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Can Cryptocurrencies Build a Future of Democracy and Financial Freedom?

cryptoknowmics.com 19 May 2022 18:09, UTC
Reading time: ~4 m

Cryptocurrencies have been booming and growing for the last couple of years to become a trillion-dollar industry. Last September, the total market capitalization hit 2 trillion as more mainstream and individual players embraced the market.  Although cryptocurrencies have been around for a long time, they are only beginning to be acknowledged as financial tools that folks can use to bring about financial freedom, among other benefits. They can help boost the global economy by making it easier for people to access capital and financial services. However, can cryptocurrencies build a future of democracy and financial freedom? Let's find out;

Eliminating Intermediaries

Bitcoin was created to allow people to conduct transactions without a third-party intermediary, such as a bank. It was initially designed to address the concerns about the erosion of privacy in our digital age. The introduction of Bitcoin in 2009 was timed to come after the financial crisis, which severely affected the trust levels of banks and governments. Although Bitcoin does not guarantee that people will be able to keep their identities secret, the ability to conduct secure, somewhat private financial transactions helps explain cryptocurrency's growing appeal.  The rise of bitcoin has also primarily been attributed to its blockchain technology. This type of digital ledger is used to record the transactions using it. Although it doesn't contain the identities of the parties that conducted the transactions, it can provide a record of all transactions. These ledgers are maintained on a wide variety of computers worldwide, making them tamper-proof and secure and preventing unauthorized access. The other network members would immediately detect and reject any attempt to access them. The potential of blockchain technology to be used for a wide range of conventional transactions, such as buying a house, is expected to grow. It can be used without banks and other financial intermediaries, ultimately providing financial freedom.

Financial Inclusion

Most people agree that financial inclusion is essential to improving the lives of those who still have no access to banking services, a tally of about 1.7 billion people worldwide.  The potential of digital finance to boost the gross domestic product (GDP) of emerging economies has been estimated to be $3.7 trillion. It would be a considerable increase in GDP for both the financial and non-financial sectors.  About two-thirds of this increase would be due to the increased productivity of financial firms and governments, while the remaining third would be due to the additional investment that financial inclusion would bring. In addition, up to 95 million news jobs across the industry would be seen, giving the involved country's GDP. Traditionally, financial inclusion has been carried out through the work of governments, banks, and institutions. However, with the rise of internet community-based open-source technology and the increasing number of people investing in cryptocurrencies, the foundations of an alternative financial system may be starting to take shape.

The Future of Democracy

The rapid emergence and evolution of technological innovation have revealed the potential of new regulation methods to create more effective and more efficient ways of regulation. Unfortunately, many existing institutions designed to implement these reforms are still very inefficient. Online marketplaces such as Amazon and Uber have created new methods of regulation that are more effective than the federal government's in their respective industries. These platforms have built-in rating functions that help users improve their experiences. Even though cryptographic technology is commonly used to enable the creation and exchange of digital currency, it is also helping safeguard some of the most fundamental freedoms of democracy.  Bitcoin and other cryptocurrencies are helping individuals and organizations in countries experiencing hyperinflation and other forms of oppression. They also provide critical funding for human rights groups operating in repressive regimes. The potential of blockchain technology to improve the voting process has been acknowledged through the concept of crypto-democracy. Voting and the electoral process are subject to costs of disorder resulting from improper registration, impersonation, and voting more than once by an individual.  Due to these risks associated with centralized systems, blockchain-based networks are the best way to achieve democracy. They allow users to participate in the system's activities without dealing with the constraints of being in a centralized environment.

Final Thoughts

The concept of blockchain and cryptocurrencies is currently growing, and new opportunities keep coming up. Even though it may take a while to realize democracy and financial freedom through crypto, folks globally are increasingly adopting the two. Cryptocurrencies allow individuals and businesses to access financial services through the DeFi ecosystem. It is beneficial for investors as it allows them to focus on digital asset trading. The rapid emergence and evolution of blockchain technology and digital assets will lead to the creation of a community-based financial system that is more secure and accountable. Companies such as MicroStrategy, Tesla, and Paypal are trying to cash in on the popularity of these types of transactions. 

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