How Bitcoin can equalize the gap between the ‘rich’ & the ‘unbanked poor’
Why does one’s country of birth or place of residence play such a large role in their potential economic outcomes in life? Why do fiat-currencies play such a large role in one’s wealth generation possibilities? What about the ‘unbanked poor’?
Access to equal financial possibilities irrespective of geographical origins is something that I am a big champion of. Bitcoin was truly the world’s first global currency, transcending geopolitical boundaries. Since then, there has been a number of altcoins, or cryptocurrencies that may function with Bitcoin-derived properties and parameters, as well as entirely new ones like Ethereum (ETH) and Ripple (XRP). Whatever the cryptocurrency in question is, digital currencies are inherently global currencies, and offer many benefits towards solving economic inequalities found in ‘developed’ and ‘developing’ countries alike.
According to many recent statistics, approximately 2 billion people in the world remain unbanked — 2 billion people do not have any form of relationship with a bank and do not hold an active bank account. The hypothesis posed here is that solving the problem of banking the ‘unbanked’ will provide one very important tool towards access to equal possibilities of wealth generation, despite country of origin or country of residence. Only by tearing down institutional barriers to wealth generation possibilities can one ultimately and legitimately begin to equalize the level of disparity between ‘rich’ and ‘poor’. Just as the Internet has acted to break down barriers to ease global communication and facilitate open and transparent data, information, and knowledge sharing — digital currencies offer the ability to break down barriers to ease the facilitation of global and local trade, and provides a tamper-proof globally-legitimate store of wealth.
As an aside — in many instances, the words ‘developed’ countries vs. ‘developing’ countries, or ‘First-World’ vs. ‘Third-World’, or ‘rich’ vs. ‘poor’ all appear in quotations. This is for a very deliberate reason. I firmly believe that these labels or categorizations serve little purpose other than to segregate and divide populations — and doing little to support inclusion, growth, and prosperity. For example, take the word ‘rich’. What does it mean to be ‘rich’? Typically one thinks of a specific income or asset threshold as a prerequisite to attain this title. However globally, the word ‘rich’ takes on entirely different meaning and thereby income inequality takes on a brand new scale. The global scale of income inequality is often obscured by incorrect perceptions.
Over the last little while, the strife between the ‘1% versus the 99%’ has entered into the common lexicon. What is most surprising though is what it takes to become a member of the so-called elite ‘1%’ club. Most Americans, even those considered to be ‘lower-income’ individuals are in fact classified in the global ‘1%’. The United States as a whole actually embodies the very definition of the top ‘1%’ globally and what is means to be ‘rich’. As an example, if one has surpassed an income of $32,400 USD (2018), or assets greater than $770,000 USD (2018), then the definition of the top ‘1%’ is also successfully achieved. When one-in-ten global citizens make less than $2 USD per-day, it makes one realize the pervasiveness of global income inequality.
Of course there are a multitude of reasons that can be ascribed to explain these quantifiable differences in income and wealth around the world. But with these multitude of rationalizations or explanations, there are few and far between concrete solutions that can offer real positive change. The Internet has already been mentioned as one cornerstone tool that has forever changed the global landscape by providing knowledge, communication, and opening up avenues for global trade and commerce between all corners of the world. In the same breath, cryptocurrencies such as Bitcoin also offer possibilities for true positive change by potentially banking the unbanked.
It can be vigorously argued that access to equal wealth generation possibilities, or access to equal possibilities of economic outcomes should be declared a basic human right. The closest article that can be found in the Universal Declaration of Human Rights is as follows:
“Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing, and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.”
But this statement does not go far enough. An individual’s country of birth or country of residence should not dictate the scope of their economic outcomes in life. However, in too many cases, an individual’s realm of economic outcomes can be broadened or narrowed just by their geopolitical boundaries. Just as the Internet has acted like a great equalizer, so too will digital cryptocurrencies.
Access to wealth generation possibilities require a few prerequisites but start with having a store of wealth that is globally recognized and free from country-specific macroeconomics. Once a globally available and accessible store of wealth is attained, the next step would require utilizing that store of wealth to facilitate ease of transactions, thereby allowing for ease of commerce and trade, and ultimately creating real economic growth and access to personal wealth generation possibilities. Summarily, this access to equal economic outcomes starts with the problem of banking the unbanked. Digital currencies like Bitcoin offer a highly plausible and concrete solution to this problem.
Today, approximately 62% of the world’s populations has a bank account. Conversely this means 38% do not have any relationship with a financial institution. Among the ‘poorest’ 40% of the globe, only 54% have a bank account. Challenges such as investments in payment infrastructure, actual travel times and distances to a bank, paperwork requirements and legal regulations all pose barriers to a significant portion of the world’s population — contributing to the issue of the unbanked. It does not stop there though, the issue of financial literacy and understanding how to access a bank account, how to deposit and receive payments, and understanding transaction costs (as examples) are also real barriers. Financial literacy also matters.
So how can a paradigm like Bitcoin help?
Convoluted with the issue of the unbanked, is also the issue of financial education, and the issue of access to individual self-actualization to broaden the possibilities of economic outcomes in one’s life. A digital currency like Bitcoin offers a solution to these issues. Bitcoin offers efficiency, cost, speed, security, and minimizes monetary leakage to third-parties. It has minimal barriers to entry, little in terms of setup, and most importantly, can be transacted upon via mobile platforms and handheld devices. This is extremely important.
It has been widely cited that more people on this planet have cell phones than have access to functional toilet. There are also more active cell phones in the world then number of people. While there are currently more than 7+ billion cell phones, the number of smartphones (or those phones that have the ability to run mobile applications) is approximately 2.5 billion and reaching ever increasing levels of global penetration. Just as the personal computer was to the Internet, so is the smartphone to cryptocurrencies.
Cryptocurrencies accessed via smartphone platforms have the potential to become worldwide transaction gateways, portals to the global economy, allowing for greater levels of financial inclusivity. Ultimately this means that individuals, despite where they might find themselves in the world, can take charge of their own economic outcomes, can be empowered to open businesses, can invest or save for the future, and can manage risks. It is now no longer a question whether or not this new paradigm will technologically disrupt the traditional financial economy, but when and by how much. The trajectory might evolve over time, just as the Internet has evolved over time in broader and different use cases, but one thing is for certain, Bitcoin and other cryptocurrencies are here to stay.
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