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Blockchain Technology and The Changing Global Economy at the Ethereal Summit

Blockchain technology is predicted to add 2.5 billion people to a new, decentralized global economy. This remarkable growth presents unprecedented opportunities and challenges for business, governments and consumers. 

At the San Francisco Ethereal Summit, Sheila Warren, the head of blockchain and distributed ledger technology for the World Economic Forum; Matt McKibbin, the co-founder and chief decentralization officer of DecentraNet; Sam Cassatt, the CSO of ConsenSys; and Galia Benartzi, the co-founder of Bancor Protocol, explained the potential of a blockchain-based global economy.

The Problem: Current Financial Systems

As Warren outlined, financial systems exclude billions of individuals, and their infrastructures are susceptible to fraud. Banks are incentivized to serve customers deemed profitable and have no incentive to serve those outside of those bounds. In turn, those neglected by banks do not have accounts, and can’t always rely on their governments for protection. Because cybersecurity frameworks at banks are susceptible to hacks, individuals are also at risk of losing money. And in developing countries, there is no guarantee that governments can return stolen funds.

When individuals are denied a financial identity by banks, they are restricted in their ability to own assets and exchange wealth. For example, if a person does not have a financial identity, how can they verify ownership? After all, deeds are forgeable and banks have been known to fall for massive scams.

The Promise: An Inclusive, Global Economy

Blockchain technology empowers all individuals — no matter their profitability in the eyes of a bank — to maintain a financial identity, to interact with a public record system and to prove ownership of their assets. Because of its append-only nature, blockchain technology provides a higher level of security than traditional financial institutions.

What’s Happening Now?

As blockchain technology develops, a growing number of governments are consulting with the World Economic Forum. Decentralization through the blockchain may appear daunting; but this technology can realistically be used to help governments function more efficiently and even to prevent crime.

Rising to the challenge, the World Economic Forum is now a leader in bringing blockchain technology to the 2.5 billion individuals with low levels of financial representation. Their approach is multifaceted, and includes developing education initiatives and creating jurisdiction and technology hubs for developing countries. Global implementations vary and are based on assessing the capabilities of a country’s power grid and existing infrastructure.

Blockchain spreads through the collaboration of the private and public sectors. The World Economic Forum fosters partnerships with forward-thinking organizations such as ConsenSys — a leading venture studio focused on blockchain ecosystems — to implement blockchain technology. Notable projects include Veridium, an asset-backed token designed to benefit the world’s forests and endangered wildlife.

There are many parallels between the adoption of blockchain technology in emerging markets and the mainstream adoption of telecommunication in the 21st century. Instead of using phone lines, developing countries utilized newer technology and developed their infrastructure using satellite wireless communication. By “piggybacking” on the cell technology of developed countries, developing countries were able to incorporate new technology in an efficient and cost-effective way. Similarly, countries with fewer established financial systems are taking advantage of decentralized financial institutions powered by blockchain technology instead of establishing traditional banks.

Although implementation speeds will vary by country, blockchain technology has the potential to empower all markets, including those looking for a technological piggyback. Blockchain technology has the disruptive force to revolutionize the global economy through inclusion, security and collaboration.

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