History has been evident that (the now) developed countries once strived and established strong governing bodies to regulate the systems working to strengthen the pillars of their economy and society. There are several examples that prove the fact how the establishment of a centralized system like federal reserve banks has helped these economies thrive. Fuad Ahmed today, in contrast to the struggle of developed nations, advocates the case of developing states that still are suffering from menaces and evils of corruption and do not have any strong central system to monitor the financial transactions in an economy. Mr. Ahmed argues that except a few strong nations in the world, the ill of corruption is prevalent in almost all parts of the world, eating nations from within like a termite. He proposes that a solution like Blockchain can do wonders in digging them out of the pit these countries are falling due to their unreliable decentralized financial system.
Fuad Ahmed explains quoting the idea of Don Tapscott, the co-founder of the Blockchain Research Institute, that because of the development in the technological sector, there are several threats that are being posed to the financial systems in the shape of hackers and terrorists. The destruction caused by such a theft can be severe and have a domino effect in the worldwide economic system, whereas the use of blockchain technology which is immune to any theft and hacking because of its devolutionary properties can safeguard economic systems of volatile economies from facing a blow and emerge to be with flourishing nations.
Blockchain for Emerging Markets Explained
Initially introduced as an underlying technology for to monitor the transactions of bitcoin, the system of blockchain was later explored to be serving the longstanding needs of other industries in the world.
The blockchain is a decentralized and continuously growing system that consists of numerous blocks, with each linked to the previous one. The blockchain is a hyper ledger, publicly available and has the capacity to store information related to money, bonds, assets, contracts or anything that holds any value.
The technology was first begun to be used by Nick Szabo, a Canadian, who introduced it as a back-end system for Ethereum. Since then, it has been widely used by all the developed nations and has been incorporated into the system of big MNCs too. However, the emerging markets are still striving to learn about the benefits and usages of the technology. As the world is becoming a global village, the export and import markets are expanding too, making a room for bourgeoning middle class to become buyers of finished products and lead their economies to jump from being under developed to developing. The countries that are buying finished products are also becoming big-time importers of quality goods hence giving way to a multiplied amount of trade for these countries.
With the influx of trade, these volatile economies also become needful of a system that can guarantee the maintenance of a strong network to document every transaction that’s taking place. The third world economies being politically fragile tend to be economically volatile too, the reasons for it are several that include corruption as one of the top causes. The system of blockchain that records everything on the block is more secure and free of human intervention, therefore less susceptible to corruption or engineering in the data. Transparency in blockchain is synonymous with less corruption in the system. The problems of the land registry to land grabbing in developing states can easily be resolved with blockchain, and as these economies are agrarian in nature, the issues related to farmers can also be addressed with more transparency in the system. No false contracts can be given out and no documents can be doctored if blockchain is properly incorporated in the system of these economies.
Financial Inclusion of the Unbanked
Recently India drove a demonetization campaign across the country to urge the citizens go and get their money banked, however, the effort proved to remain futile in many areas. The reason for the drive was to document all the money and include it in the financial sector. Since the effort couldn’t give desired results, emerging economies like India and Brazil could use blockchain to record all the data that had been missing as, if not banks at least internet is available to almost 80% of the population in India, even in remote areas.
The other way developing nations can generate good profit from blockchain is by using it for the transfer of remittances. These nations thrive on the economy that is made of share put in by immigrants sent money from abroad. Blockchain in these circumstances can be a major help for these states as with each transaction that is sent through the Western Union or a bank, a huge chunk of money is being deducted from the transaction. This situation can be easily avoided with the use of a decentralized system like a blockchain that operates on equal grounds globally and can be controlled with an app or just a plain internet connection.
Blockchain is a revolutionary technology that pledges to change the fate of developing nations where lack of accountability and corruption is weakening the state structure from within. This system promises to keep every single piece of information documented on the network along with the insurance of security of all data. The developing nations that take immense benefit from this technology and emerge to stand among the developed ones in a very limited time.