Three ways how blockchain technology is already changing the lives of thousands of workers in emerging countries

The rise of the internet made the world feel like a smaller place. Economic globalization enables companies to source talent in all parts of the world, giving billions of people the opportunity to participate in a connected economy for the first time. Blockchain technology provides a global network for the cheap and fast transfer of digital assets, built on top of the internet. To create new ways to make money and allow people to be part of a global financial system, without needing a bank account. Are we witnessing the rise of a new economy?

Global payments are being disrupted before our eyes

Today’s banking system is built on the Bretton Woods agreement of 1944. In the post-war era, fast and reliable payments between the countries of the “Western world” were a top priority. Following this idea, the Bretton Woods system of monetary management established the rules for commercial and economic relations between the United States, Canada, Western European countries, Australia and Japan. It was a great improvement over the gold-backed monetary system, which was too slow and inefficient to send money between continents. The fiat monetary system with the US dollar as the global reserve currency offered a much faster and cheaper way to send money and trade goods globally.

Almost 80 years later, we find ourselves in a world where an emerging workforce wants to trade with each other, not just in Europe and North America, but in every part of the world. The Bretton Woods system was never designed to handle these types of payments, and it shows.

Sending payments should be as easy as sending a text message

Paying a developer in India from a German bank account is usually painful and expensive. An Indian bank does not offer IBAN bank transfers, and with the SWIFT system there is a lot of paperwork to do. Payments take days to settle and cost $20 or more, plus a conversion fee proportional to the amount sent. The best practice is to use a third-party payment system from one of the global fintechs and go through the lengthy KYC process. For payments of more than $1,000, the amount is often frozen and a questionnaire is sent to the recipient of the money. The recipient must justify why he is being paid this salary and is ultimately dependent on the government’s mercy to receive his hard-earned income.

“Within 10 minutes I get the money in my local account”

Back in 2009, when BitcoinBTC
emerged as the first blockchain-backed global digital currency, it was hard to imagine that this technology would one day connect hundreds of millions of people. Today, we see new applications of this technology come to life every week, forming a value network on top of the internet. Payments are settled within minutes at a cost of a few cents, depending on the blockchain network used. The use case has evolved far beyond Bitcoin. Stablecoins in particular are becoming increasingly popular. These blockchain tokens represent the value of a “real” currency, such as the US dollar, and are not subject to the high volatility of other cryptocurrencies. Joel Oshigbu, who works as a front-end developer for the German crypto-accounting startup basenode.io and receives his salary in the most popular US Dollar stable coin “TetherUSDT
” (USDT) explains: “I usually choose USDT because it is the most popular stable coin, easier to get a buyer and less susceptible to a bank run.” His employer, Oliver Schantin, co-founder and CEO of basenode.io, says that employees can choose which token they want to be paid in, or have the option of being paid in fiat currencies. The company developed an accounting software for blockchain-based payments. “We expect the number of crypto payments to continue to accelerate in growth in the coming years. Accounting and invoicing for cryptocurrencies will become more of a problem for both freelancers and businesses, Schantin explains.

Anyone can have digital currencies on their phone

Talents from all over the world seek to be paid in dollar stablecoins. An estimated 38% of web3 freelancers prefer to receive their salary in crypto assets. A main reason for this trend is that local fiat currencies typically show a higher rate of inflation and lose purchasing power against the US dollar. Iran’s national currency showed an official inflation rate of more than 36% in 2020, making cryptocurrencies a much-needed tool to preserve purchasing power. A developer from Iran explains why he receives his salary in the form of cryptocurrencies: “Due to inflation and the volatility of my local currency, I usually prefer to keep my payments as stable coins in my KuCoin account, but if necessary, I will use another wallet address, created on a local crypto exchange, this way I convert the received funds into my local currency immediately and deposit them into my bank account in less than 2 minutes.”

How remote workers make a living from NFT games

Today, we are seeing new markets forming in the crypto ecosystem, giving people the opportunity to make a living in ways no one could have imagined just a couple of years ago. The second example is the NFT-based game Axie Infinity, which has seen strong growth in its user base in recent years, amounting to more than a million players worldwide. A large amount of them are located in emerging markets in Southeast Asia. Playing the game to farm in-game currency and virtual items, then selling to players in Europe, who are willing to pay a higher price to advance faster in the virtual world, has become a revenue stream there. This is a win-win situation for both parties and allows people to make a living working a remote job, which only requires a laptop and an internet connection.

Education is a key ingredient for financial inclusion

Telecommuting is now an option for many professionals from emerging countries, and this takes away the hassle of moving and having to adapt to a different culture. The first step to working in blockchain is to get relevant career-specific education. In the third example, EkoLance, a Frankfurt-based web3 education and recruitment platform, has discovered that on the road to financial inclusion, providing educational inclusion is crucial. They offer blockchain training for specific professions such as solidity developer, blockchain community manager and blockchain content creator. These trainings are offered free of charge to talents from emerging economies, enabling them to gain skills and experience working in blockchain. To complete the cycle and offer financial inclusion, EkoLance connects the talents with international employers who offer remote work opportunities. Modupe Ativie, co-founder of EkoLance says: “We foresee a future where blockchain-powered accounting and payment services will become commonplace as thousands of African telecommuters who still live in countries where adoption of blockchain technology and cryptocurrencies is slow or outright banned can work wherever they want, earn what they want and get paid.”

Conclusion

With companies like EkoLance educating a growing number of future employees on the benefits of blockchain-based payments, one can only imagine how future generations will change the way we settle global payments. Blockchain technology has the potential to change lives around the world. By promoting the financial inclusion of under- and unbanked workers, the impact on their lives can be enormous. Fast, easy and uncomplicated global payments, the ability to personally be in charge of your assets, and new opportunities to generate income are real-world examples of how this is already happening. Ongoing development of the technology and the development of new business models can lead to even more positive effects of the blockchain technology for workers in emerging markets.

Business WireBakkt study finds nearly 50% of gig workers open to being paid some in crypto