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Can cryptocurrencies solve the humanitarian crisis?
We're currently faced with a global humanitarian crisis. While an estimated 134.1 million people around the world are in direct need of humanitarian aid, only 96.2 million people are set to receive it in the coming year - leaving many without access to fundamental human services such as food, healthcare, or housing. It's a problem that's only getting more pressing with time, and leading philanthropic organizations are increasingly struggling to find the resources necessary to meet the growing demand. In searching for a tangible solution, many industry experts have begun to turn to advancements in blockchain technology, the mechanism underpinning major cryptocurrencies like bitcoin, in an attempt to bring their operations to scale.
There are a couple of reasons for this. Blockchain technology carries a variety of use cases with the potential to provide security and transparency to global philanthropic efforts. The platform's decentralization and immutability, in particular, holds tremendous promise in allowing philanthropic organizations to accurately assess the exact size and the scale of the current humanitarian effort, which is a growing concern for communities with poor technological capacity. How can you possibly tend to a problem if you can't accurately assess what's required to fix it?
For years, lack of sufficient record-keeping processes have thwarted organizations from accurately pinpointing potential problem areas. With an estimated 1.1 billion people in the world without government-issued identification, and an estimated two billion labeled as "unbanked," it's nearly impossible for humanitarian organizations to effectively direct their efforts to those in need. What's more, these individuals, many of whom would otherwise qualify for humanitarian aid, are largely prevented from gaining access to an education, receiving healthcare, or registering for financial services. With no written background, there is simply no way of applying for them.
Using blockchain, however, we have a unique opportunity to store identity, financial, and reputational information on a decentralized ledger, giving communities in even the most rural parts of the world the ability to build credit or receive federal funding. Humanitarian organizations can place information, from birth certificates to loan financing, on the blockchain, and its immutable record can be saved and viewed from anywhere in the world. These services not only can equip underserved communities with the tools necessary to participate in global commerce, but they also empower grassroots financial growth that will contribute to economic stability.
Mind you, cryptocurrencies have a role to play here as well. Market volatility has been, and continues to be, an ever-present reality for individuals living in developing regions, and many are struggling to account for rampant fluctuations in national, or fiat currency. In Venezuela, for example, a decade's worth of economic recession has led to hyperinflation that has, at times, led to inflation of over 13,000 percent. And with nearly 82 percent of the country living below the poverty line, this inflation has had crippling repercussions for Venezuelan citizens, leading to malnutrition and homelessness.
However, because cryptocurrencies operate independent of the centralized market, humanitarian organizations can provide more substantive guarantees in the longevity of their aid. For individuals who rely on these efforts as a source of income, this consistency is critically important, as fluctuations in the market could make the difference in whether they have food to eat or a bed to sleep in. In truth, relief efforts must not only be effective, but longstanding, so it's important that the value of the aid you provide doesn't vary per remittance.
Not only does blockchain technology provide security and transparency to humanitarian processes, but it can also expose a new target audience to the importance of humanitarian relief, increasing charitable donations and encouraging future participation. At present, the greater cryptocurrency industry is worth an estimated $251 billion USD, complete with a community of industry leaders committed to making a tangible change in societies around the world. If we were to use even the smallest portion of this value and redirect it toward the greater good, the potential impact would be substantial.
Cryptocurrency organizations recognize this, and have started to lend their platforms to charity organizations in an attempt to pioneer a new medium for donation processes. In fact, just last week, one cryptocurrency exchange announced that it would launch a new blockchain service in Kenya with the goal of creating "community currencies" aimed at stimulating regional commerce and combating poverty. This new infrastructure will not only allow for the company to track the value of the token exchange in real time, but it will also open the market up to outsiders to increase its overall value. It's a system of checks and balances that provides individuals with the stability they need to build flourishing global economies.
My own enterprise, Dash, has worked to educate those in developing countries about the benefits of cryptocurrency as a reliable economic alternative to transact and store value. In the past few years, we have seen an overwhelming interest in this prospect, and have built strong connections with merchants around the world to provide the everyday person with access to basic human necessities. For example, Dash has created a significant presence in Venezuela due to the country's ballooning inflation and economic instability; we're currently accepted by nearly 400 merchants in the country, ranging from grocery stores to restaurants and utility outlets.
As population density and wealth inequality continue to increase around the world, it's becoming increasingly apparent that traditional remedies will simply not fit the bill. Faced with an increasingly insurmountable dilemma, humanitarian organizations have a unique opportunity to find an innovative solution that is not only scalable, but targeted to each individual in need, when they need it most. Blockchain technology has the potential to deliver on such a promise. The future with cryptocurrency is bright.
Ryan Taylor is the CEO of Dash Core Group, a digital currency for making payments. Prior to Dash, he was a hedge fund analyst covering a global stable of payments industry investments for the private equity and public market funds of a $20 billion investment firm based in New York. He holds an MBA from Columbia Business School with a concentration in finance and economics, and a bachelor of science from W.P. Carey School of Business at Arizona State University.