Why Millennials and Gen X’ers Need Cryptocurrencies
When we decided to steer away from the Gold Standard and adopt a floating currency model back in 1973, our paradigm of personal finance and lending also shifted. We started to idolize the mysterious credit system. Comedian and current The Daily Show host, Trevor Noah bemoaned the over-indulgence of the American credit history in a hilarious bit and he might be right. You can’t rent an apartment in Manhattan without a credit history. Meaning, no FICO score, no roof over your head.
Here is a glaring fact: today’s credit system does not work for the young adult population that consists of millennials and Generation X-ers.
It doesn’t work because this group does not have an established credit history. The exorbitant rise in the cost of living in cities has also pushed them away from saving, further compounding their problems. These poor souls account for most of the “under-banked” people in the U.S.
The lucky ones who do have a credit score and a credit card end up paying interest anywhere from the low 20’s to mid-30’s, which ends up consuming most of their disposable income.
What’s the Solution?
We don’t mean to bemoan the concept of credit, but rather, it seems to us that the solution to the “millennial problem” is to revolutionize the financial lending system.
This innovation is provided by the blockchain community. The blockchain system is a perfect adaptation for a credit system because:
- it allows all transactions to be visible to all members of the network,
- it allows each transaction to serve as a data point for an algorithm to calculate each individual’s creditworthiness for future transactions &
- it can also ascertain the eligibility of new members based on the algorithm.
Blockchain enables the creation of a worldwide peer-to-peer lending program — akin to micro-lending. Blockchain leverages and expands the concepts of small loans on a larger scale and it has proven to be effective with low default rates.
In fact, as the global adoption of cryptocurrencies increases, a third of the world population stands a chance of joining the middle class and the global financial system.
Centralized systems are monopolistic financial institutions; they have been the norm for centuries but they also have certain shortcomings that a blockchain platform can resolve. Since the transaction costs on the blockchain are a fraction of centralized systems, the new platform can accommodate both micro-payments as well as act as a store of value for very small amounts.
How Celsius Intends to Help?
For the past few months, our team at Celsius Network has been working to extend credit to everyone that is currently squeezed out of, or have limited access to archaic and inefficient financial systems.
With Celsius, we hope to generate a cryptocurrency ecosystem on Ethereum to help the underbanked. This system will be built around a membership-based accountability wherein the community decides who they want to interact with or lend money to using smart contracts.
- Celsius’s role will be to use the transaction data from existing systems (FICO scores — if any) as well as those accumulated on the blockchain and around the web (transaction history from Amazon, eBay, etc.) to assess and provide real time creditworthiness of every community member part of the Celsius Network. Hence, acting as a guarantor of sorts.
- In addition, we intend to mediate and help remove the bad players prevalent in the blockchain community so that a new and safe Ethereum-based marketplace can thrive.
- This “policing” will be achieved through the establishment of a network of trusted vendors and members that are able to transact seamlessly within and beyond the current Ethereum platform.
We see the blockchain revolution as a Cambrian explosion of possibilities for the entire world; it provides faster access to would-be entrepreneurs by way of token sales, which have been making its own headlines lately. The blockchain revolution also stands to extend credit to a group representing the majority of the population of the planet that is marginalized based solely on their age, (in)experience or lifestyle.
The possibilities facilitated by blockchain will mean that the next two years will give birth to the next wave of platforms that will dwarf today’s Facebooks and Googles. Many pretenders-to-the-throne will lay their claim, but just like the Cambrian explosion, 90% of these “new-found species” will go extinct, allowing only the best blockchain applications to remain and revolutionize the world.
We should not be suffocating the young, but rather empowering the new and the fresh. That is why millennials need to adopt and build a new world of cryptocurrencies. They need to take the blue pill and join the revolution.