The social impact of blockchain technology has already begun, which may be the tip of the iceberg. Cryptocurrencies have already raised doubts about financial services through digital wallets, installing ATMs, and providing loans and payment systems. Today, there are more than 2 billion people without a bank account; this change is indeed a lifestyle change and can only be good. Perhaps the transition to cryptocurrencies will be easier in developing countries than using fiat money and credit cards. In some ways, it is similar to the transformation developing countries have seen with mobile phones.
Decentralizing and removing control over people’s lives will likely be welcomed by many, and the social implications could be pretty significant. Just consider the rise in identity theft in recent years. Allowing people to check identification systems would undoubtedly eliminate such events and reveal information with more peace of mind and confidence.
In addition to providing quick access to banking services and greater transparency, it could also raise the profile and effectiveness of charitable organizations working in developing countries that are victims of corrupt or manipulated governments. A greater level of trust in the places where the money goes and who benefits from it would undoubtedly lead to more significant contributions and support to those in need in all parts of the world who are in dire need of help. Ironically, and out of line with public opini Blockchain could create a trust-based financial system.
Taking it a step further, blockchain technology is suitable for removing the possibility of electoral fraud and all other negative aspects associated with the current system. In some countries, we have heard that voters are being threatened, or worse that polling stations are being closed by governments in an attempt to control results in a world where true democracy has been questioned.
Problems with the electoral system are certainly not limited in developing countries. Last year’s US presidential election is a case in point, where accusations of Russia hacking voting systems question whether the outcome was democratic or rigged in favour of the Republicans or perhaps the Russians. Believe it, or Blockchain can solve some of these problems. With new technology, there will be new obstacles and problems, but this is what happens, and those new problems will be solved with more sophisticated solutions.
A decentralized ledger would provide all the data needed to record votes anonymously accurately, verify their accuracy and see if there has been any manipulation of the voting process. There would be no more intimidation as voters would be able to cast their votes in the privacy of their home.
Perhaps the biggest social impact of blockchain technology is right here.
Banks are Afraid of the Blockchain!
76.4% of retail CFD accounts lose money
Brokers would no longer be needed and we could see the end of today’s traditional brokers.
Therefore, a migration from physical to virtual money would seem inevitable – with market sentiment pushing the value of cryptocurrencies as economic indicators drive paper currencies today.
What is the purpose of central banks when the use of paper money collapses in favour of virtual money? Japan has already adopted cryptocurrencies as legal tender. As the market continues to evolve, others will follow.
If central bankers continue enjoying their days in the spotlight, they will need to catch up. One side that remains lacking is the regulatory one. By taking control from governments, perhaps central banks will eventually become equivalent to supervisory fees, working out the regulatory framework and defining the progressive inclusion of blockchain technology in the financial system. Some argue that such a function would be of far greater value.
The outlook for blockchain technology looks bright, and the benefits of adopting the technology will be beyond understanding. How the technology is received will ultimately be the key to how it benefits the financial markets and the world.
For now, the world’s largest banks and central banks have started investing significant capital in the use of blockchain technology. While bank CEOs have generally been dismissive of Bitcoin, the view is quite different when it comes to the technology behind it.
The first protagonists will probably be the largest banks in the world who want to make their way not to be left behind. JPMorgan Chase & Co (JPM: N) announced in October that it had launched a new payment system using blockchain technology in partnership with Royal Bank of Canada (RY: TO) and Australia and New Zealand Banking Group (ANZ: AX).
The three banks aren’t the only ones with IBM having assigned different groups to revamp internal processes using blockchain technology. Microsoft is also on track and will likely be one of the leaders in the group. The speed at which banks move indicates how scared they are of what blockchain might mean for them.