Crypto decentralization and its effect on human development
We might never find out what Satoshi Nakamoto thought when he invented bitcoin. Bitcoin was invented in 2008 when there was a worldwide financial crisis. Who might know? He might have gotten rejected for a credit card. That’s very interesting and possible because one of the core importance of bitcoin, in particular, is its decentralization, meaning there is no centralized authority controlling it, so no federal reserve or bank. That becomes more interesting when you find out that blockchain technology is being used in different financial companies and without any decentralization. So we will talk about what decentralization is, how it affects us, and its benefits.
Democratization of banking
Decentralization means democratization. It means that more people have a say in the rise and fall of the currency and its regulations than traditional banking, where the banks, which the same entities or individuals usually own, control the outcome of the services. With democratization, we’ll have normal people, who might even own something as little as 0.01 BTC, have their fair share of effect in the market by deciding when to sell or buy.
Access for underbanked regions to the global economy
You probably know that banks can deny service to anyone they don’t seem fit for their business. This might be due to credit score, previous business, debt, or even nationality and risk management. Right now, HSBC, a big name in international banking, refuses access to some nationalities, even if they would satisfy their requirements. The bank calls it a risk management policy, but it’s a form of discrimination in reality. But with crypto, due to decentralization, anyone and everyone can use it with all of its functionalities, regardless of their credit score or nationality. Additionally, people in rural areas and some countries with limited access to banking will have the opportunity to have the same access as anyone else in the world. No private banking and nothing else (nobody gets special treatment). And as the technology is growing. More functionalities are entering this system, which would hopefully increase access to banking for more and more people.
Limiting unilateral control
Previously, banks and governments got to decide the fate of your assets. Judicial systems can decide to confiscate your assets for whatever reason they might see fit, specifically in third-world countries. Although the US and the German governments have confiscated bitcoin from wallets before, this process would be near impossible with crypto because nobody knows the true owner of the wallet in the first place. And the US government’s activities in crypto have been limited to hackers, ransomware, and dark web merchants.
Since no single entity decides on a decentralized network, no one can regulate it except the majority. So no matter what governments do, they can’t really ban a bitcoin transfer to another wallet, therefore, losing control of the system. The same goes for banks.
Transparency in value
Whenever the US government, congress, and the president of the United States want a new project, covid stimulus checks or any of its foreign government aid as well as the new infrastructure plan, they need to borrow this money by issuing bonds or foreign government loans, which would raise inflation and decrease the value of the US dollar because of its increased supply. That means your savings and salary won’t have the same purchasing power as yesterday. They get to do this because they have control over the US dollar. But with crypto, nobody has any control over its blockchain supply and transactions. And because the blockchain has a completely transparent system in its explorer, everybody gets to see even the smallest amount of transactions done by it. Therefore limiting fraud and increasing transparency to the maximum extent.
Having this system is a blessing in disguise because while governments will surely try, they won’t stop it. Thus, leading to the inevitability of issuing their own governmental digital currencies. Or a government like El Salvador would recognize cryptocurrencies as legal tender(some of them, at least). Either way, crypto is unstoppable. So either get in or lose.
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