The dark side of the blockchain
Blockchain technology has been touted as a solution to the issue of financial exclusion, promising a more inclusive and accessible financial system. However, there is a growing concern that the implementation of blockchain technology could backfire spectacularly, further exacerbating the already existing technological gap, while exacerbating financial exclusion and unbanked population.
While blockchain technology has the potential to create a decentralized financial system, the reality is that the technology gap remains significant. There are still many people who lack access to the internet, mobile phones or other technologies required to use blockchain-based financial services. This creates a significant barrier to entry for those who are already financially excluded and unbanked.
Also, the learning curve for blockchain technology is steep, meaning those unfamiliar with the technology may struggle to navigate and use blockchain-based financial services. As such, there is a risk that implementation of blockchain technology could widen the technological gap between those who have access to the technology and those who do not, leading to further economic exclusion.
Another problem with the implementation of blockchain technology is the potential for further concentration of power. Blockchain-based financial services require significant computing power and resources to operate, meaning that those with the resources to invest in the necessary infrastructure and equipment will have an advantage. This may lead to a concentration of power among a few dominant players, which may not be conducive to financial inclusion.
Furthermore, there is a risk that the implementation of blockchain technology could reinforce existing inequalities. Blockchain technology operates on a trustless system, meaning users do not need to trust intermediaries such as banks or financial institutions. While this is a positive development, it may not be suitable for everyone, especially those who lack the necessary skills or knowledge to protect their assets on a trustless system. This can lead to further exploitation of vulnerable individuals, such as the elderly or low-income populations.
Open Banking may be in an excellent position to close the gap
Blockchain technology has the potential to bridge the technology gap if used correctly and open banks appear to be in prime position to do so.
Blockchain technology can help open banks by providing a secure and efficient platform for financial transactions. By leveraging blockchain technology, open banks can offer safer and more efficient financial services to their customers, without needing to understand the intricacies of blockchain technology, yet reap benefits from the security and efficiency of financial transactions.
As such, for example, blockchain technology can provide a more efficient and secure platform for remittances and international remittances, which is particularly important for people who may be working abroad and sending money home to their families. Moreover, it can also ensure that these transactions are secure and transparent, with lower transaction fees than traditional financial institutions.
Blockchain technology can also help open banks provide more accessible and inclusive financial services to people who are currently unbanked or underbanked. By using blockchain-based financial services, these individuals can access the same financial services as everyone else, without the need for a traditional bank account.
Ends
While blockchain technology has the potential to revolutionize the financial system and promote financial inclusion, there is a risk that it may not deliver.
The technology gap remains significant, and the implementation of blockchain technology could widen it and exacerbate existing inequalities.
As such, it is critical to address these concerns and ensure that the implementation of blockchain technology is done in a way that promotes financial inclusion and benefits all members of society, regardless of their technological capabilities.
Blockchain technology has been touted as a solution to the issue of financial exclusion, promising a more inclusive and accessible financial system. However, there is a growing concern that the implementation of blockchain technology could backfire spectacularly, further exacerbating the already existing technological gap, while exacerbating financial exclusion and unbanked population.
While blockchain technology has the potential to create a decentralized financial system, the reality is that the technology gap remains significant. There are still many people who lack access to the internet, mobile phones or other technologies required to use blockchain-based financial services. This creates a significant barrier to entry for those who are already financially excluded and unbanked.
Also, the learning curve for blockchain technology is steep, meaning those unfamiliar with the technology may struggle to navigate and use blockchain-based financial services. As such, there is a risk that implementation of blockchain technology could widen the technological gap between those who have access to the technology and those who do not, leading to further economic exclusion.
Another problem with the implementation of blockchain technology is the potential for further concentration of power. Blockchain-based financial services require significant computing power and resources to operate, meaning that those with the resources to invest in the necessary infrastructure and equipment will have an advantage. This may lead to a concentration of power among a few dominant players, which may not be conducive to financial inclusion.
Furthermore, there is a risk that the implementation of blockchain technology could reinforce existing inequalities. Blockchain technology operates on a trustless system, meaning users do not need to trust intermediaries such as banks or financial institutions. While this is a positive development, it may not be suitable for everyone, especially those who lack the necessary skills or knowledge to protect their assets on a trustless system. This can lead to further exploitation of vulnerable individuals, such as the elderly or low-income populations.
Open Banking may be in an excellent position to close the gap
Blockchain technology has the potential to bridge the technology gap if used correctly and open banks appear to be in prime position to do so.
Blockchain technology can help open banks by providing a secure and efficient platform for financial transactions. By leveraging blockchain technology, open banks can offer safer and more efficient financial services to their customers, without needing to understand the intricacies of blockchain technology, yet reap benefits from the security and efficiency of financial transactions.
As such, for example, blockchain technology can provide a more efficient and secure platform for remittances and international remittances, which is particularly important for people who may be working abroad and sending money home to their families. Moreover, it can also ensure that these transactions are secure and transparent, with lower transaction fees than traditional financial institutions.
Blockchain technology can also help open banks provide more accessible and inclusive financial services to people who are currently unbanked or underbanked. By using blockchain-based financial services, these individuals can access the same financial services as everyone else, without the need for a traditional bank account.
Ends
While blockchain technology has the potential to revolutionize the financial system and promote financial inclusion, there is a risk that it may not deliver.
The technology gap remains significant, and the implementation of blockchain technology could widen it and exacerbate existing inequalities.
As such, it is critical to address these concerns and ensure that the implementation of blockchain technology is done in a way that promotes financial inclusion and benefits all members of society, regardless of their technological capabilities.
