Cryptocurrency and blockchain are developing rapidly around the world to service virtual peer-to-peer transactions using digital currency. This allows people to send money directly to the recipient without intermediaries. Virtual money has made everyday life a lot easier for many of us, but can it help fight poverty in countries?
Blockchain in the fight against poverty
Hyperinflation, poverty, lack of jobs, lack of access to banking services, lack of capital and poor access to markets are some of the problems that cryptocurrencies and blockchain can solve.
Unlike banks, the blockchain does not require physical presence to operate. Because the technology operates in a distributed network, there is no need for a complex, opaque, and expensive private infrastructure. This saves on expenses that banks transfer to users through commissions and other fees when using bank accounts or performing mobile transactions.
Thanks to mobile financial technology, financial services suddenly become available to everyone who has a mobile phone for a small fee.
New developments can improve people's lives by helping them participate in the global economy and avoid poverty. This can be achieved by providing all people around the world with access to modern banking and financial services through blockchain, an analogue of cryptocurrency.
There are many entrepreneurs, economists, aid officials, and bankers who believe that a combination of cryptocurrency and mobile phones will provide the world with good access to the global economy and overcome many of the limitations of traditional banking services.
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Limiting countries in bank accounts is a global problem
Many people in developing countries who want to trade find themselves limited due to the inability to afford a bank account. For example, throughout Africa, opening a business account may involve an inaccessible deposit.
Cryptocurrency can also help those who want to buy their home, but cannot afford it. The founder of Habibi Coin, Com Mirza, launched a cryptocurrency to help those who wish to buy real estate without paying interest.
"In many of the first countries in the world, interest payments cannot be avoided, and if the homeowner does not fulfill his obligations, the bank loses ownership, and the homeowner loses everything," Mirza says.
"During the 2008-2009 mortgage crisis, 6 million people lost their homes. Many of them were hardworking families who relied on mortgages to finance their homes. With the Habibi Coin system, interest is completely excluded from payment and allows homeowners to make direct payments on their principal debt, this accelerates the path to sole ownership of real estate and significantly reduces the economic burden on the family."
That is why affordability is a critical factor in economic growth and plays an important role in eradicating poverty. This will reduce the gap between rich and poor, help accelerate the creation of new jobs, accelerate consumption. It will also directly help vulnerable people manage risks and absorb financial shocks.
That is why the United Nations (UN) is exploring the idea of using blockchain technology to provide legal entities with more than a billion people without any authorized documents.
For example, in 2018, the World Food Program used cryptocurrency to pay 500,000 to refugees. Since many of today's refugees have mobile phones, but do not have access to banks.
Developed by NAGA Group AG
Fintech companies such as NAGA Group AG have developed mobile financial solutions that will bring cryptocurrencies to mass communities, including non-banking people around the world. NAGA has implemented financial inclusion – across all asset classes and continents – at the center of its mission and is working on innovations that will allow users to send and receive cryptocurrency payments by email or phone numbers and convert them into cash.
It is clear that blockchain technology can positively impact the decline in the percentage of poor people around the world in the 21st century, allowing them to participate in the global economy, giving them the opportunity to save money, open bank accounts, invest, start a business, receive money transfers or send money to friends and family anywhere in the world. The effect of this will be enormous, and this can lead to the emergence of millions of new enterprises and a huge amount of new wealth, which is good for all of us.
Editor: Yuliya Soroka