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One of the hallmarks of 2020 is that global economies are seeing lots of instability, and this is true at every level of society. For individuals, there may be more options available, but this hasn’t necessarily translated into more people being able to access banking services. In some regions, great ideas like micro-lending have taken off, and this has helped. But globally, as we move away from standard Monday-Friday, 9-5 jobs, millions of people are turning to non-traditional forms of work. For many of these independent workers, the result has been that personal finance is getting even further away. 

At a global level, we’re still seeing huge numbers of underserved people. Even in developed nations, the gulf between banked vs. unbanked can be deep: in the US, as many as one quarter of all households are unbanked or underbanked, without easy access to savings, credit, or loans. There are also many who lack financial literacy, and the pandemic has highlighted these issues in ways not seen before. In countries like the US and Canada, the distribution of stimulus payments has shown how precarious many livelihoods—and lives—truly are. 

According to World Bank forecasts, the global economy will shrink by as much as 5.2 percent this year. This would represent the deepest recession since the Second World War. Global problems require global solutions. How can blockchain be used to spur a global economic recovery? 

While blockchain can’t solve issues of unemployment or the problems that result when the cost of living outpaces salaries, it can be used to make financial services and products more available, secure, and fair. It also promotes financial inclusion by keeping fees low, and by ensuring every transaction is equal, no matter where it originates, or who initiates it. 

In the US, many found that the distribution of stimulus checks was neither streamlined nor transparent. How much better would it have been to distribute those benefits using a blockchain? In the wake of COVID-19, countries around the world (including Canada, Spain, New Zealand and Australia) have begun to explore universal basic income (UBI), and blockchain offers an effective way to handle the logistics of distribution. Adding flexibility would have a positive impact on populations: by stopping automatically when recipients’ incomes rise to a certain level, for example, and by starting again when incomes fall, all without the need for complex or convoluted application processes. 

By transforming finance, of course, blockchains also have the power to promote much broader transformation. When individuals have the power to connect freely and without constraint, decentralized governance becomes possible. We’re already seeing this on a civic level, with cities such as Oslo, Dubai and Toronto exploring blockchain-based projects. Done well, smart cities hold out the promise of being more sustainable, more efficient, and more able to be nimble in response to changes in the environment. Another benefit is that distributed management will extend participation in governance broadly and horizontally, so that all inhabitants can contribute to a democratic process that is both transparent and fair. 

Now more than ever, major online economies need to rethink the economic value they generate for their users, not just the value they extract from them. A good example of how this works is Reddit: with support from the platform, two subreddits have launched their own cryptocurrencies that can be used as tokens for an in-community currency, with distribution linked to contributions and governed by community consensus. 

In recent years, platforms like Facebook, YouTube, and Airbnb have become successful due to the content and products generated by individuals rather than corporations. Crowdfunding has become commonplace, with marketplaces such as Patreon and Kickstarter offering creative businesses an opportunity to raise funds directly from their customers. What’s the next step? The ownership economy (a concept being championed in the crypto world and by investors like Jesse Walden at Variant Fund) will create new ways to distribute economic value, with platforms that aren’t only funded by users, but are owned by them as well. What needs to happen to make this easy and widely available? Blockchain will be an essential part of making finance more accessible to the 99%.

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