One of the major selling points of Bitcoin and other cryptocurrencies was their disruptive potential. Early proponents often raved about the possibility of cryptocurrencies replacing fiat, with Bitcoin earning the title of “digital gold” at one point.
Thank you for reading this post, don't forget to subscribe!Although cryptocurrencies have yet to unseat traditional finance since the advent of Bitcoin fifteen years ago, the underlying blockchain tech remains a force to reckon with. Disruption may not have happened as predicted by crypto fanboys, but it is hard to ignore the transformative changes in the last few years. More importantly, it still possesses the potential to disrupt existing economic systems as we know it.
In this article, I explore the role of cryptocurrencies in promoting fair economic systems. To get things started, I’d like to examine what a fair economic system should look like from the perspective of someone who has spent a large chunk of my life in Africa.
Through My Lens: What a Fair Economic System Should Look Like
I began freelancing as a researcher and writer over a decade ago. From sites like Freelancer to Fiverr, and later Upwork, I clawed my way to the top, one review at a time. But getting “gigs” wasn’t the hard part; getting paid was!
Living in Africa, specifically Nigeria, I typically have to rely on third-party solutions to receive payments from my clients. Apparently, PayPal moved to blacklist several sub-Saharan countries, including Nigeria, in 2004. The payments giant cited a high incidence of credit card fraud from these regions. And as of July 2024, Nigeria and several other African countries were still restricted from receiving payment via PayPal.
While I wouldn’t want to delve into the steps involved in getting paid as a freelancer working from Africa, trust me when I say the process is both cumbersome and expensive. But this is not an isolated case.
The World Bank in its Remittance Markets in Africa report noted that “the cost of sending remittances to Africa, and especially within Africa, is the highest among developing countries,” adding that:
“The market for cross-border remittances in Africa continues to be characterized by a high degree of informality, lack of effective competition, exchange controls on outward transfers, and often-exclusive partnerships of international money transfer companies with local banks and post offices that contribute to high costs and restrict market entry and competition.”
A more recent report from the agency states that
“Sub-Saharan Africa remains the region with the highest remittance costs. The average cost of sending $200 to the Sub-Saharan Africa region slightly increased, averaging 7.9% in 2023 Q2 compared with 7.2% in 2022 Q2.”
Does this seem like a fair economy? I don’t think so!
That said, a fair economy as it relates to being a freelancer would entail seamless access to payments without having to pass through multiple channels. On a much broader scale, it could mean the “proper” distribution of resources to those who need them. It could also mean giving workers the right to share the wealth produced by their labor. While the definition and meaning may vary from person to person, economic inequality cuts across a plethora of industries and sectors.
Beyond Banks & Borders: The Role of Cryptocurrencies
In my opinion, the role of cryptocurrencies in promoting a fair economy has little to do with the digital assets themselves but more about the underlying technology – blockchain.
Blockchains have been touted as being immutable, decentralized, secure, and transparent. Their decentralized nature makes them a powerful tool in fair economies. Although blockchains are susceptible to 51% attacks and centralization, anyone from anywhere can become a part of a public blockchain without restriction. Furthermore, the security of a blockchain increases with the number of unique nodes on the network. Take Bitcoin, for instance, as of July 9, 2024, there were over 19,000 nodes from across the world on the network.
Another important aspect of blockchain and by extension cryptocurrencies is that they bypass the limitations of traditional banking systems. They can be sent and received anywhere in the world, 24/7, without the need for intermediaries. So, while I’d typically have to wait for 3-5 business days to confirm an overseas payment, digital assets make it possible in a matter of minutes. Needless to say, the transaction fees are also relatively cheaper.
Do not get me wrong, cryptocurrencies are not a silver bullet for a fairer economic system. However, they offer a powerful set of tools that can be used to build a more inclusive and accessible financial future for all. As the technology matures and regulations evolve, the true potential of cryptocurrencies to reshape our economic landscape will become clearer.
