The advantage of cryptocurrency is that the risk of wild inflation or deflation is minimized, and the currency can be more easily transferred across borders which means they can through the heavily-regulated traditional financial system.
The technology underlying cryptocurrencies is blockchain, a public ledger that records all transactions and uses private key cryptography and peer-to-peer networking to ensure secure decentralized distribution. This technology enables the transfer of assets and the recording of transactions through a secure database.
According to the World Bank, in 2013, 10.7 percent of the global population lived on less than $1.90 a day. While these figures have been in decline over the last few years, that percentage still equates to around 750 million people. Financial inclusion is considered a key factor to poverty reduction. It refers to the access of people to a formal financial system.
Blockchain’s disruption of the financial services sector supposedly changes this. Blockchain overcomes many of banking’s current limitations. Unlike banks, no physical branch presence is needed for blockchain to work. Since blockchain operates on a distributed network, there’s no need for a complex and expensive private infrastructure to run. This saves on the costs that banks and telecom companies pass on to users through fees and other charges when using bank accounts or performing mobile transactions.
United Nations (UN) aid efforts have a historic problem of fraud, mismanagement, and bureaucratic red tape, but with the ability to circumnavigate governments and banking institutions, transferring aid via blockchain can be far more efficient.
The World Food Program (WFP) have already using the Ethereum blockchain in a pilot program called Building Blocks to distribute vouchers for food to refugees in Jordan.
Blockchain technology could also be used for peer-to-peer renewable energy trading platforms where governments, businesses, and civilians would be able to buy and sell digital assets that represent a certain amount of energy production. They have also proposed that this could facilitate crowdfunding for renewable projects, as well as enhance tracking the reduction of greenhouse gases in accordance with the Nationally Determined Contributions spelled out in the Paris Agreement.
Another powerful feature of blockchain is remittance. The UN estimates around 200 million migrant workers send money across borders to support close to 800 million family members, totaling more than 400 billion dollars in 2016. According to the UN’s International Fund for Agricultural Development (IFAD), this is responsible for lifting millions out of poverty, as the money is spent on needs like food, healthcare, housing, education, and sanitation. Unfortunately, transaction costs to send remittances currently exceed $30 billion annually, with fees particularly high to the poorest countries and remote rural areas.
One of the effort comes from an initiative of the Bprotocol Foundation, a nonprofit organization based in Zug, Switzerland.
The Bancor protocol enables anyone to create a new type of cryptocurrency called a Smart Token™, which can hold (and trade) other cryptocurrencies. This allows the Smart Token’s™ contract to serve as its own market maker, automatically discovering its own price(s) and providing liquidity to other currencies, thereby removing the need for a second party in cryptocurrency trades. Every Smart Token™ is always liquid at some price point.
Smart Tokens™ removes the barrier-to-liquidity and enables the emergence of the long tail of user-generated currencies. This could lead to a democratization of value creation in global economy and the fair distribution of wealth.
Bancor platform makes it possible for each country or community to create their own currency by consensus. And all of these currencies will then connected in one platform, making all of them liquid between each other and can be used vice-versa.
Let’s take a look at an example; New York City creates a token called “NYTOKEN” and a small village Kenema District in Africa created their own token called “KENEMATOKEN”. Within The Bancor Protocol, people in Kenema can exchanged their KENEMATOKEN for NYTOKEN to purchase any related goods or services in New York City.
Imagine a bigger picture of this small example, where all community and local currency connected to each other in a decentralized way. Now it is the time for the people to be treated like they should be, as the same human being.
