Blockchain has a lot to offer different companies and industries, but it may have the most to offer to developing nations. These countries may lack a lot of infrastructure, but this actually could give them the ability to leapfrog into a better economy evading outdated systems. Blockchain is transforming emerging markets in several ways, but most notably through giving people more options for commerce, non-bureaucratized credit scoring as offered by the Colendi Project, and the potential for a wide-scale economic boom. Colendi utilizes blockchain to offer decentralized credit scoring as well as a fast-growing global network of financial service to emerging consumers, and is proud to be part of the movement. Here are three ways blockchain is transforming developing nations:
Creating New Commerce Options
According to the 2017 Global Findex Database by the World Bank, there are approximately 1.7 billion people worldwide that are unbanked. They don’t have any access to bank accounts, credit services, debit cards or other resources that make commerce easily attainable. Many experts note that the impoverished often face higher transaction fees because many don’t have bank accounts, and something as simple as cashing a paycheck can come at high expense. By giving people access to financial services on their smartphones, there are many options for getting around fees that plague those without bank accounts.
Provide Credit Scoring to All
Blockchain was created to decentralize and disrupt traditional financial systems that hold a significant control on people’s lives, and this is none more true than within the credit bureau oligarchy. Credit scores are important for many things in life, including everything from getting a loan to renting an apartment to getting smaller credit opportunities for things just outside of our budgets. The un/underbanked population tends to be credit-invisible and unscorable. Fortunately, in combination with artificial intelligence, blockchain enables credit scoring protocol and microcredit platform Colendi to offer a great solution to this problem by using smartphone, social, transactional and other data to calculate individuals’ credit scores. For those who travel frequently or move internationally, a ColendiScore can be used across borders — something that traditional credit scoring bureaus don’t allow — as different credit bureaus are more powerful in different regions.
Assuming there are upwards of 3 billion people considered un/underbanked, that means that nearly 40 percent of the world isn’t able to make purchases beyond what they have in cash. Imagine if that 40 percent was enabled on a global scale? That would be an incredibly powerful engine revving the global economy. Now, given the fact that developing countries often have a higher amount of un/underbanked, extending credit opportunities enabled by blockchain could supercharge a developing economy. While the majority of the unbanked population may be in poverty, that does not necessarily mean they are not creditable. In fact, if we enable this population with more buying power, and thus increase their access to mobile banking, peer-to-peer lending and alternative credit scoring, the potential exists that these communities will put it toward higher education, getting a better job and innovation, which will further drive the economy.
While blockchain may have originally been created for Bitcoin, it’s growing into something promoting social good and global inclusivity. We haven’t even begun to harness all the possibilities of blockchain, but we already know it offers affordability, security and accessibility to industry. By continuing to focus on how to use technology for the greater good, Colendi’s goal is to reach 1 billion underbanked, unbanked and underserved people in the next decade by democratizing credit scoring and make participation in banking systems possible for everybody. We believe this truly can change the world.