As mobile technologies and the digital economy become ever more ubiquitous around the world, the more people in the poorest and most remote areas of the globe will have the opportunity to participate in the global economy. However, there is yet another innovation that will become even more relevant to this endeavor as it develops and becomes more widely adopted: cryptocurrency.
If you’re new to the concept, cryptocurrencies are a relatively new form of digital currency (the first and currently most notable of which being Bitcoin) that are revolutionary in that they are an inherently secure form of value transaction based on the blockchain. This explanation is probably confusing to most people (it certainly was to me), but William Mougayar, Venture advisor, 4x entrepreneur, and blockchain specialist, gives a great analogy…at least for those of us who have a Google account. Basically, he explains that traditional financial transactions are just like the way we’d share word documents before Google Docs. You’d type it up, save it, attach it to an email, and then send it off to its intended recipient. But once you send it, you’re effectively locked out of it until the recipient makes their changes and send it back, and you have no say in any of the changes they make. But as Mougayar explains, the blockchain is like Google Docs where “both parties have access to the same document at the same time, and the single version of that document is always visible to both of them. It is like a shared ledger, but it is a shared document.” And, perhaps most importantly, the document is not complete until both agree that it’s done.
This might seem like a mere matter of convenience when put in terms of word processing, but when it comes to financial transactions it’s a game changer. Blockchain is secure precisely because both parties must agree on the terms of the transaction before it can be made official. And as issues like fraud and identity theft become ever more pressing issues in digital finance, currencies based in the blockchain will become more widely adopted, which serves to increase their value.
But while cryptocurrencies certainly have distinct advantages for those of us in the Western world, the implications may even be far greater for people living in developing countries. As explained by Dr. Corey Petty, blockchain expert and host of The Bitcoin Podcast, for folks in these communities, access to the blockchain is more than just a matter of convenience or finacial security, but a potential way out of poverty. “Money sent over the internet is typically tied to whatever fiat currency you’re tied to in that particular country. So for those living under a repressive regime that really dictates how they spend their money, where they get it, or even the valuation of it, they are getting into Bitcoin because they can take their wealth outside of the dictation of someone else. Bitcoin is the most stable and legitimate completely global currency that’s not tied to anything or anyone. Ethereum is the same. And because these currencies are not tied to a state, they allow people to do things they could never do beforehand. It’s a technology of inclusion. It’s not trying to cater to a certain kind of person. Anyone who can find a use for it can use it, which could potentially disrupt the way things are done.”
This has broad implications for many of those entrepreneurs Seeds provides with microloans because, perhaps not coincidentally, some of the poorest countries in the world also have some of the most corrupt governments. And while altruistic purposes may not be the main factor that drives the development of these currencies, Dr. Petty thinks there’s a future when the potential these currencies have to do good becomes a real driver. “Right now it’s about investing in potential. What’s driving the technology is speculation on people making a lot of money. But as more companies like Seeds start using cryptocurrency, then you have a push for a movement that really sees the potential of investing in these things as a social good. But it’s not going to bootstrap itself. It has to be done through projects like this that are trying to make that change. That’s what will really bring that potential to light.”
Cryptocurrencies are still in their infancy and have a long way to go, but their potential is huge, not just for revolutionizing the way we think about finance in general, but for leveling the playing field between people born into dramatically different circumstances. For Seeds, it’s our goal as a company to give as many people in need as we can an opportunity to stand on their own two feet. As time goes on, cryptocurrencies will become an increasingly powerful tool we can use to achieve that mission.
If you’re interested in learning more about this topic, catch Dr. Corey Petty and his co-hosts on the Bitcoin Podcast, or check out any of the other great content contributors featured on the Bitcoin Podcast Network.