Entrepreneurs are using blockchain to drive financial inclusion

We live in a world with growing economic inequality. According to a 2020 UN report, 1.3 billion people in 107 developing countries experience deprivation in health, education and living standards due to their economic conditions. These people are excluded from the formal economy, trapped by their financial situation with limited access to platforms, products and services that can empower them to uplift themselves.

Traditionally, this has been exacerbated at an institutional and corporate level where capital, technological and regulatory constraints have made it either impossible or not economically viable to serve this low end of the market. But advances in the fintech space are rapidly removing many of these barriers, enabling banks, financial service providers and new challengers to access this market. On an ethical and human level, democratizing access to financial services can combat poverty, but on a business level this also represents a huge opportunity.

One of the key technologies acting as a catalyst to unlock this market is blockchain due to its low operating costs and ability to operate at scale. Various blockchain projects have emerged focused on creating avenues for people to spend, save and send money, but one of the best use cases is in the investment space.

A South African-based blockchain called Fraxeum has been developed by three experienced tech entrepreneurs, co-founders Llew Morkel, Khaya Maloney and Barry Tuck, specifically to enable broad-based micro-investing across a wide range of asset classes.

“Essentially, Fraxeum tokenizes equity in any form of asset, real world or digital, traditional or alternative,” says Fraxeum’s chief strategy officer Barry Tuck from Durban, “enabling the fractionation of equity into millions of micro-shares. On top of the blockchain, we have then developed a range of fintech solutions that enable easy customer KYC, AML and onboarding, direct fiat deposits and withdrawals, a secondary OTC desk for reselling micro shares and much more.”

The Fraxeum blockchain is an eco-friendly, no-gas-fee, bank-grade blockchain that facilitates the creation and management of accessible and inclusive investment platforms, enabling investments as low as $0.10. By making investment opportunities affordable and accessible to this broad base of retail investors who are currently excluded from the market, the Fraxeum blockchain provides banks, financial service providers and other businesses or startups with the perfect platform to reach this untapped market. The Fraxeum blockchain sustainably facilitates and automates the management of millions of sub-investment accounts with zero gas fees.

“We’ve had great traction since our official launch earlier this year,” says Fraxeum’s Head of Business Development, Khaya Maloney, “with one of Africa’s largest banks now working on a product that will use Fraxeum to tokenize equity in listed stocks, ETFs and other alternative assets. We have a client that enables investment in whiskey cask dividends and rare Rolex watches, while another large multinational wants to use Fraxeum to tokenize carbon credits and clean energy projects. Other use cases include debt financing, investing in agriculture or mining , or the purchase of equity in sports teams, franchisees or property.”

Contrary to popular belief, poverty is not only a challenge in emerging markets. The same UN report highlights how the wealth gap is growing globally, with, for example, an estimated 10.5% of the US population (34 million people) living in poverty. Access to real estate investment – ​​a highly sought-after resource – is becoming increasingly exclusive as high real estate prices in major cities prevent millions of people from investing in real estate.

“Building out a real estate micro-investment platform using Fraxeum provides a great solution to this problem,” continues Maloney, “giving people who are unable to enter the real estate market an affordable and accessible alternative through buying equity in properties and building a portfolio. . This solution has global relevance – democratizing access to real estate investment opportunities in both established and emerging markets.”

Although still in its early stages, Fraxeum will change the world of finance as more institutions, banks and financial service providers begin to use the blockchain to enable broad-based micro-investment opportunities for retail investors.