Blockchain technology has been touted as a solution to the
issue of financial exclusion, promising a more inclusive and accessible
financial system. However, there is a growing concern that the implementation
of blockchain technology could backfire spectacularly, further exacerbating the
already existing technological gap while also aggravating financial exclusion
and unbanked population.
While blockchain technology has the potential to create a
decentralized financial system, the reality is that the tech gap is still
significant. There are still many people who lack access to the internet,
mobile phones, or other technologies required to use blockchain-based financial
services. This creates a significant barrier to entry for those who are already
financially excluded and unbanked.
Moreover, the learning curve for blockchain technology is
steep, which means that those who are not familiar with the technology may
struggle to navigate and use blockchain-based financial services. As such,
there is a risk that the implementation of blockchain technology could widen
the technological gap between those who have access to the technology and those
who do not, leading to further financial exclusion.
Another issue with the implementation of blockchain
technology is the potential for further concentration of power.
Blockchain-based financial services require significant computing power and
resources to operate, which means that those with the resources to invest in
the necessary infrastructure and equipment will have an advantage. This could
lead to a concentration of power among a few dominant players, which may not be
beneficial for financial inclusion.
Furthermore, there is a risk that the implementation of
blockchain technology could exacerbate existing inequalities. Blockchain
technology operates on a trustless system, meaning that users do not need to
trust intermediaries such as banks or financial institutions. While this is a
positive development, it may not be suitable for everyone, especially those who
lack the necessary skills or knowledge to protect their assets on a trustless
system. This could lead to the further exploitation of vulnerable individuals,
such as the elderly or low-income populations.
Open Banking might be in prime position to close
the gap
Blockchain technology has the potential to bridge the
technological gap if correctly used and open banks seem to be in prime position
to do so.
Blockchain technology can help open banks by…
