I will look at the facts for and against crypto as a tool to reduce global inequality. Although there are many factors that can reduce inequality, cryptocurrency is one factor in it.
Facts have proven that Crypto does provide solutions that benefit ordinary people or beginners. But at the same time, some big problems still exist and cannot ignore. That is the risk that must consider when making a transaction.
Crypto and Blockchain Reduce Global Inequality Went Smoothly
Solve the problem of inequalities. Since blockchain technology has become the focus of many media discussions, it has repeatedly as an innovation that helps solve the problem of inequality in the world. To some extent, this claim does have some truth. For example, initial coin offerings (ICOs) are considered to be a normal way to invest in companies. No need to be an angel investor, venture capitalist, or a central bank with authority.
Blockchain technology also makes it easier for people to get banking and financial services. Globally, there are still 1.7 billion adults who cannot access or have accounts with financial institutions. Access to financial services will have a major impact on the quality of life of the unbanked.
DeFi (Decentralized Finance) increases transparency, no permissions, and no boundaries. It allows people to get loans and mortgages, thus enabling them to start businesses or deposit. At the same time, funds can easily transfer using cryptocurrencies. Although, done with a cross-country distance. This is clearly very helpful for people who like speed and accuracy in transactions.
NFT is another promising tool that allows ordinary people to invest in different asset classes. Tokenization of art, real estate, and other commodities to people. In addition, 1% opens the door to participate in high-performing assets and increase wealth. NFT also offers many other advantages that can be had. One of them with its rare nature, they can get a very high selling price, on every NFT.
This means that blockchain technology, or at least has great potential, allows people all over the world to live better lives. But it’s important to point out that we shouldn’t completely believe in the narrative that encryption and blockchain are a great balancer, as certain figures in the media or encryption field portray.
Control is Exercised on the Stronger
Distribution encrypts uneven assets and the return on investment is also reflected in the mechanisms that building a new economy the foundation of blockchain technology. The chain uses various consensus algorithms to realize universal sharing in real-time:
- PoW work load block ledger: The working principle of the algorithm is proof to allow miners to compete with each other and use computing power to solve mathematical problems to get a new generation of blocks right. Currently, only those with sufficient computing power can do this. Without funds to purchase suitable mining equipment and obtain cheap electricity, it is impossible to mine Bitcoin.
- PoS: The proof-of-stake algorithm is another way for PoW to verify transactions. The validator must pledge a certain number of coins to earn the right to mine the block, and the mining power possessed by each miner is proportional to the coins guaranteed by the miner.
- BFT: The advantage of Byzantine Fault Tolerance is that it does not require mining to verify transactions. However, the nodes used to verify consensus are largely in the hands of established institutions.
All of these examples show that those who already have a lot of resources will continue to earn more, and those who have fewer resources will continue to earn less in the future.
It is important to note that this in itself is not a bad thing. To this day, without these established mechanisms, blockchain technology would not be able to function.
Why Some Inequality In Cryptocurrency Will Continue To Exist
Although more and more people will be able to use technology in the future to help solve some problems. Crypto reduce global inequality in many areas will continue to exist. An example is the actual ownership of encrypted assets, which reflects the global distribution of real-world assets. In short: the rich will invest in bitcoin and reap the rewards, while the poor will remain poor -blockchain technology and the underlying mechanics of cryptocurrencies will not change any of this.
This statement about crypto reducing global inequality is supported by the global cryptocurrency investment trend. Even if the data is incomplete or lacking in-depth. And even a map visualizing the distribution of cryptocurrencies at ATMs around the world. Indicates a large global gap in ownership of encrypted assets.
People and institutions are mainly owners of cryptocurrency develop countries. In developing countries, only the elite have the knowledge and resources to buy encrypted assets.