Working with blockchain technology, you face both, huge skepticism and innovation’s optimism. Some are calling it “nothing but hype,” and others “the fuel for the utopian society we can achieve one day soon.” I feel like we shouldn’t get distracted by these binary choices, and instead focus on making steady practical steps forward. That’s why it’s refreshing to find that there are blockchain-related books that promote the facts, much to the detriment of opinions.
Any technology needs to be applied with solutions that meet real human needs – it’s not guaranteed that the technology will be used this way. It takes humans to act in order to make it happen. We may not be able to bring everyone across the globe into the 21st century economy overnight, but we can, day-by-day, point to new people that now, for example, have the ability to transact online due to the blockchain’s financial applications.
I’d like to share with you a few must-read books about this sector that I found essential. These authors are highlighting real ways in which the blockchain allows us to do new things that the Internet has not been able to. I usually like my reading without eulogising – inspiration without the hyperbole – and with a heavy dose of realism.
My first choice was The FinTECH Book by Susanne Chisti and Janos Barberis. This survey of the FinTech sector highlights “the biggest, most earth-shattering fact… that the unbanked are being reached” (my emphasis!). This isn’t an impossible dream, digital transactions are being brought to many unbanked people as we speak, overcoming discrimination in the provision of financial services. The same approach can be found in Henning Diedrich’s book Ethereum: Blockchains, Digital Assets, Smart Contracts, Decentralized Autonomous Organizations. He points to how business owners that currently have no reliable path to litigation will be able to borrow and grow with blockchain-based, self-executing smart contracts, making emerging markets much more lucrative.
The empowered world we were promised by the Internet age is now finally coming to fruition, Don and Alex Tapscott argue about my third inspiring choice. This is because of a key difference: no tech giants are needed as intermediaries to connect people. The change does, however, need to be facilitated: apps can be more-or-less empowering and focused on connecting people with each other, or by connecting them to goods and services.
The ability to more easily make digital transactions is one thing, and an important one, as sub-Saharan Africa has already shown us, with mobile-based apps such as M-Pesa and Standard Bank providing this across the continent. But it is not enough. First, I would like to see the era of apps with passive, disconnected users to come to an end. I aspire to create a community of users who can connect, transact and collaborate, users who are rewarded for introducing new members, and who can choose from an ecosystem of applications providing financial and other services.
I am pleased that the belief in a more “optimally efficient P2P economy” comes through strongly in a lot of the recent writings of Redmer Huizinga and Arturo Bris. For instance, envisaging a shift in power in the emerging digital economy and setting out concretely how this can be achieved, or applications that allow customers and providers to meet each other without a centralized office dictating how they must transact.
This is, sadly, the reality all too often with apps in the first wave of the so-called “sharing economy.” We are beginning to see this already. We have the likes of Asuqu in Nigera, allowing small businesses to draw on the services of trusted freelancers, and mFarm in Kenya that connects buyers with producers.
The “limitless trust” that they rightly say this will require will in part be facilitated by the technology. However, this new way of transacting will not initially come about through technology alone. It will come through community building, which is why it is important to reward people for referring their friends. People need to quickly feel that they are in a trusted environment with people that they know from the outset – another priority for me – which is why many apps such as Azimo, IG, Quick Cash, and Tapporo offer rewards for referring friends. Humaniq users are also rewarded for referring contacts.
I work with the blockchain because of the great reward of transacting when using this technology: any number of transactions will be newly enabled or made much cheaper and easier. We will see this happen with everything from peer-to-peer lending to global remittances via micropayments – as Makafui George Dzivenu has lucidly set out for in one of my reading choices. Another massive benefit is that the fees charged by every middleman to every current banking transaction, passed on to us in hidden ways, will become history.
These rapid gains make what might appear to be a challenge to put in the “too difficult box,” which Humaniq for one is set on contributing to – specifically when it comes to bringing the full range of financial services to the 2 billion unbanked people, and the 1.5 billion under-banked – more realisable. They will be easier to achieve because there will be a strong “push” as well as a “pull” – in other words, there will be something they want to leave, as well as something they want to join.
