In 2015, the United Nations passed a resolution titled
The UN’s number one objective is the elimination of poverty. Today, billions of our humans continue to live in poverty and are denied a life of basic dignity. There are rising inequalities within and among countries, as well as tremendous disparities of opportunity, wealth and power.
The members of the United Nations aim to eradicate poverty in all its forms and dimensions, starting with extreme poverty, as the greatest global challenge and an indispensable requirement for all sustainable development efforts. The following considerations focus on the impact of decentralized software solutions – popularized under the moniker blockchain– on the UN’s core objective of ending poverty in all forms everywhere.
Defining Poverty
The
A quarter of the world’s population live in poverty.
It should be noted that measures taken by government officials as a reaction to the spread of the COVID-19 virus are estimated to have pushed as many as 150 million people into extreme poverty in 2021 (more
Causes of Poverty
Research conducted by the
- the inability of poor households to secure property ownership
- limited and poor education leading to fewer opportunities
- limited access to credit, creating more poverty via inherited poverty
- the systematic exclusion of ethnic minorities, ethnic castes, tribes, women and people with disabilities from participating in fair economic enterprise and access to institutions and markets.
Property Ownership
Property ownership and secure property rights exceed the role as economic assets, they provide a sense of identity, dignity, and belonging to people of very different economic means (more
Property rights create reliable ties between community members, creating a system of mutual recognition and responsibilities beyond local communities. For many poor individuals and the communities in which they live, the relationship with property is more than just an aggregate of occupied and used plots. It is an expression of a way of life, and one that they must have the opportunity to improve through their own efforts.
Land Registries
Land registries were historically created through paper records. These documents can be lost, destroyed, falsified, or otherwise manipulated. Most modern countries’ governments have therefore largely moved to digital land registration systems. However, if someone wants to sell an older property that hasn’t previously been registered, and the paper title deeds have been lost or destroyed, the process to register the property in order to sell it can be very difficult. The latter is true for much of the worlds’ population.
When an earthquake devastated large parts of Haiti in 2010, it not only left 1.5 million people homeless, but the disaster also destroyed 60 years’ worth of government archives, including land registrations. Since then, many Haitians have put great efforts and investment into rebuilding their towns and cities, but they remain without legal means of claiming the land as their own, given the government has no record of prior ownership.
A
These problems are not limited to the two examples, but are indeed a common scenario around the world, causing financial hardship for families globally, and more so in the developing world. Without an official, enforceable legal title to their property, citizens cannot resolve disputes over who can use which land for what – like who can farm where. They are also barred from
Peruvian economist and anti-poverty campaigner Hernando de Soto estimates that
Blockchain-based systems can address the fundamental shortcomings of paper of database-driven solutions to record ownership, by creating a decentralized file system of immutable records. And, while the public at large has been led to believe that nonfungible tokens (NFTs) are synonymous with digital art, the paradigm has indeed a much more important role to play for the recording of rights to real-world assets. As such blockchain-based land registries have begun to emerge in Bermuda, Brazil, Georgia, Ghana, Honduras, India, Russia, and Rwanda.
Financial Inclusion
In 1974 the Equal Credit Opportunity Act was passed in the United States, for the first time allowing women to open bank accounts and get credit cards without the permission of their husband or a male relative.
Nevertheless, according to the Federal Reserve’s
The graphics depict in large parts the systematic exclusion of ethnic minorities, ethnic castes, tribes, women, and people with disabilities from participating in the legacy financial system.
And, while many countries have indicated via their central banks that new technologies may address the needs of the unbanked, it has become clear that CBDCs will indeed not address the reasons for many – and likely most – citizens currently excluded from financial systems (more
Cryptocurrencies, and – more broadly – censorship-resistant digital bearer instruments, and non-custodial wallets, already provide access to global financial services to an ever-growing number of citizens around the world. Many of these individuals do not have the required government-issued credentials – an impediment which according to a
As with voice-over-IP solutions, blockchain-based systems enable anybody to download client software (i.e. a digital wallet) for free and start to use it without the need for identification.
Note: while some motivated individuals currently in government offices claim that cryptocurrencies pose a security risk and are increasingly used for illicit purposes,
Sending money internationally
The gross-domestic-product (GDP) of countries all over the world depends on the inflow of foreign capital. However, particular regions are more reliant on remittances in particular than others. According to the World Bank
As is common all over the world, citizens from these regions tend to move abroad to seek work in service-related jobs. Women often find employment in domestic and caregiving roles, and men usually earn money from seasonal agricultural work. The countries that migrant workers seek out most often are: Australia, New Zealand, the United States of America, and Canada.
Another region that is heavily reliant on remittances is Central Asia. The World Bank stated that in 2019 Tajikistan and Kyrgyzstan were the fourth and fifth most remittance dependent countries in the world, based on the percentage of GDP. The only countries ahead of them were Nepal, Haiti, and Tonga. Central Asia is a region that contains, relatively speaking, very new countries. Tajikistan and Kyrgyzstan only became independent nations in 1991, as a result of the fall of the Soviet Union. Tajikistan is the poorest of the Central Asian nations, predominantly due to its lack of arable land. It’s incredibly mountainous, with
According to a 2020 report by the World Bank emigrants working abroad sent an estimated US$470 billion to their families in their home countries. This flow of capital is a significant factor in the financial well-being of families and societies in developing nations.
However, the process of sending money through legacy financial service providers remains expensive. Using MoneyGram, for example, a migrant in the U.S. with US$50 to send to Ghana has to pay $10 in fees, meaning the recipient only receives $40. In 2021, transaction costs and commission rates averaged 10.96 percent for remittances sent from banks and 6.36 percent for sending money through money transfer operators, which is more than double the
Cryptocurrencies and non-custodial wallets can readily provide remittance services to any person with a basic smartphone, moving money at costs far below the objectives.
