How Blockchain Can Help Failing Economies

When many investors in the U.S. hear the word "blockchain," they immediately think of cryptocurrencies, and with good reason. The impressive new technology provides the support necessary for the decentralized, anonymized tracking and transaction of digital currencies around the world. However, as many industries are discovering, blockchain technology also allows for many other uses and applications as well.

From insurance and real estate to crowdfunding and data management, the potential applications of blockchain technology are numerous, and it's likely that there will be new ways of adapting this technology to the mainstream business world in the future as well. But one important use of blockchain technology may be outside the mainstream business world: Some of the world's most impoverished nations may benefit from the integration of blockchain technology in various ways.

Protecting Children

The Democratic Republic of Congo, a central African country ravaged by a devastating and protracted war that has led to millions of deaths, is routinely listed among the poorest nations in the world. Now, a report from Bitcoin News highlights a project slated for launch later this year that could help to protect children there from forced labor. This project will provide global manufacturers of high-tech devices like smartphones with a guarantee that cobalt used in lithium-ion batteries was not mined by children. The Democratic Republic of Congo has a significant problem with informal mining sites, many of which include child workers.

The country holds over half of the cobalt reserves around the world, and this could prove to be beneficial to the, and this could prove to be beneficial to the struggling economy in the years to come, particularly as electric cars are likely to become increasingly popular. Indeed, for the year 2019, the Congo mined 100,000, or approximately 71%, of the 140,000 tons of cobalt generated around the world.

Basic Necessities

In Venezuela, where hyperinflation has prompted dramatic shortages of basic necessities and food, bitcoin and other cryptocurrencies could help ease the strain. Given its global usage and the relative ease of cross-border payments and transfers, cryptocurrency has been a viable alternative to an increasingly problematic local fiat money for many Venezuelan citizens.

Haiti, still reeling from hurricane and earthquake damage caused over the last decade, and with a gross national income per capita of just $1,330 as of 2019 also stands to benefit from blockchain. The Haitian government has suggested that blockchain technology could be used to record and register property transactions, voting, intellectual property, and other aspects of bureaucracy.

For Paul Domjan, former global head of research, analytics, and data at investment bank Tellimer (formerly Exotix), emerging nations are the most promising beneficiaries of blockchain tech. He argues that, because "frontier markets in Latin America, Sub-Saharan Africa, and South Asia lag far behind [in the area of ownership recording], with average performance less than half that of the best-performing economies," they are primed for the benefits of blockchain.

Amnesty International program director Mark Dummett has voiced cautious support for the integration of blockchain into efforts to address these and other problems plaguing developing nations, saying, "You have to be wary of technological solutions to problems that are also political and economic, but blockchain may help. We're not against it."

Besides the applications listed above, supporters of blockchain believe that it could enhance the distribution of government services in these nations, help to provide identity services, and even help to enhance freedom of speech and anti-corruption activities as well. All of these ideas are promising on paper, but major project implementation has yet to take shape, although various companies and projects have discussed plans and potential applications.

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