In a world where banks can collapse and accounts can be frozen even in the highly regulated and developed economies of Europe and the US, people in emerging economies would be wise to not trust banks, Mark Gates reminds us in his book Blockchain: Ultimate Guide to Understanding Blockchain, Bitcoin, Cryptocurrencies, Smart Contracts and the Future of Money. The blockchain provides a “trust machine” that makes new financial solutions built on it attractive when trust in traditional banks is low. This is particularly the case when it comes to emerging economies where regulation is less developed and people have less experience dealing with banks.
I see a need to bring together some of the many financial inclusion solutions that are coming forward. I remember reading Carol Realini’s words, rightly saying that we have represented suboptimal, “unconnected efforts to introduce universal banking.” The author brings up “Banking as a Platform” where she presents a possible solution in an ecosystem fueled by financial transactions made directly within an app. And such communities of never-before-served users of financial services will be able to flourish through investment and business expansion. Smart contracts will allow small businesses and people to safely and easily borrow money. This will allow capital to be dispersed further without banks moving closer to the people or opening their doors any wider than they already are today. This will level the playfield, as Diedrich says, for those in emerging economies without comprehensive records of assets to lend against.
As I said in the beginning, I avoid hyperboles. I believe that terms such as “revolution” are overused, but it’s undeniable that there are big opportunities for the ones willing to harness them. And if they are the right propositions, they will allow for public and private gain. To coin Professor Klaus Schwab’s formulation, the potential benefits of technological change are not a foregone conclusion. There especially has to be a big question mark over whether the public benefits can be realized or whether, instead, if it will mainly be private gains.
As London’s FinTech community heard last summer from entrepreneur Thomas Power, a leading Blockchain influencer at the event: “Technology has failed to match talent to demand for that talent.” An Internet based on companies with large centralized servers “has not spread capital everywhere, it’s put it back to the top.” This is why we need to put our energy and resources into the mission of achieving it – and it’s why Humaniq took the global challenge to fund startups that can tackle problems that persist in nations such as Kenya, despite them gaining the ability to make some digital transactions.
The second stage of benefits for digital transactions is coming, as Susanne Chisti and Janos Barberis says in one of my top reading choices. With smartphones due to replace mobiles in low and middle-income nations, there is the opportunity for the technology to provide more than just mobile money, they argue. There could be, for example, FinTech-powered credit insurance that allows businesses to invest and expand. There could be, in the hands of the unbanked, “everything that can traditionally be done within the banking system.” But as Schwab reminds us in his latest book, this will only happen if we take steps to make it so. The fruits of the technology will not fall themselves, we will need to harvest them.
Leaders and investors in this sector have to focus on those underserved and the emerging markets if we are to level the playing field and spread opportunity. That is what drives me at Humaniq, and I would argue that that is exactly how investors should judge the propositions in the white papers when they scrutinise ICOs. Is this meeting a real human need? How is this making life better for people? We need the right objectives, as well as the right technology. Then we can indeed have a very real utopia, one where capitalism truly has humans at its heart.
Books mentioned in this article:
- Susanne Chisti and Janos Barberis. “The FINTECH Book: The Financial Technology Handbook for Investors, Entrepreneurs and Visionaries.”
- Henning Diedrich. “Ethereum: Blockchains, Digital Assets, Smart Contracts, Decentralized Autonomous Organizations.”
- Don and Alex Tapscott. “Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business and the World.”
- Makafui George Dzivenu. “Bitcoin Effect: How Bitcoin Will Transform Finance, Economy And Establishments.”
- Redmer Huizinga and Arturo Bris. “Blockchange!: How to Survive the Crypto Economy.”
- Chris Skinner. “VALUEWEB: How Fintech Firms are Using Bitcoin, Blockchain and Mobile Technologies to Create the Internet of Value.”
- Mark Gates. “Blockchain: Ultimate Guide to Understanding Blockchain, Bitcoin, Cryptocurrencies, Smart Contracts and the Future of Money.”
- Carol Realini. “Financial Inclusion at the Bottom of the Pyramid.”
- Klaus Schwab. “The Fourth Industrial Revolution.”
- Klaus Schwab. “Shaping the Fourth Industrial Revolution.”