, this proved difficult.

Writing for Medium, Phil Siarri asks to what extent blockchain could help with some of these problems of poverty. One of his answers to this question is that, “Blockchain technology can be suitable to register property ownership whether such exists in digital and non-digital format”. In his opinion, this could be helpful in situations where there is not great political stability. Registering ownership in this way could be helpful as the rights of the owner would be clarified, and this could help with resolving disputes. Using this approach could also be beneficial in the sense that fraud is reduced, due to the way blockchain works. Manual errors would also be avoided by using such an approach, arguably.

Perhaps even more important, given the extent of people that can be described as “unbanked” that have been described already above, this is another area in which it is anticipated that blockchain could be helpful. Blockchain could help the unbanked through payment services. This could be of significant assistance in countries where there is very limited financial infrastructure available. Specifically, the cryptography used in blockchain can help with digital transfer of ownerships.

This could be achieved using smartphones, particularly as smartphone ownership has been estimated to get to 37% of the global population by 2020. It is also thought that undocumented migrants could benefit from these types of solutions, particularly since refugees may have left their homes in a hurry, and as such may not have access to formal identification documents. This currently leads to them not being in a good financial position. Having this all documented on blockchain could be highly beneficial in this regard.

While there is potential for the blockchain to add value, there are still possible issues with the use of blockchain as a saviour to some of the problems of poverty. The technology is not proven, and there is the potential for problems with it, particularly with regard to scalability, at least with the bitcoin version of it.

Even if people do register details on blockchain and keep digital records in this way, it will not be very meaningful if the government does not authenticate the data that is put into the system about personal identity or house ownership. There might also be some reluctance among people to record their data in this way – there may be a trust issue to be overcome, and people do not want to be vulnerable. Equally, in a number of places where poverty is rife, such as in the favelas, gangs may have a good deal of control over rights to property and these would be more likely to be more powerful than any digital record on blockchain. These are all areas for concern. Nonetheless, if some of the challenges can be surpassed, and if the will is there to do so, blockchain certainly does have potential that cannot be ignored.

Article powered by Humaniq

Launched in 2016, Humaniq aims to provide mobile finance to the 2 billion unbanked population through its mobile app for good, that uses biometric authentication to replace traditional methods of ID and security. Humaniq’s open source stack and API will be available for startups and other businesses to build services on its core technology, making it easy to adapt their service and plug it into Humaniq’s network to reach a huge, untapped audience.