Bringing the Poor into the Financial Industry

Two billion people outside of the global banking system are poised to benefit from blockchain technology, especially with the help and guidance of the Bill and Melinda Gates Foundation’s Financial Services for the Poor program. The Level One Project within the program sets out to assist governments and banks in the creation and implementation of digital payments systems accessible to everyone in their societies–regardless of socio-economic status. (Here’s a video specifically on the project.) Read More >>

This is an example, however, of some of the blockchain hurdles that will need to be addressed in order for philanthropic and aid organizations like the Gates Foundation to bring the best of blockchain to their global initiatives.

First and foremost, government and central bank regulation is key. The Gates Foundation enables and builds, they generally do not operate. As such, governments and central banks need to be able to regulate their own blockchain networks and keep them operational for the purpose for which they were created. This includes preventing money laundering and terrorist financing operations from occurring on their platforms. Level One’s project lead Kosta Peric points out that most of the platform operators are unlikely to be from banks or trained in financial fraud monitoring, which increases the risk of potential wrongdoing taking place within these systems. Getting a handle on fraud is key; aid groups cannot be associated with systems that even indirectly support nefarious acts–it is bad for business and donor relationships.

Second, the technology must allow for real-time transfers. There’s nothing like a lag in transfer times to sow distrust among a population already disenfranchised by the traditional banking sector. These real-time transfers must also allow for a scalability of the system.

BLOCK INTEL’S TAKE: If an organization like the Gates Foundation can figure out a way to make this work, there is a chance blockchain really will save the world. The idea of establishing a regional multi-currency system seems ambitious, especially given the history of corruption and poor governance in the regions that could most benefit from these financial services. Even if it were to only succeed in one or two test countries, the benefits could be life-changing for multiple communities (e.g. establishing a credit history and giving them access to global trade).

#levelone #gatesfoundation #digitalpayments

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