Amid a flurry of speculation about Bitcoin and altcoin prices, 2017 saw a decent amount of hype and over-promise. Blockchain technology was touted as a panacea for all the world’s ills. It had the power to fix just about every broken system, from advertising and healthcare to world hunger. Now that there’s decidedly less noise surrounding the space, let’s take a look at the (real) potential of blockchain in developing countries.
Blockchain for a better world
Oftentimes, contemplating the magnitude of a problem stops us in our tracks. After all, what good can one person do against climate change, famine, corruption, and disease? However, for the first time in our history, we don’t have to act alone. Blockchain in developing countries can be used to create a better world, in potentially limitless ways.
Of course, there remain many sceptics about the power of blockchain technology. According to a survey by Deloitte, ‘blockchain fatigue’ started setting in towards the end of last year. But that doesn’t make it any less useful. Blockchain may still be in its infancy, but as it grows up, so will its multiple use cases.
Technology has historically been met with resistance. Just consider the internet or drones, both labelled as unnecessary and expensive. Both are now tackling real-world, everyday problems (and causing disruption at airports).
Allowing for financial inclusion
One of the most powerful use cases for blockchain in developing countries is enabling financial inclusion. The largest gap between the rich and the poor is caused by lack of access to the financial system.
In rural areas, for example, where bank branches don’t exist and people don’t have computers, they’re unable to request loans, start businesses, and send or save money. That’s a horribly crippling disadvantage.
Around one billion people in the world still don’t have access to a bank or any type of financial service. However, some 438 million of those do have mobile phones.
While blockchain in developing countries may not be able to fix the problem by itself, when teamed up with mobile technology, it could put the unbanked on the grid.
With peer-to-peer trustless payments straight to their handhelds, people would no longer have a need for a bank branch or intermediary. They could also transfer value for infinitely smaller amounts of trade.
Thanks to cryptocurrency, residents in developing countries can monetise the smallest of transactions, from services rendered to the sale of three kilos of potatoes. No bank will cash a cheque for a dollar. But in many cases, that small amount of money will go a long way.
Dr John Edmunds, a global economist specialising in developing countries in Latin America, believes that blockchain technology will open up large sections of the global economy that were previously inactive thanks to its power to enable microtransactions.
Not only does this provide extraordinary opportunities for commerce, but it gives more people access to goods and services at a fair price with no unnecessary markups.
Blockchain in developing countries can foster microlending
Microlending has developed a bad name in many parts of the world. When people can’t turn to legitimate financial services, they often end up having to turn to undesirable sources who give them high-interest rates and threats if they can’t pay them back.
However, by using blockchain in developing countries where loans are often needed, loan sharks and other shady characters could be removed from the scene. Since the cost of administering loans would drop dramatically, microlenders could manage more accounts and extend their services to more borrowers.
This would give people in the developing world the chance to borrow funds for education, to start a business, or even install electricity in their homes.
Wiping out corruption and creating transparency
Blockchain has proven itself to have many possible use cases beyond financial transactions. Since public blockchains are visible to all, the open, distributed ledger can lead to accountability and transparency.
This removes the possibility of tampering with orders and goods in the supply chain or interfering with data. There is great potential for wiping out corruption and ensuring fair payments using blockchain in developing countries.
A smart contract system could ensure that all parties are paid fairly and irreversibly. Currently, in an area such as shipping, there are so many links in the supply chain and paperwork involved that payments are often delayed, leaving people out of pocket.
Bringing light to those in need
There are still some 1.2 billion people lacking electricity in the world. Most of these people are living throughout Africa and parts of Asia. However, one of the areas in which blockchain technology is proving most successful is in the energy sector, particularly through solar energy as it can tokenise energy generation.
There are multiple projects experimenting with solar energy in the third world. Some allow you to finance projects through cryptocurrency, while others enable users to install a solar panel in their homes and accumulate energy points which they can later use for goods and services.
We’re still uncertain about when blockchain in developing countries might really start becoming a force for good. But we are certain that it can happen. We just need to let the technology learn to walk before it can run.