How does blockchain make financial services safer and fairer?

One of the hallmarks of 2020 is that many destabilizing factors are emerging in the global economy, and this is true at all levels of society . For individuals, there may be more choices, but this does not necessarily mean that more people can use banking services.

In some areas, ideas such as microfinance have emerged, which helps. But on a global scale, as we no longer use the standard Monday to Friday fixed working hours, thousands of people are turning to non-traditional forms of work. For many of these independent workers, the result is that personal finances are getting farther away .

Globally, we still see a large number of underserved people. Even in developed countries, the gap between banked and unbanked accounts can be deep : in the United States, as many as a quarter of households have no bank accounts or insufficient bank accounts to easily obtain savings, credit or loans. Many people lack financial literacy, and the coronavirus has highlighted these problems in an unprecedented way.

Finance + Blockchain

According to the World Bank’s forecast, the global economy will shrink by 5.2% this year , which will be the worst recession since World War II. Global problems require global solutions, so how to use blockchain to stimulate global economic recovery?

Although blockchain cannot solve the problem of unemployment or the cost of living exceeding salary, it can be used to make financial services and products more available, safe and fair. It also promotes financial inclusion by keeping fees low and ensuring that every transaction is equal, regardless of its origin or originator.

In the United States, many people find that the distribution of economic stimulus is neither streamlined nor transparent. Would it be better to use the blockchain to distribute these benefits? After COVID-19, countries around the world (including Canada, Spain, New Zealand, and Australia) have begun to explore Universal Basic Income (UBI), and blockchain provides an effective way to handle distribution.

And increase the flexibility of the population will have a positive impact : for example, automatically stop when the recipient’s income reaches a certain level, and start again at the drop of income, all without the need for complex application process.

Finance + Blockchain

Of course, through financial transformation, blockchain also has the ability to promote broader transformation. Distributed governance becomes possible when individuals have the right to connect freely without restriction. We have seen this at the city level, and cities such as Oslo, Dubai and Toronto are exploring blockchain-based projects.

Smart cities are expected to achieve the promise of more sustainable, more efficient, and more flexible response to environmental changes. Another benefit is that distributed management will broadly extend to participation in governance, so that all residents can contribute democratically.

Today, more than ever, major online economies need to reconsider the economic value they create for users, not just the value they get from users. Reddit is a good example. With the support of the platform, Reddit launched its own cryptocurrency, which can be used as a token for the currency in the community. Its distribution is linked to donations and is governed by the consensus of the community.

Finance + Blockchain

In recent years, platforms such as Facebook, YouTube and Airbnb have been successful due to content and products produced by individuals rather than companies. Crowdfunding has become commonplace, and markets such as Patreon and Kickstarter provide creative companies with opportunities to raise funds directly from their customers.

What’s next? The ownership economy will create a new way of distributing economic value, and its platform is not only funded by users, but also owned by users. What needs to be done to make it easy and widely available? Blockchain will make it easier for 99% of people to access financial services.

The original text comes from the English version of Forbes, compiled by the Bluemountain Labs team, the English copyright belongs to the original author, please contact the compiler for Chinese reprint.

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