How helpful is the block chain to microfinance?
Gaining novel global attention due to its allied digital chain of blocks, the block chain technology is gaining immense popularity both domestically and internationally. Operating functionally due to the integrated connectivity induced by active data transference between each individual block resulting in an elongated digitally chained pathway, the block chain has set on a rapid passion within the community in relation to learning its operations with the massive social media coverage. With the extensive support of cryptography, the science behind encoding and decoding codes, the block chain possesses the ability to store records un-tampered and highly secured.
The block chain has a great potential to support various industries at the very basic level in quite practical methods. The present industry at discussion here in the article is the microfinance industry. The microfinance industry was set up as a prime solution to tackle a global issue-poverty.
Poverty, in all its means and origins is downright playing with the world’s less privileged, less fortunate population crumpling down their livelihood along with the self-worth, confidence and self-satisfaction. A large part of the world is literally struggling because of poverty. It is a struggle to survive. A large part of this population is deprived of , either by one’s own self or by any other external factor, financial services making life even more miserable .
Microfinance, as the name suggests is the use of small loans to empower the underprivileged, unbanked populace of the world through micro lending. The microfinance model has given birth to various sub models, a vast train of institutions all around the world, new technical face-fronts, funding etc. As supposed, the industry as a whole enhanced a large part of the target audience by a considerable degree bringing them above the poverty line.
However, the microfinance model has problems which disable the ability to accomplish its aim. The model alongside most of its procedures involves the middleman, lacks transparency over client data and procedures, involves collateral documentation and consumes lot of time, energy. These factors, together, reduce the microfinance model’s ability to function at its full potential.
Many have suggested temporary solutions to the burning question. However, due to its temporary component, none lasted long. Beyond the realms of the flow of time, the block chain emerged!
So far, the block chain is the best solution to the problematic issues of microfinance. The block chain breaks all the boundaries which disabled the less privileged, unbanked population from gaining access to financial services.
The block based digital ledger has the ability to store data under strict security terms making it almost impossible for anyone to steal, change or access. It reduces the space left for corruption within the system and therefore the clients benefit positively. It also does not include extended time and energy consuming collateral processes due to simplified data obtaining methods.
Traditional financial institutions suffer from high operating costs. With the block chain, the costs are not on the higher section of the scale as the peer to lending platform does not include the middleman. Elimination of the middleman reduces the total costs of transactions by a significant level. Transactions can process at a faster rate as the decentralized structure helps speed up transactions. Together they make it possible to empower the populace in need financially. The abundant availability of this advanced technology through various applications (For example- the prosprousca app) and platforms such as websites etc.
At present, with the fundamental shift away from the dominant traditional lending culture, the block chain is gaining momentum as the fourth industrial revolution. Its various componential features enabling a vast representative advantage is moving the world to the next level with a marvelous leap. A world of dignity, pride, non-attachment and easy access. A world which everyone simply dreams of. Let’s wait as the fourth industrial. Mighty and wise with longing and yearning.
Reference
Everex (August 22, 2017) Problems with microfinance and how block chain solves them . Retrieved 08 May 2018 from https://blog.everex.io/problems-with-microlending-and-how-blockchain-solves-them-1582f98e2a7c
Metry Mark (September 2, 2017) Block chain technology is the most significant invention since the internet and electricity .Retrieved 08 May 2018 from https://medium.com/@markymetry/blockchain-technology-is-the-most-significant-invention-since-the-internet-and-electricity-f2d44a631ef6
Stanley Aaron ( December 8, 2017) Micro lending startups look to block chain for loans. Retrieved 08 May 2018 from https://www.coindesk.com/microlending-trends-startups-look-blockchain-loans/
Miles Curtis (December 12 2017 ) Security by blocks . Retrieved 08 May 2018 from https://www.ibm.com/blogs/blockchain/2017/12/blockchain-security-what-keeps-your-transaction-data-safe/
