- The image of cryptocurrency tends to focus on privilege and flaunted wealth.
- Financial institutions dismiss Bitcoin as a fad, while exploiting the benefits of the underlying technology for themselves.
- But the story in developing countries paints a different picture – one of vast potential.
In 2018, The New York Times published a comprehensive expose on the burgeoning crypto movement that detailed the luxurious lives of the newly crypto rich. The article, aptly titled, “Everyone is Getting Hilariously Rich and You’re Not” is emblematic of the coverage that often typecasts crypto enthusiasts as amateur wealth connoisseurs.
It’s a common storyline about crypto diehards that is imminently popular because of the ostentatious numbers and the perceived greed of the whole thing. For example, when Ripple surged in value by more than 1,240% in a month, the headlines often reported on the company’s CEO, Chris Larsen, who briefly became richer than Mark Zuckerberg.
The notion that a few people, 4.11% of Bitcoin owners to be exact, are becoming incredibly wealthy from the crypto movement only perpetuate the idea that cryptocurrencies are about becoming fabulously wealthy.
Of course, this penchant for discussing privilege has created a limiting narrative that propels skepticism about the transformative potential found in cryptocurrencies.
More specifically, continuing narratives about the culture of privilege surrounding cryptocurrencies is a distraction from what should define the primary use case for the crypto movement.
The skepticism of financial institutions
While traditional financial institutions are happy to benefit from Bitcoin in the form of derivatives contracts bought and sold through their institutions, they are continually dismissive of the crypto movement.
Most famously, JP Morgan Chase CEO, Jamie Dimon, described Bitcoin as a “fraud,” adding that it’s a good option for murderers and drug dealers.
Meanwhile, Bill Harris, the former CEO of PayPal, described Bitcoin as “a colossal pump-and-dump scheme…best suited for one use: criminal activity.” Similarly, billionaire Charles Munger, vice chairman of Berkshire Hathaway, explained that he “detested it the moment it was raised.”
Moreover, Bank of America has expressed continual incredulity about crypto’s underlying technology, the blockchain, even as they rack up the most patents for the technology.
To be sure, financial institutions have every reason to prevent the proliferation of cryptocurrencies. Not only do they circumvent their once-unchallenged grip on the monetary system, but these institutions, and those who run them, have little use for an alternative to the existing financial infrastructure.
Simply put, the incredulity the financial elites feel is self-serving at best. Not only do they sit in powerful positions that prop up their privilege, but their access to vast financial resources encourages them to be dismissive of a new asset class that serves less well-positioned people.
Creating Financial Inclusion
With all this noise, an important expression of the crypto movement is struggling to breakthrough. For some, cryptocurrencies are just a modern way for a few people to become incredibly wealthy, while others see it as a threat to their business model and bottom line.
However, for many others, cryptocurrencies are a savior, a crucial way of exchanging value in turbulent and unstable situations. In between the headlines and hot takes, cryptocurrencies are making a real difference in the lives of the unbanked, those living in developing countries, and those impacted by geopolitical turmoil.
While Facebook’s highly touted Libra is yet unproven, the purpose is right on the mark. The currency is targeting the worlds’ 1.7 billion adults who don’t have access to the financial system. In the US alone, 25% of the population is considered unbanked, meaning that there is a significant need for a better option.
Therefore, tech titan IBM notes, “we have reached a tipping point in the banking industry where our relationships with banks and how they extract value from us is going to be transformed.”
For a lot of people, that transformation is already taking place. In Venezuela, where the national currency’s annual inflation rate is 1.7 million percent, cryptocurrencies are allowing people to buy things like food, milk, and housing. As Venezuelan economist, Carlos Hernández, wrote in a Times op-ed, “‘Borderless money’ is more than a buzzword when you live in a collapsing economy and a collapsing dictatorship.”
Indeed, cryptocurrencies effectively combat inflation, corruption, and high remittance costs. With cryptocurrencies, people aren’t dependent on financial elites or established organizations to provide relief or opportunity. They can create this for themselves.
Creating new opportunities for entrepreneurs
Beyond the use case of blockchain as cryptocurrencies, the open, censorship-resistant nature of the technology has fostered a startup culture that’s positively buzzing with innovation, the benefit of which isn’t just limited to wealthy hubs like San Francisco and Singapore.
For example, Matic Network is an Indian company that is rapidly becoming the base protocol of India with its fast, scalable second-layer solution for Ethereum. Whereas Ethereum has struggled to scale beyond around 15 transactions per second, Matic uses side-chain technology to scale up to 65,000 transactions per second.
The company has already established partnerships with well-known names in the blockchain space, including Binance and Coinbase Ventures. As a development platform, Matic provides ready-made infrastructure to help kickstart the Indian blockchain startup scene, encouraging tech entrepreneurs to bring their applications to life
Despite its status as a developing country, India has long been the IT outsourcing hub of choice for companies the world over and contains a wealth of programming talent.
Open source, shared benefits
For the many people who won’t become Bitcoin millionaires and who aren’t members of the financial elite, cryptocurrencies and blockchain are becoming a vital resource that levels the playing field, inviting total participation in a trustless economy that has a place for everyone. Furthermore, the low barrier to entry for building blockchain-based applications offers the potential to open new channels for entrepreneurship in developing countries.