Brickblock will lead the way in making investing more financially inclusive around the world
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Brickblock’s platform promotes the financial inclusion of investment opportunities by eliminating the high fees, minimum amounts, and complexity of traditional investing.
For the majority of low-income earners, participating in the global financial system isn’t just a matter of not having the means. It’s about a lack of easy, affordable, and secure access.
The reality for most people living in developing countries or those with little capital in developed markets is that it isn’t financially feasible to make their money go further. If they could invest $100 a month, buying and selling one ETF, around 20 to 30 per cent of it will be lost to fees. Any amount that cuts into one’s potential return on investment is magnified for those who can only make a small contribution. For them, it takes too long to simply break even on money lost to fees.
Fees per trade, broker-assisted fees, account maintenance fees, account transfer fees, selling fees, and commission fees at various stages of the process are just some of the standard costs to consider when investing. In addition to high fees — many of which aren’t disclosed upfront — minimum investment amounts, intransparency, complex regulatory frameworks, lengthy and costly remittance settlements, location-based restrictions, and potential transaction repudiation are all detrimental factors to investing for those with little disposable income.
In short: investing via traditional brokers and financial institutions is inclusive for the rich while excluding the poor from contributing to and benefitting from the global economy.
That financial institutions would continue to impede the free flow of business through their rigid structures is surprising given the market opportunity of including poorer citizens in the global economy. According to Fortune Global 500 consulting firm Accenture, banks could generate about $380 billion USD in annual revenue by catering to unbanked adults — those not served by a bank or similar financial institution — in emerging markets.
It’s no wonder then, that broadening financial inclusion is becoming a hot topic for everyone from fintech entrepreneurs to World Bank researchers, an effort accelerated by the opportunities offered by cryptocurrencies and blockchain technology. Traditional financial institutions are getting in on the action too, of course — over 100 central banks have engaged in distributed ledger technology (blockchain) discussions worldwide — but they’ll struggle to compete with the benefits of fully transparent, low-cost peer-to-peer exchange.
Brickblock, the first service that allows you to diversify into and out of cryptocurrency in a simple, transparent, and secure way, is leading the way in this new space. The Ethereum-based investment platform lets people all over the world invest their cryptocurrency into real world assets across three types of funds — Real Estate Funds (REFs), Exchange Traded Funds (ETFs), and Crypto Funds (CFs).
Brickblock’s advantages over traditional retail brokers and banks are plentiful, and especially enticing for those whose income or location excludes them from the existing system.
The first restriction to traditional investing that Brickblock lifts is the need for a bank account. This is significant because 38 per cent of the world’s population are among the above-mentioned “unbanked.” To get started with Brickblock, you simply choose one of the three types of investment funds and initiate a fund order by depositing your cryptocurrency into a self-executing smart contract. This contract completes all of the lengthy and costly transaction processes incurred by initiating an order through a bank — immediately and at a fraction of the cost.
On depositing the funds, you receive Proof of Asset tokens, which are your access key to the real-world assets acquired and safely stored in segregated accounts. They prove that you own the CF, ETF, or REF shares as outlined within the smart contract and entitle you, the trader, to any dividend payments or coupons derived from the assets.
The few costs you’ll incur along the way include a marginal tiered commission charge, transaction fee, and the bid-ask spread, which will be significantly reduced due to Brickblock’s pooled investments.
Investing through a traditional online broker, meanwhile, incurs an $8.90 USD fee-per-trade, $31 broker-assisted fee, and $32.50 account maintenance fee, on average. Additional expenses include stock exchange fees, foreign exchange fees, and repeat commission fees upon closing a position (selling the ETF, for example). There are also fees for monthly activity and low balance, pending certain requirements. Most frustrating is that the intransparent nature of investment services, combined with the varying regulations of every respective bank, country, and market, obscure these fees until well into the investment process. Even the lowest-cost brokerage accounts charge a minimum $20 fee for a buy and close order of an ETF — a considerable sum for those making small investments.
A visual breakdown of the transaction costs, annual fees, and high commission rates incurred via traditional services highlights the extent to which third parties drive up the price of investing:
Fees aside, there are other ways Brickblock offers a more financially inclusive opportunity to invest.
Anyone who wishes to invest any amount may do so regardless of background or bank account (some exceptions apply). Brickblock requires no minimum investment amount, which is often in the thousands of dollars when investing into REFs through a traditional broker. Investors can choose between multiple products to diversify their portfolio, and all necessary information about each asset will be easily accessible. Investments are carefully validated and audited by independent parties, orders are confirmed by the self-executing smart contract, and transactions publicly viewable and secured on the blockchain.
You can read a more detailed explanation of how Brickblock simplifies investing into CF, ETF, and REF assets here.
Brickblock is built on the belief that the peer-to-peer exchange of digital assets on a blockchain should nullify the need for middling institutions like clearing houses, stock exchanges, and retail brokers to burden transactions with their respective bureaucracy. First and foremost a platform to connect cryptocurrency with real-world assets, it functions as a gateway for the roughly three billion people excluded from or underserved by the financial sector.
Speaking about the potential for cryptocurrencies and blockchain to solve Asia’s financial inclusion issue recently, Dr. Garrick Hileman, a cryptocurrency researcher at the Cambridge Centre for Alternative Finance, emphasized the long-term implication of this current shift.
“It would be surprising to me if in 30 years from now we aren’t looking back and saying, yes, this was a watershed moment for financial inclusion, and that cryptocurrency and distributed ledgers played a significant role in opening up access to the financial system in developing economies,” said Hileman.
Brickblock is exactly the tool to open that access.
