Three Ways How Blockchain Technology Is Already Changing The Lives Of Thousands Of Workers In Emerging Countries

The rise of the internet made the world feel like a smaller place. Economic globalization allows companies to source talent in all parts of the world, giving billions of people the opportunity to participate in a connected economy for the first time. The blockchain technology provides a global network for cheap and fast transfer of digital assets, built on top of the internet. Creating new ways to earn money and allowing people to be part of a global financial system, without needing a bank account. Are we witnessing the emergence of a new economy?

Global payments are being disrupted before our eyes

Today’s banking system is built upon the Bretton Woods Agreement from 1944. In the post-war period, fast and reliable payments between the countries of the “western world” were a top priority. Following this idea, the Bretton Woods system of monetary management established the rules for commercial and financial relations among the United States, Canada, Western European countries, Australia, and Japan. It was a big improvement over the gold-backed monetary system, which was too slow and inefficient for sending money between continents. The fiat monetary system with the US-Dollar as a global reserve currency offered a much faster and cheaper way to send money and trade goods globally.

Nearly 80 years later, we find ourselves in a world, where an emerging work force wants to transact with one another, not just in Europe and northern America, but in all parts of the world. The Bretton Woods system was never designed to handle these kinds of payments, and it shows.

Sending payments should be as easy as sending a text message

Paying a developer in India from a German bank account is usually painful and expensive. An Indian bank does not offer IBAN wire transfers and with the SWIFT system there is a lot of paperwork to do. Payments take days to settle and cost $20 or more, plus a conversion fee that is proportional to the amount sent. The best practice is to use a third party payment system from one of the global fintechs and go through the lengthy KYC process. For payments of more than $1,000 oftentimes the amount gets frozen, and a questionnaire is sent to the recipient of the money. The recipient must justify, why he is getting paid this salary and ultimately relies on the mercy of the authorities to receive his hard-earned income.

“Within 10 minutes, I get the funds in my local account”

Back in 2009, when BitcoinBTC
emerged as the first blockchain backed global digital currency, it was hard to imagine that this technology would one day connect hundreds of millions of people. Today, we are seeing new applications of this technology coming to life every week, forming a network of value on top of the internet. Payments settle within minutes at the cost of a couple of cents, depending on the blockchain network used. The use case has evolved far beyond Bitcoin. Especially stable coins are gaining popularity. These blockchain tokens represent the value of a “real” currency, such as the US Dollar, and are not subject to the high volatility of other cryptocurrencies. Joel Oshigbu, who works as a front end developer for the German crypto accounting startup basenode.io and receives his salary in the most popular US Dollar stable coin “TetherUSDT
” (USDT) explains: “I usually choose USDT because it’s the most popular stable coin, easier to get a buyer and less susceptible to a bank run.” His employer, Oliver Schantin, co-founder and CEO of basenode.io, says employees can pick which token they wish to be paid in, or have the option to be paid in fiat currencies. The company developed an accounting software for blockchain based payments. “We are expecting the number of crypto payments to continue to accelerate in growth in the coming years. Accounting and invoicing for cryptocurrencies will become more of a concern for freelancers and companies alike”, Schantin explains.

Everyone can hold digital currencies on their phone

Talents from all over the world are seeking to get paid in Dollar stablecoins. An estimated 38% of freelancers in web3 prefer to receive their salary in crypto assets. One main reason for this trend is that local fiat currencies usually show a higher inflation rate and lose purchasing power against the US Dollar. Iran’s national currency showed an official inflation rate of more than 36% in 2020, making cryptocurrencies a much-needed tool to preserve purchasing power. A developer from Iran explains, why he receives his salary in the form of cryptocurrencies : “Due to inflation and my local currency’s volatility, I usually prefer to keep my payments as stablecoins in my KuCoin account, but if needed, I will use another wallet address, created on a local crypto exchange, this way I convert the received funds to my local currency instantly and deposit them into my bank account in less than 2 minutes.”

How remote workers make a living with gaming NFTs

Today, we are seeing new markets forming in the crypto ecosystem, giving people the opportunity to make a living in ways no one could imagine just a couple of years ago. The second example is the NFT-based game Axie Infinity, which has seen a strong growth in its user base during the last years, amounting to more than a million players worldwide. A large amount of them are located in emerging markets in south-east Asia. Playing the game to farm in-game currency and virtual items, to then sell to players in Europe, who are willing to pay a higher price in order to advance quicker in the virtual world, has become an income stream there. This is a win-win situation for both parties, and allows people to make a living working a remote job, that only requires a laptop and an internet connection.

Education is one key ingredient to financial inclusion

Remote work is now an option for many professionals from emerging countries and this takes away the hassles of relocation, and having to adapt to another culture. The first step to working in blockchain is gaining relevant career-specific education. In the third example, EkoLance, a Frankfurt based web3 education and recruitment platform, has discovered that on the way to financial inclusion, providing educational inclusion is crucial. They offer blockchain training for specific professions such as solidity developer, blockchain community manager and blockchain content creator. These trainings are offered for free to talents from emerging economies, enabling them to gain the skills and experience to work in blockchain. To complete the cycle and offer financial inclusion, EkoLance connects the talents to international employers offering remote work opportunities. Modupe Ativie, co-founder of EkoLance says “We anticipate a future where blockchain powered accounting and payment services would become commonplace as thousands of African remote workers who still live in countries where adoption of blockchain technology and cryptocurrencies is slow or outrightly banned, can work wherever they want, earn whatever they want and get paid.”

Conclusion

With companies like EkoLance educating an increasing number of future employees on the benefits of blockchain based payments, one can only imagine how future generations will change the way we settle global payments. Blockchain technology holds the potential to change lives all over the world. By fostering the financial inclusion of under- and unbanked workers, the impact on their lives can become immense. Quick, easy and uncomplicated global payments, the ability to personally be in charge of your assets, and new opportunities to generate income are real world examples, how this is already happening. Ongoing development of the technology and the evolution of new business models might lead to even more positive effects of the blockchain technology to workers in emerging markets.

BusinesswireBakkt Study Finds Nearly 50% of Gig Workers Open to Getting Paid a Portion in Crypto