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Expanding the Blockchain

Using blockchain to fight corruption and aid underbanked and unbanked populations in the developing world

I had the great fortune to attend an inclusive innovation incubator, Blockchain for Smart Cities: Technology, Investment, and Training, in the Washington, DC area. The event hosted a series of leading experts both in the blockchain space and the developing world who came from backgrounds like IBM, PwC, Global Impact, and the World Bank. They all had one issue in mind: how to adopt new technologies to address some of the most daunting urban problems that humans are facing in cities throughout the emerging world?

David Fragale, Director of Strategic Intelligence at PwC, stated that, "We must look through the noise. The opportunity for blockchain is in the developing world. America operates within a frictionless system regarding swiping a credit card at a store or using credit cards for online payments, even though the back office procedure of ensuring that payment goes through takes two to three days. If we try to change the current frictionless system dealing with how banks operate in the U.S., large banking institutions will simply lobby Congress. But, there is an opportunity to leverage comfort in developing markets to enable frictionless transactions, create access to credit, loans, and capital, and expand infrastructure."

This is where expanding the blockchain comes in. Its ability to be integrated into a variety of industries from logistics to infrastructure, from inclusive finance to healthcare has led to blockchain being seen by many as a disruptive innovation for cities. Thus, the goal of these experts is to find successful solutions that combine the power of technologies such as Internet of Things (IoT), cloud computing, and interconnected networks together with blockchain to move cities forward by making them smarter, cleaner, and more inclusive.

Much of the discussion focused on using blockchain and the power of technologies to serve unbanked and underbanked populations in the developing world. For instance, a leading expert from the World Bank detailed her experiences within Peru and the effect of climate change there. As a result of the El Niño Southern Oscillation and how climate change has significantly affected those dependent upon agriculture and fishing, the need for new infrastructure is now. Climate change has lead to incredible natural disasters such as hurricanes and floods, which seriously devastate the communities within Latin America. In the Peru case, people were losing all of their money because they stored their life savings under their mattress or somewhere within their house, and this would be lost during a natural disaster. As a result, the aspirations for blockchain will attempt to expand opportunities for unbanked and underbanked populations to have a secure and easy place to store their savings without the cost of a banking institution.

However, the problem becomes the need for a digital identity in order to use digital currency. So these experts are also working to address the identity issue so people can have access to credit, banking, and just access the financial system - a right every citizen should have. Another amazing feature of FinTech's expansion in the emerging world is how it helps to solve the cost of debt, especially when the cost of debt is over 300% in Brazil. Peer-to-peer lending (P2P) allows debt to be issued at 60% enabling entrepreneurs and this is also an amazing return for investors who decide to invest in Brazil's economy. This makes the economy more accessible for a population that had little options before.

Throughout history, we have had centralization in which people come together to form a community, government, and economy, but this also leads to corruption. Blockchain is decentralized, more democratic, and gives the individual more power. This successfully reduces the shackles that are on the existing construction, improving efficiency and security, as well as reducing fraud and introducing a new way of government in the developing world.

I hope you are all excited as I am about the expansion of the blockchain and the role FinTech will play in the developing world as it increases clarity, social capital, and the message to move the ecosystem forward.

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