Blockchain for Social Impact (2): innovative financing and funding

This story is important for those of you who are curious about how #technology , when used ethically, can change people's lives. You will have learned about alternatives to money as we know it by the end of this article.

Once upon a time, in a faraway land, there was a small kingdom that was peaceful, prosperous, and abundant in oil and tradition. A couple and their young daughter, Fatima, lived in this stately home. Sadly, one day she was ten, her kingdom was devastated by #war , leaving it in ruins and despair. Fatima is now 21 years old, young like the majority of people in her homeland, active on social media, and full of hopes and dreams for a better life. She wanted to transform her community into a place where hard work and creativity were rewarded. Her dream was to build an international #fashion brand that represented her #african country by utilizing local resources and talented tailors.

The local #currency was too unstable to be competitive, and banks would not even lend her money, which was the main issue. Even her Europe-based brother would have to pay up to 20% of the meager funds he could give her in bank transfer fees. However, she had a substantial online community who stood behind her and shared her beliefs. One day, she came upon what some refer to as "the new internet" and made the decision to use it to fund her company and gather money in order to fulfill her dream. She launched a #crowdfunding campaign that was successful without needing to rely on #banks or financial institutions. She currently has a #booming #business that employs hundreds of local designers and exports garments all around the world, pieces of art that cast the light on the cultural richness of her country.

This story brings up some questions about the “new internet”, which I will address briefly below:

What is cryptocurrency?

A #cryptocurrency is a type of virtual money that, like fiat money, can be used to buy things and send money to others. The term "crypto" refers to encrypted codes used to create and track transactions. This type of currency was created to eliminate intermediaries such as banks, resulting in cheaper and faster transfers between people and organizations. It takes money as it is known to many people and uses blockchain technology to make it more transparent and #decentralized.

While #bitcoin is by far the most popular type of cryptocurrency, there are over 6000 different virtual encrypted currencies, including #ethereum , which is rapidly gaining popularity in the developing world.

Why is cryptocurrency gaining traction in the global south?

Young people in many places, including #africa, are becoming more #tech savvy and are already accustomed to mobile money, which functions similarly to cryptocurrency. This made it simple for them to adapt to the new technology. Furthermore, the shockingly high rate of unemployment has compelled young entrepreneurs to seek out less expensive alternatives to traditional monetary transactions. People can now build businesses, raise funds, and work for large corporations outside of their home country and make a decent living thanks to cryptocurrency and the blockchain. Add to that the local currency instability and hyperinflation, which drove many to turn to Bitcoin trading as a hedge against such dangers.

Digital assets could revolutionize #remittances across the world

One of the most promising advantages of cryptocurrency and #digital #assets is the ability to transfer value over the internet almost instantly in unchanging and transparent transactions. People living in unstable countries or war zones with limited access to banking infrastructure may find this technology life-saving. According to the 世界银行 , remittances to low and middle income countries hit nearly $600 billion in 2021; however, this vast sum of money is frequently hampered by slow settlement times, unfavorable exchange rates, agency commissions, and bank transaction fees. All of these issues have an impact on the daily lives of millions of poor people in the developing world.

?Crypto payments and SMEs in the global south

While traditional fiat currencies have limitations and risks, cryptocurrencies do not. Banks, for example, are vulnerable to economic booms and busts, which can result in crashes and client money loss. #lebanon is a good recent example of that.

In theory, cryptocurrency ensures user autonomy because its price is unrelated to local government actions. Governments and third parties cannot alter blockchain transactions because they are irreversible.

Because this is a peer-to-peer payment system, you can send and receive money from anyone on the network, anywhere in the world. Unless they are sending or receiving crypto through a licensed exchange or institution, the parties involved in a transaction do not require authorization from an external source or authority. This eliminates the need to wait for banks to authorize payments, which can be a serious hurdle for organizations operating globally particularly between north and south like MK Sustainable Solutions and many others. Not to mention the exorbitant transaction fees and currency exchanges we must pay whenever we make payments to run our operations across continents.

?Is Fatima’s tale a true account?

No it is not. However, it is based on actual events, difficulties and aspirations. It symbolizes the solution to common issues that many motivated young people, whom some I have met and accompanied via my work in developing countries, face.

In the ‘90s, many thought that the idea that all companies would one day become internet companies was crazy. Today, we see similar skepticism with cryptocurrency that will soon be squashed by reality. One day, Soon, all businesses will adopt the cryptocurrency industry and feature a "Connect Wallet" button on their homepages. And that's how they'll get there—via #web3 . What internet did for communication, the blockchain is about to do for transactions.