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
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
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