Opportunities Abound To Change The World With Crypto For Good
This post was originally produced for Forbes.
This is the first in a three-part series on #cryptoforgood. Here is the second and third part the series.
Within the blockchain community, there is a clear consensus that this cryptographic technology will change the world. This article and the two pieces that follow in the series, will explore the opportunities, the challenges and the current projects in the space focused on creating a social impact.
Blockchain is the technology that underlies Bitcoin and all other cryptocurrencies. The technology is intended to provide a secure, unalterable record of ownership. It has been used for a variety of uses outside of new currencies.
The industry, less than a decade old, is booming by almost any measure. There are now far more cryptocurrencies in circulation than there are fiat or government-issued currencies (coinmarketcap.com lists 1,558 as of this writing). According to the Financial Times, at least 39 digital currencies have a market capitalization of at least $1 billion.
From the outset, the cryptocurrency community has held as a fundamental tenet that cryptocurrencies are inherently superior to fiat currencies by virtue of the security associated with the technology, the cap on the number of units of currency to be issued (either immediately or ultimately) and the freedom from meddling regulators, especially central banks. Hence, enthusiasts have long held that the technology would make the world a better place.
This series will look more narrowly at the opportunities, challenges and projects within the space that are specifically focused on addressing a social challenge. This article focuses on the opportunities.
In 2014, Overstock.com began accepting Bitcoin and established a subsidiary called Medici Ventures to advance “blockchain technology to democratize capital, eliminate middlemen and rehumanize commerce.” [Disclosure: I own shares of OSTK.]
Jonathan Johnson, past CEO of Overstock where he continues to sit on the board, now serves as the president of Medici Ventures. He notes, “Too many of the world’s population are either unbanked or under-banked. Without access to digital currency in the form of credit or debit cards, they live in a cash-only economy and have difficulty participating in the 21st-century economy. Cryptocurrency can remedy that by giving the unbanked and underbanked access to digital currencies in the form of cryptocurrencies held on a secure digital wallet.”
He adds that inflation is a problem addressed by cryptocurrencies. “In many countries, rampant inflation destroys the value of savings. In such economies, cryptocurrencies with a capped amount of coins become a much better store of value than wantonly printed fiat currency because they hold their value better.”
It should be noted that this advantage may be more theoretical than actual—at least so far. Buyers of Bitcoin on December 12, 2017 paid as much as $19,200 per Bitcoin; as of this writing, Bitcoin is valued at $9,546, having lost about half of its purchasing power in little more than three months. Bitcoin’s long-term trend, however volatile, is unmistakably upward. At the end of 2009, it was valued at about $12. See historical value charts and latest valuations here.
Darryl Garth of Solomonstouch suggests that cryptocurrencies will improve the world “by creating economic liberation from centralized powerhouses and create a healthier global economy that is fair, sustainable and decentralized.”
Derek Chen of Wolverine Crypto Trading a student-led organization at the University of Michigan, identified a key nuance. “Cryptocurrency can improve interactions that traditionally involve two parties and a third-party mediator, [where] that third-party mediator is not very efficient in terms of monetary cost and speed.”
Ryan Scott of ICO IMPACT CO takes the logic one step further. “An interesting thing happens when the marginal cost of transactions reaches zero, when all the friction is removed. You can profitably support consumers and clients at the bottom of the pyramid. It’s not charity anymore, its financial inclusion. That is what cryptocurrency provides.”
Matthew Loughran of Uulala concurs, noting how these innovations could work for low-income regions. “Cryptocurrency can be the great equalizer for the billions of people in the base of the pyramid. What I mean is in emerging markets there is a great lack of access to financial instruments to save or participate in commerce outside of their region. Now with an inexpensive smartphone, and a cryptocurrency wallet this demographic can now be bridged from the informal to the formal economy.”
He adds that the scope of crypto solutions may be broader than we realize. “In many instances, cryptocurrencies and blockchain projects are trying to solve global problems, including everything from access to clean water, inexpensive renewable energy, property rights in developing countries, identity verification and financial inclusion.”
George Wong of Wemerge Ventures Ltd sees cryptocurrencies facilitating a move toward more self-governance. “I truly believe there’s an inherent need to move from traditional management methodologies to a holacracy model which is complementary to a blockchain project organization. There are no leaders but instead a group of likeminded micro entrepreneurs working towards a common goal.”
Jay Singh of ClearCoin identified a movement within the crypto community to reinvent the concept of a country. “Blockchain can be used for trustless nations to arise. See the emerging trend of ‘initial country offerings.’ Entire nations can be built on blockchain.”
Luc Lapointe and Christopher Georgen of TOPL suggest that blockchain technology can protect NGOs from being connected to money laundering. “The social sector has faced several issues around de-risking from banks which has caused several NGOs to look for alternative mechanism to ensure that their work is not associated with money laundering or terrorism financing. Blockchain solutions such as cryptocurrencies provide alternative and transparent instruments for social investors and civil society.”
Joshua Shepard, a Crowdfunding Associate at Windmill Communication + Design, sees an opportunity for greater transparency for nonprofits. “Perhaps one of ways to use blockchain technology to solve social problems is to use it in a way that holds charities accountable for their spending.”
Ogundele Olawumi Mayowa of Agroplexi agrees. “Cryptocurrency and blockchain will surely tackle problems such as poverty and environmental degradation, strengthen true democracy and give power back to the common man.”
Telly Valerie Onu of Beyond Capital Markets also sees a broad range of impact innovations coming via blockchain, including in the areas of agriculture, climate innovation, health and wellness and education. Because these sectors are highly fragmented in the first place and generally have very small-scale actors, [it is] therefore difficult to efficiently organize the value chains. Through the adoption of a value networked model and cryptocurrency/smart-contracts, now they have the ability to coordinate a decentralized network.”
Toni Lane Casserly of cultu.re sees the potential for these new technologies to reshape the world fundamentally. “While blockchain has the ability to eliminate incentives of scarcity, that is only the halfway mark to end our social problems. If we fail to unleash our capacity for empathy to heal trauma through human connection and transcendence, our social problems will persist. Regardless of the amount of capital a person has, happiness is not derived from ownership. Blockchain has the potential to change incentives from material value toward social values, from extraction into generation, and from ownership into stewardship.”
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