Role of Cryptocurrency in Tackling Socio-economic Challenges
Blockchain technology holds the power to equip communities and individuals in different ways. It helps eliminate the need for middlemen and offers person-to-person communications. Blockchain enables you to get maximum control over personal assets and data. Also, it introduces you to different prospects of financial inclusion. For example, you can access your financial services without depending on conventional banking systems.
Let us have a look at some social challenges the communities face from economic and geographical aspects and how cryptocurrency helps tackle the challenges.
Challenges Faced by Communities
One of the main obstacles to economic growth is access to financial services (often known as financial exclusion) mostly to low-income communities and people. The main causes are
- Limited access to useful resources.
- Lack of trust in conventional banking systems and awareness about multiple financial products.
- Geographical limitations restrict individuals to open bank accounts.
- Traditional financial services are available at higher costs even for standard transactions like money transfers or maintenance of accounts.
- Electoral fraud due to lack of secure voting system.
- Ineffective supply chains
Blockchain and Cryptocurrency help to Overcome Challenges
Now, let us explore the empowering features of cryptocurrency and blockchain for social good.
Decentralization and Authorization
Blockchain removes the interference of centralized authorities which allows the communities to take complete over resources and data. For instance, a supply chain management system based on blockchain technology can monitor sourced goods end to end (from farmer to their table) which helps offer a fair share of profit to the producer and maintain transparency for the consumers.
Secure Identity Management
Individuals can benefit from the authorized digital identity features of blockchain. It mainly helps the individuals staying in conflict areas to get basic amenities like education, healthcare etc through secured documentation offered by blockchain.
Secure Voting Systems
Blockchain has changed the voting system making it a more transparent, secure decentralized system. Cryptography ensures votes remain unchanged, and authorized and eliminates the risk of manipulation or fraud.
Empowering the Unbanked through Financial Inclusion
Crypto for financial inclusion is an effective way to eliminate general poverty and offer new financial opportunities to underbanked and unbanked communities. Let us explore how cryptocurrency can empower the unbanked.
Avail Financial Services without a traditional bank account
Freedom from Unfair Banks
Why a crypto wallet when one can open a banking account using mobile apps in normal currency? Well, several unbanked lack trust in traditional banks. Many people avoid opening bank accounts due to the issues they face with business loan, mortgages etc. Crypto wallets can act as your savings accounts, you can get loans and exchanges for trading.
No Preconditions with Crypto
Cryptocurrency investment is free of the preconditions that come with traditional banking. Many people opt out of traditional financial services due to bad credit scores.
Affordable International money transfer
Individuals can send money internationally at an affordable price with cryptocurrency. As per the World Bank, the average fee for sending basic remittance payments is 6% or more. It adds to paying more for those who often send payments abroad. Comparatively, crypto transactions are reasonable.
No need to submit documents
One of the main advantages of cryptocurrency is that you do not need to submit any documents as identity proof for creating a crypto wallet.
Maintain Transparency in Charity Donations with Blockchain
Blockchain helps organizations to monitor the process of charitable donations right from donors to the end recipients. Crypto donations and transparency ensure the appropriate use of funds which boosts donor confidence.
The donors can get real-time updates on their contribution which encourages them to support more charity work. Transactions saved on the blockchain network are transparent and rigid, which helps all parties engaged to get a clear picture of the donation system.
Transparency and accessibility boosts trust & accountability in social projects. Blockchain platforms help track donations in different charity projects like food distribution etc. It helps promote charity fundraising on a large scale to help society and people in need.
DAO and its benefits for community solutions
Benefits of DAO for Social Good
Fund Management
Fund management becomes easier with DAOs. DAO can be used to take care of a decentralized hedge fund. Also, it helps assign funds to investors and manage fund investments.
Company Management
DAO helps manage company operations, decentralise the company and assign funds to their employees.
Product development and protocol management
DAO helps manage products and protocols. It also helps assign funds to developers and manage treasury and DEX(decentralized exchange).
Community management
Manage communities easily with DAO. For instance, DAOs can manage decentralized social networks, and their operations and allocate funds to the users.
Fundraising for charity
Fundraising for charity purposes can be simplified using DAOs. It manages the charity functions and allocates funds to charitable sources.
DAO uses blockchain technology to build democratic decision-making modules which can strengthen communities and result in considerate governance models.
Elements of a DAO
Conclusion
Cryptocurrency & blockchain technology encloses multiple features to promote transparency, security, and financial inclusion to contribute to a more sustainable and equitable future. With the decentralization of financial systems to facilitate peer-to-peer transactions, these technologies can empower communities and individuals across the world. With complete transparency in supply chains to building democratic processes strong blockchain has the power to create an equitable world beyond imagination.
