How to Add 2 Billion People to the World Economy —
Using Blockchains and Mobile Phones
More than two billion people worldwide are deprived of basic financial services due to underdeveloped infrastructures and institutional inefficiencies, making the way out of poverty even harder than it already is. Lack of access to affordable credit and frictionless methods to store and transfer money are among the main obstacles to economic growth and financial inclusion. Everex combines blockchain technology, abundant mobile infrastructures, machine learning software and innovative business models to remove this barrier to entry, and to allow anyone to take part in the global economy.
The financial sector, often mystified and misunderstood, is the cardiovascular system of our modern economy. Financial services coordinate and regulate the flow of the building blocks of global markets — risk and capital — and as such function as a gateway to entrepreneurship and social mobility for many who would otherwise be devoid of the prospect to harness their full potential.
Access to credit and the ability to securely and swiftly move money around allows groups and individuals of modest means to turn bold ideas into goods and services, expanding the market, while considerably improving their standard of living and that of their communities. Although often taken for granted in the industrialized world, providing these services adequately normally requires highly developed markets, well-functioning political environments, and cost-intensive infrastructures that too many people around the world are deprived of.
To date, about 2 billion individuals, more than a quarter of the world’s population, are entirely disconnected from the global financial system and make ends meet without a bank account, let alone access to credit. Many more are chronically underbanked and trapped in underdeveloped and often exploitive financial systems.
These numbers are by all means dire, but they’re better than they used to be. The number of individuals with a bank account went up by almost 10% between 2011 and 2014 alone, partly thanks to the falling prices of communication infrastructures and the steady pace in which developing markets keep on closing the gap to the industrialized world. However, considering the human suffering and lost potential involved, the speed of this process is arguably at suboptimal levels.
Blockchain and the tarrying revolution
In 2008, amidst a fatal financial implosion many thought was impossible, while anticipated by others as destined to occur, a mysterious figure going by the pseudonym Satoshi Nakamoto published a monumental white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System”. The nine pages short document set the now $32 billion worth Bitcoin economy in motion. In the midst of a global economic meltdown, it sparked in many the hope for a better, fairer and cleaner financial infrastructure.
The discourse around blockchains, the technology introduced by Nakamoto, revolved from its very beginning around the idea of financial inclusion. Bitcoin, it was argued, is freed from the political and often corrupt shenanigans the traditional banking sector is drenched in, and it holds the potential to render trade, entrepreneurship and eventually success, accessible to the disenfranchised of the world.
In the years following 2008, many initiatives arose with the intention of fulfilling this promise. From blockchain currencies for the Native American community, cryptographic universal basic income projects designed to subvert government restrictions, to peer-to-peer credit systems, the blockchain space experienced a Cambrian explosion of bold ideas, elaborate schemes and great hopes out to reinvent the way money works — albeit with very moderate success. Barely aware of the often excellent intentions of crypto activists and entrepreneurs, the situation of the world’s un- and underbanked was hardly mitigated by the new technology. At least until now.
Inclusion rather than departure
The idea behind early blockchain projects addressing the disenfranchised was to create alternative financial structures, liberating its users and customers from the inefficiencies of the existing financial system. The lesson learned from the previous decade, however, is that the real needs of the world’s unbanked population comprise inclusion, empowerment and easy access to the same financial instruments that allow industrial nations to provide their denizens with the social mobility they enjoy. Luckily, blockchains and cryptocurrencies hold great potential to deliver that with unprecedented efficiency.
Blockchains are essentially a tool for the digitization of value — a highly complicated and only partly possible feature before 2008. In combination with the breathtaking amount of more than 7 billion mobile devices dispersed around the globe, including the developing world, this value can now permeate to remote regions deprived of roads, functioning governments and adequate utility services.
Besides the ability to securely, swiftly, and cost-efficiently store and move money around, the combination of blockchains and mobile technology also allows for the streamlining of one of the most crucial elements of economic development: access to affordable and immediate credit. The accessibility of credit doesn’t only rely on the supply and demand of lendable capital, but to a very high degree also on the availability of the information needed to match the two while managing risk in an intelligent manner. The no widespread use of mobile devices in the developing world provides just that, and it is the goal of Everex to put it to the best use possible.
Instant remittance with Cryptocash
For many in the developing world, mobile phones are the single most important piece of technology for the improvement of their daily living conditions. Mobile technology enabled billions worldwide to engage in trade and access the internet for the first time. In many places, such as Sub-Saharan Africa and Southeast Asia, mobile payments are already one of the most widespread payment methods and serve as an alternative to underdeveloped banking and debit services.
The problem with contemporary mobile payments, however, is that they are dependent on local, often monopolistic service providers, and are hence costly, limited to national borders and locked to non-interoperable, proprietary systems.
Everex Cryptocash provides a universal, globally accessible and affordable alternative to these systems. Cryptocash is accessible from mobile devices and based on Ethereum ERC20 tokens, 100% backed by fiat reserves. For every Cryptocash dollar, one US dollar is held in a publically viewable third-party escrow. Cryptocash can be redeemed at will and hence is value-pegged to its fiat counterpart.
The global nature of the network allows migrant workers, for example, to send money home to their families in seconds, who then can use it immediately to purchase goods and services with mobile payments, or cash it out at local ATMs, vendors and exchanges. For many families in the developing world, payments remitted from relatives working abroad are the fastest way to grow out of poverty and establish an independent existence. Rendering these transactions affordable and efficient is an important factor in the potential growth rate of these regions.
In a first of it’s kind Everex pilot, hundreds of Burmese migrant workers already sent about 850000 THB back home from Thailand at the cost of a simple Ethereum transaction. Prior to that, their only alternative was using legacy systems such as Western Union, paying excessive fees, or relying on unregistered informal agents, which often turn out to be frauds.
Cryptocash can be used for direct mobile payments using the Everex wallet, but it is not locked to the application and can be traded on any ERC20-compatible exchange or Ethereum wallet. This contributes to the universal nature of the platform, allowing future competitors and partners to secure the general usability of the system.
Accessible microfinance on mobile devices
The credit industry in general, and microlending in particular, is heavily reliant on information used for risk assessment. If you can’t calculate the risk involved in lending money, you can’t uphold a sustainable microfinancing operation.
Generating the data needed for accurate risk assessment, however, proves itself very often to be highly problematic in the developing world, where the calculation of meaningful credit scores is many times impossible due to the lack of documentation and financial records. Mobile technology holds great potential to close this informational gap, allowing the assessment of the required rates of interest and loan periods on the basis of social data and user behavior.
With the Everex wallet already installed, the system has immediate access to data assets such as spending patterns, income, and social networking information, which can then be fed to AI and machine learning software, automatically generating credit scores on the spot. This way, anyone using the Everex platform has immediate access to microcredit, at custom-set and highly competitive interest rates — without having to attend remote facilities, fill out forms or submit documentation that is hard or impossible to provide.
Thanks to blockchain-powered Cryptocash, loans applied for in this way are available immediately, and can be used to provide the much needed liquidity to enable entrepreneurship. We at Everex believe that the opportunities provided can lead to a wave of local and global innovation, connecting billions of people to the world economy, benefitting an ever-growing portion of the world’s population, and eventually all of us.
