In times of economic uncertainty, blockchain technology enables the era of financial autonomy
By Todd Crosland, CEO and Founder, CoinZoom
Born partly in reaction to the 2008 financial crisis, cryptocurrency was created as a radical alternative to the traditional financial industry. Rewind 15 years: banks that were “too big to fail” had failed and subsequently caused mass panic across the globe. These institutions that held most of the population’s money, lent out trillions of dollars for mortgages, and were responsible for financial stability in many regions suddenly looked shaky.
In response to this, in the bitcoin whitepaper, Satoshi Nakamoto laid out a cashless system, which didn’t rely on a centralized third party governing who could benefit and how but created a peer-to-peer trust-less system built on the blockchain. As uncertainty and instability creep back into the global financial system once again, will Satoshi’s vision of decentralized financebe driven even further into the mainstream?
Taking money into your own hands
The answer to this question, at first glance, appears to be a resounding ‘yes’. The benefits of blockchain have come into sharp relief in recent years – this technology has the potential to revolutionize the financial industry, by enabling access to fairer markets, providing broader wealth creation, and helping improve thefinancial well-being for billions of people across the world.
The popular narrative around crypto has been very focused on the hero and villainous aspects of Bitcoin – the “flagship” currency. Its volatile daily value, its carbon footprint, its prevalence in the dark corners of the internet. What has been largely overlooked is the utility of blockchain technologies to change the archaic and biased flow of how money moves through people and economies – and what effect that can have on the downside of physical cash, institution-centric practices and “permission-based logic” like credit scores.
For many who have been on the side-lines of traditional financial services, cryptocurrencies do not represent a pathto get rich, but offer a seat at the table to tackle being poor. Many of the most troubled economies and regions in the world have been able to stabilize with sensible implementation of crypto-based services that enable “financial autonomy,” increased personal security and a peer-to-peer economy that cuts out the bias, fees and delays associated to “middlemen” in traditional finance.
There are simple wins for an individual who does not have a regular or reliable income. Digital payments are peer to peer – no waiting, straight to the person expecting the money – sometimes to the wallet or account available on their phone so they can spend the money instantly. For women, small businesses, gig-workers and even vulnerable people with urgent needs, this can be a game-changer in terms of cashflow, ability to make your own money and being able to achieve financial independence.
A cashless economy is sometimes seen as a threat to privacy or perhaps a loss of spontaneity. But in times when a recession hardens, crime increases and carrying or storing cash is a personal risk. Places where cash transactions occur like traditional remittance agencies are also very threatening, especially for women or older people. Blockchain technology enables instant international remittances – like ZoomMe, where you can send money or crypto anywhere in the world in an instant for free. This has been one of the classic areas where “it is expensive to be poor” with the average remittance fee being 6% and some destinations as high as 13%. The World Bank has set a target to reach an average remittance fee of 3% by 2030 – blockchain enabled international P2P is the fastest way to achieve this goal.
Crypto is not only volatile over time but also on a day-to-day basis – our customers have told us that even these micro-gains can help make theirincomes stretch further. One of our customers told us that they invested every other Uber shift into crypto – and often got up to 10% increase in value of his money by holding it in crypto for a short time. It is these sort of hacks that are not possible with cash and give people an advantage in a financial system that is designed for someone else.
Stepping up the security game
A concern for people when thinking about using crypto platforms to hold their hard-earned money is trusting that the platform will keep their money safe. High volatility, hacks, scams, and lack of regulation can often make potential investors wary – and players within the cryptosphere have had to adapt quickly to gain and retain the trust of customers.
Cryptocurrencies trade 24/7, 365 days a year. Due to crypto’s round the clock nature, responsible crypto custodians, exchanges, and protocols have developed some of the most rigorous standards of online safety ever seen in the world of finance.
For the most forward-thinking crypto firms, security is more than just a single defense – it is a matter of priority. For the safety and security of each account, there are multiple layers of protection, so that if one layer were to be breached, the account’s integrity would remain intact.
Unfortunately, while crypto means a new world of financial autonomy and investment opportunities for customers, the sector is also often associated in the press with criminal activity, such as money laundering and terrorist funding. Against this backdrop, it’s understandable that some people are cautious to dip their toes into the market’s often choppy waters.
Tides are turning though. An increasing number of cryptocurrency platforms are becoming regulated in the countries they operate within, and the top priority for a vast number of financial regulators is clamping down on bad actors and allowing the crypto space to grow in a way that is healthy and does not put everyday people at risk.Despitecryptocurrency’s susceptibility to be used for money laundering, only 1.1% of all transactions are illegal. (NORC)
Those who wish to keep some of their money in crypto and make the most of digital banking should seek platforms that are reputable and properly regulated to ensure their money is protected. Many platforms are domiciled in countries that have little or no regulatory requirements related to crypto. The U.S., to their credit, has traditionally had the highest standards and highest capital requirements for financial institutions – but been very slow to set out a framework for crypto based platforms. By promoting clear intent and standards for appropriate crypto regulation, people would increasingly look for platforms domiciled in the US and be reassured by their rigorous regulatory standards.
A brighter financial future
Financial autonomy through crypto is an empowering opportunity for many people around the world. As the safety and regulatory measures in crypto grow, it’s inevitable that creating financial advantages through crypto will become a reality for more of us – and crypto will stop being regarded as just an investment asset via a bitcoin market price to help you get rich or a vehicle for the bad actors in the dark corners of the internet.
By harnessing the power of blockchain technology is a safe and secure manner, more and more everyday people will relate to crypto’s ability to tackle real-world problems like exorbitant fees, unnecessary delays, and conscious bias in access to financial services. It can become part of the defence strategy against potential recessionary forces that many foresee.