Can Cryptocurrency Help Alleviate Poverty?
The cryptocurrency sector is booming, with more and more initiatives being created to help the developing world.
Cryptocurrency, or blockchain, is rapidly evolving around the world to cater for virtual peer-to-peer transactions using digital currency. This enables people to send money directly to a recipient without an intermediary. Virtual money has made the daily business of life much easier for many of us, but can it help alleviate poverty in the developing world?
One way to think about cryptocurrency is as a digital record of a transaction, without the need for a bank or third party services. Cryptocurrency is different from payment providers such as Paypal. It is a virtual currency that can be transferred into a virtual account. It is essentially a digital asset set up by the cryptocurrency provider that allows people to open an account and send and receive payments electronically, without going through a bank or a money transfer center, which often charge transaction fees.
Many people in the developing world who want to trade find themselves limited by not being able to afford a bank account. For example, across Africa opening a business account can imply an unaffordable deposit, often more than what an average person would earn in a year.
Cryptocurrency could also help those who want to buy their homes but can’t afford to. The founder of Habibi Coin, Com Mirza, started an ethical cryptocurrency to help those wishing to buy property in a way that doesn’t involve interest payments.
“There is no escaping paying interest in many first world countries and, if the homeowner defaults, the bank forecloses the property, and the homeowner loses everything,” says Mirza. “During the subprime mortgage crisis of 2008-2009, 6 million people lost their homes. … Many of them were hard-working families who relied on interest bearing mortgages to finance their homes. With the Habibi Coin system, interest is completely removed from the equation allowing homeowners to make direct payments to principal debt, and this speeds up the path to sole home ownership. It significantly reduces the economic burdens on a family.”
The $217-trillion global real estate industry is set to flourish, with more investments in the cryptocurrency sector seen to be advancing due to initiatives such as Habibi Coin that cater to diversifying the market. Mirza has secured $3-million investment for his start-up and is on track to raise an additional $14 million in the next months from over 500 investors. Mirza is confident the venture is on course to raise over 100 million in its initial coin offering in the beginning of 2018.
Aid agencies can also see unprecedented benefits by using blockchain technology that can improve humanitarian assistance worldwide. It can significantly help with mismanagement of money intended to alleviate poverty and improve education.
In early 2017, the UN World Food Programme launched the blockchain crypto assistance, Building Blocks, which aims to help poor families in Pakistan’s Sindh province by providing food and cash handouts. An internet-connected smartphone was used to record payments from the UN agency to food vendors, ensuring that those in need received aid, merchants got paid, and everything was tracked and recorded. By using an electronic device to send money virtually, aid agencies were able to reach people quickly and efficiently without relying on banks and other financial third party sources. By using cryptocurrency, humanitarian agencies can send aid to remote areas where ATMs may not even exist.
The cryptocurrency sector is booming and, with more and more initiatives being created to help those in need, we can see a more prosperous and inclusive system where those in the developing world can join the global economy and improve their lives.
The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.