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How Cryptocurrency Can Help Tackle Global Income Inequality

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When Muhammad Yunus founded Grameen Bank in 1983, his contention was simple: he believed that to foster financial independence and inclusion – even amongst the poorest of the poor – we do not require a long list of credit requirements, personal income histories, complex sets of rules, or prerequisites of other kinds to approve credit lines to those who need them the most. Instead, what we need are simple, facilitative terms that favor borrowers, as well as supportive tools and services that can help borrowers unleash their latent creative, innovative, and entrepreneurial talents.

Grameen Bank – which was awarded the Nobel Peace Prize in 2006 – used microcredit to do just that, and it is a success story unlike any other. It proved that we can meaningfully impact families at the micro level, foster growth, and address our shared and most pressing challenges if we just take a step back to understand the contexts in which we are working and the tools we have at our disposal.

Interestingly, there are many parallels between microcredit services 30 years ago and the pivot toward digital payments, blockchain, and decentralized finance (DeFi) that is taking the world by storm today – thanks, in part, not just to recent technological advancements but macro factors such as the COVID-19 pandemic and business and industrial closures that impacted industries and markets worldwide.

According to the Boston Consulting Group, digital payment processor revenues are forecasted to grow to almost $3 trillion by 2030 from about $1.5 trillion in 2020, and many have asked if this means that we are moving toward a cashless society. Others have asked – perhaps more importantly – should we?

With the advantages of cashless transactions and the opportunities presented by blockchain-powered cryptocurrency solutions, the answer to both questions is an unequivocal yes. Many types of crime can be combated by moving from cash-based transactions to cashless, digital ones that come with auditable digital trails. The same can be said about moving toward using crypto-based finance in place of traditional, fiat-based finance.

Using crypto e-wallets, digital transactions – between people, businesses, and the government – can be quicker than fiat cash transactions, not to mention less susceptible to counting errors. They can also lower operational costs via, for example, not requiring brick-and-mortar locations to make or receive payments or paying for security, utilities, rent, or other costs and services associated with operating a physical business. Most importantly, they facilitate capital transfers and provide capital access to the people that need them the most – all at a fraction of the cost and time that users typically experience with traditional, bank-facilitated services.

In short, digital payment solutions built on blockchain and crypto technology can bypass the need for banking infrastructures of any kind and the need for countries or regions to be whitelisted to receive global payments. Many such solutions also work without formal identification – a critical impediment to many when it comes to opening bank accounts since many people in emerging economies do not necessarily have such documentation. They can also help foster financial inclusion, reduce the risks of cash-related crimes, and increase trust and transparency. Finally, since users of decentralized payment applications are free to execute transactions on any network, they can avoid the high fees and delays commonly seen with banks.

Today, we have the tools to do for the finance industry what Airbnb and Uber/Lyft have done with the accommodation and transportation businesses: unlock the power of individuals to conduct business, execute transactions, and enjoy more financial and business freedom without steep learning curves or expensive capital investments of any kind. All it takes is the innovative use of blockchain- and cryptocurrency-based platforms and services that can radically reimagine what is possible for the world’s unbanked and underbanked populations. Doing this can potentially lead to a Grameen Bank-like revolution that helps reduce the income equalities and wealth gaps that are holding far too many people back from financial independence and upward mobility.

Getting there will take concerted efforts in the areas of financial literacy, user onboarding, and the development of intuitive applications and services that can deliver the solutions needed to target users. Another prerequisite for this idea to take off is internet connectivity.

Thankfully, that is something that companies such as 3air are working on. 3air is building a mesh network of base stations and transceivers that can connect tens of thousands of users in hard-to-reach locations to the internet. Using proprietary technologies that are low-cost and easy to deploy, 3air is working on connecting the next one billion users to the internet. Only then will many of these unserved and underserved users be able to tap into and reap the benefits of using the decentralized payment solutions that are rapidly gaining traction elsewhere in the world.

While mobile device penetration and internet access vary widely even across otherwise similar emerging economies, these markets are home to hundreds of millions of individuals. With connectivity solutions such as those being built by 3air in place, we can meaningfully deliver effective, low-cost internet access to these people and reimagine how high-growth emerging economies do business in 2022 and beyond.

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