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Can Crypto Help Tackle Social Issues?
With the increasing emphasis on initiatives like diversity, equity, and inclusion (DEI), does cryptocurrency have a place in tackling social issues the same way that other institutions do?
For example, green incentives have made investments in sustainable energy profitable, thus bringing humanity closer to a clean energy future. Can cryptocurrency bring us closer to solving other social issues? Find out below.
Access to Financial Infrastructure and Banking the Unbanked
One of the most well known use-cases of cryptocurrency is financial freedom. While this is not high on the list of priorities for many in democratic countries, outside of the democratic world this is a different story. Not all currencies are equal and some are stronger or weaker than others. Take Nigeria for example, a country where saving in US dollars is hugely popular. The Nigerian Naira isn’t exactly as valuable as USD, but it’s not so bad that it’s in the same ballpark as Venezuelan Bolívar.
Since the launch of Bitcoin and cryptocurrencies, Nigerians now have a means to transmit money more cheaply than using the USD, and the means to save that money in accounts which are separate and detached from a less than reputable government. These kinds of situations are not unique to Nigeria and without access to cryptocurrencies, individuals living under authoritarian governments or in financially unstable countries would have a much harder time keeping their savings than without it.
However, even in the world of democratic society, there are trends to be concerned about. The Cantillon effect has a noteworthy effect on where one stands economically. The closer to the money printer someone is, (the Federal Reserve in the case of the USD) the wealthier that someone becomes. With fears of inflation running amuck and fear, uncertainty, and doubt around mid-size banks like SVB going under, there is reasonable cause for considering the possibility of using a crypto wallet as a savings account in the event of runaway inflation or other harms to the economy.
Dwindling Trust
In recent years, social trust has been falling in the United States and Canada. Trust in the government and institutions of authority are all on the downturn. In an environment of low trust, having the means to exchange currency in a trustless fashion is an important technology.
With trustless technology, one does not need to rely on a centralized authority to act as a kind of “oracle” figure through which everyone does business. In a trustless exchange, users make transactions independent of centralized authorities. Allowing users to send transactions without a bank, company, government, or other governing institutions.
You might have heard the phrase “don’t trust, verify” used by cryptocurrency enthusiasts. This is a nod to trustless systems that don’t rely on the services provided by an institution. This, in turn, is supposed to guarantee trust in the seamlessness of the transaction.
This bypasses problems associated with reputation and credibility. Trustless systems encourage verification. If you think your transaction was tampered with, you can go through and check the open ledger yourself, and make the same verification the network did.
Technological Development
Cryptocurrency exists on a medium of blockchains. As cryptocurrency advances, blockchain technology is bound to advance. Blockchains are not exclusively limited to the field of finance and are being explored for their applicability outside of the world of finance.
Blockchains have been identified in a number of use-cases, including but not limited to healthcare, gaming, electronic voting, data management, authorship and ownership, internet of things, real estate, and network infrastructure. Finally, the use case that is particularly interesting for tackling a wide range of social issues, is how blockchain interlinks with governance.
Take the bitcoin blockchain for example. Within the network, a large number of people reach consensus on the state of the ledger approximately every 10 minutes. These network participants don’t need to know who each other are, nor do they need to speak the same language, or even have the same interests. Yet, they are all achieving consensus among one another in support of their common goal, building and maintaining the bitcoin blockchain.
The Emergence of DAOs
The use of blockchain in governance systems since 2009 has exploded, and a host of new use cases and applications have emerged. They are most commonly referred to as DAOs or Decentralized Autonomous Organizations.
DAOs typically organize themselves around a single cause, then pool funds to orient towards accomplishing shared goals. Members or participants of the DAO vote on how shared funds ought to be used.
Although voting systems may emerge independently from blockchains, the benefit of building DAOs and consensus on top of blockchains is that monetary units are seamlessly integrated and linked to the operations of the DAO itself.
Conclusion: More Than Money
To wrap up, how does cryptocurrency tackle social issues? It does so by liberalizing financial alternatives for anyone with an internet connection, such as the population of Nigeria which is a growing country of cell phones and internet users.
Cryptocurrency and governance systems can operate in a trustless environment. In the event that you have no entity of good repute with which to make transactions, you will not need an entity of good repute since you can validate everything yourself on blockchains with open ledgers.
Finally, cryptocurrency has social implications through its influence on blockchain technology. Blockchain technology stands to impact computer science, governance, finance, communications and much more. Cryptocurrencies are only scratching the surface of their potential, today in 2023. Once cryptocurrencies become commonplace among populations, the power of consensus and free movement of money will be unleashed.
