While services in major western economies may benefit from some optimisation, they work well enough for most people to be satisfied on a day-to-day basis. That’s not the case for billions of people elsewhere in the world.
Use cases for blockchain in so-called ‘developing’ (or low-income) countries are driven by necessity as much as efficiency. That’s why, for example, while Africa may initially have been slow to adopt blockchain, the continent is now making up for lost time, and is the third fastest-growing market for the technology. It’s also why Latin America has a thriving crypto scene.
Here are four major use cases where blockchain is already making a difference in developing countries.
1. Currency Collapse
Inflation has been running at 5-10% in the US and Europe, but in some countries where the economy has been managed badly, it can be 50-100%, or even more. In the worst cases, it takes only a few days for the value of a pay cheque to be seriously eroded: Venezuela’s inflation rate was around 1,200% in 2022.
What’s more, in times of serious turmoil the banking system cannot be accessed at all, so money can’t be transferred electronically. During Lebanon’s economic crisis, which saw its currency lose most of its value, banks closed their doors and prevented depositors from accessing their savings.
It’s situations like this that blockchain was designed for. As a peer-to-peer network, no one can prevent you from making a transaction. Because they do not rely on any centralised authority, blockchains cannot be shut down.
No surprise, then, that cryptocurrency has seen soaring adoption in these countries, and others in similar situations. Bitcoin and stablecoins have given hope to forward-thinking Lebanese citizens, and a way to pay and get paid, and store value. Similarly, Argentina and Venezuela have both seen high levels of crypto adoption.
Identity documentation – passports, driving licences, state-issued ID cards, and so on – are taken for granted in the US and Europe. But almost a billion people worldwide lack any form of ID, meaning it’s hard for them to vote, find a good job, and access financial services.
This is another ideal use case for blockchain, which enables the creation of reliable, trustworthy, tamper-resistant identity records. The Kenyan government has introduced a unified identity number and card system, built on the blockchain, to address the problems of fragmented and low-quality ID records. Known as Huduma Number, this includes an ID card, driving licence, passport, birth certificate, and other information.
Corruption is a serious problem for poor countries. Corruption contributes to poverty as public money is appropriated by unscrupulous officials, and poverty (often caused by economic mismanagement) helps create the conditions in which corruption thrives.
Sub-Saharan Africa suffers some of the worst corruption on the planet, with countries averaging just 32 out of 100 marks on the Corruption Perceptions Index (CPI), and no overall improvement for years – compounding other humanitarian crises caused by war and famine. By offering a secure, transparent, tamper-resistant and auditable ledger of transactions, blockchain can ensure that money goes directly to those for whom it is intended, without any being siphoned off by corrupt parties.
In 2020, the South African Presidential Commission on the Fourth Industrial Revolution recommended the use of blockchain to address corruption and lack of market access. One of the most promising areas for application is the minerals and mining sector. Blockchain-based systems are also being used in the agricultural sector, helping to track the quality and safety of food, and providing market inclusion for smaller farmers.
4. Access To Work
The US has 73 million freelancers and the number is projected to keep growing until the end of the decade. But while the gig economy is booming in the US, in other countries freelance work hasn’t taken off as well as might be expected.
Freelancing for clients all over the world might seem the ideal way to pick up some extra cash when you don’t have access to good jobs locally, but unfortunately it’s not that simple. Conventional freelance platforms rely on the legacy banking system, and would-be freelancers in many countries are cut out by default.
PayPal, one of the most popular payment solutions, has a presence in two-thirds of Africa’s 54 countries. However, users can only receive payments in 12 of those countries. It’s the same with many other payment providers. PayPal, Stripe and almost every other payment company will refuse to serve anyone located in Nigeria. It doesn’t matter how talented a freelancer you might be, if you need your employer to send money to a Nigerian bank account, they have very few options, to the point where it’s easier to give up and work with someone else. And while solutions do exist to send money to these underserved countries, they may not be known, trusted, or available for employers in other locations – or else, they take a huge cut of the funds.
Blockchain is the perfect solution to this problem. As open, transparent networks, Bitcoin, Ethereum, Binance Smart Chain and other options can be used to send crypto tokens and stablecoins to freelancers anywhere in the world – instantly and at a low, fixed cost.
Chono.tech was founded on the belief that everyone in the world deserves the same opportunities to access work and get paid promptly, securely and fairly. This is the idea behind LaborX, their blockchain-powered work platform, which offers smart contract escrow and crypto payments for freelancers. The site offers over 30,000 Gigs (fixed-price services), with over 100,000 registered users from all around the world.
These are just some of the potential use cases for blockchain in developing countries. Others include land title registries, secure and private voting systems, microfinance initiatives, intellectual property rights, healthcare data management, distribution of aid, and much more.
Chrono.tech is committed to building blockchain-based services that can be used by anyone, no matter where in the world they live, and regardless of whether they have access to conventional financial infrastructure – helping to improve the lives of hundreds of millions of people by enhancing inclusion, reducing inequality and inefficiency, and making labour markets more efficient.