Mission-driven cryptocurrency requires an active commitment to equity

On September 27, Coinbase CEO Brian Armstrong sought to center his employees’ work on the company’s core mission: “Bringing economic freedom to people around the world.” Armstrong advocates a restrictive interpretation of Coinbase’s mission to build the best possible product because it is “already extremely ambitious” and because companies generally cannot be successful if their goals “include all forms of equality and justice.”

Armstrong’s perspective is not exclusive to Coinbase and represents a broader embodiment of the tech industry than the white savior complex rooted in the belief in the intrinsic goodness of the product. This belief is particularly noteworthy in cryptocurrencies, given its diversity problem. Views like Armstrong’s, when they come from a mission-oriented cryptocurrency organization, ignore and insult the people and organizations on the ground who do the vital work to financially empower communities. Furthermore, these views overestimate the ability of cryptocurrency to deal with financial exclusion caused by structural as well as technical problems.

Related: Brian Armstrong’s miserly misanthropy

Cryptocurrency technology offers fundamental solutions and features to increase financial inclusion. Payments can be made in places where money is at risk of being stolen and where bank accounts are inaccessible. They can also be anonymised and tied to contracts, all without the need for a third party.

The technical advantages of cryptocurrency, however, do not align perfectly with the root causes of financial exclusion. So while companies like Coinbase do important work for the proliferation of cryptocurrencies, achieving economic freedom requires more, and crypto projects need to be honest about their opportunities to improve financial inclusion while taking into account their limitations. If they’re not interested in economic prosperity and freedom, that’s fine – after all, a company’s ultimate goal is ultimate profits. But if crypto organizations legitimately want to claim a social mission, they must step out from behind their computer monitors to face the limitations of their technical products. Otherwise, their platitudes for financial prosperity read like an investment bank claiming that it brings economic freedom to the world by increasing market liquidity.

Related: No, blockchain technology cannot solve everything

The limits of cryptocurrency

While cryptocurrency offers new ways to create a new financial system, technology and its proliferation cannot solve the underlying causes of financial exclusion alone. Today, 1.7 billion people don’t have access to a bank account and another billion don’t have access to other basic financial services because institutions have long ignored and oppressed these communities. Among the people who have access to the financial system, many are trapped in a cycle of debt without the means to generate wealth. According to the Boston Globe, the average net worth of non-immigrant African American households in Boston is $ 8. The history of marginalization that cryptocurrency will face is manifested in lack of connectivity, distrust of technology, financial illiteracy, and historical economic and social inequality. .

Cryptocurrency requires internet access. Today, only 59% of the world has access to the Internet. Smartphones, which act as a lower barrier to people’s access to the internet, have a penetration rate of only 45%. Hidden within these statistics, however, is the fact that many people who have the internet or smartphones may not have stable connections or regular access to electricity. The overall result is a digital divide that prevents billions of people from using cryptocurrency.

Crypto is a new technology that seeks to overturn some of the most basic forms of everyday life. The Fiat currency is not just a daily tool, but the very basis of people’s livelihood. Distrust of cryptocurrencies is to be expected, particularly when people cannot see the physical transaction and when simple mistakes like a forgotten password can make money unrecoverable. Distrust is also greater among people with low incomes and limited education, the same people who are more likely to be without banks or sub-banks.

Financial illiteracy is also linked to distrust. Financial institutions may offer financial products or education that are difficult to understand, particularly in emerging markets, and some take advantage of consumers through products such as predatory lending. Lack of financial knowledge also results from a broader inability to access resources or to devote adequate time to understanding financial products. As a result, financial illiteracy can prevent people from knowing how or why to use cryptocurrency.

More importantly, financial exclusion is the result of poverty and inequality linked to oppression. Throughout history, institutions and people in power have excluded or marginalized certain communities, such as women, minorities, rural residents and LGBTQ + people. Financial institutions have been an integral part of this historical exclusion and oppression.

Related: LGBTQ + in blockchain / crypto: a safe space with room for greater inclusion

In the United States, we cannot separate finance from its history of slavery or the more recent racial discrimination in lending. Likewise, finance in Europe is closely linked to colonialism. The story of oppression ties in perfectly with the current wealth inequality and financial exclusion. If people don’t have enough money, they simply don’t need access to the financial system.

Cryptocurrency does not generate wealth simply out of thin air, it only facilitates the holding and transfer of wealth. With no ways to generate wealth and amid the growing economic inequality for more than 70% of the global population, people will still find it difficult to use cryptocurrency or have no real use of it.

For cryptocurrency to significantly shift “the needle on major global challenges,” as Armstrong writes, the underlying causes of inequality must be addressed. And while mission-oriented cryptocurrency organizations can’t expect to do it alone, they have an important role to play in developing and orienting their products to use in the service of addressing the underlying problems. Those who claim to be engaged in a social mission inevitably subscribe to this challenge.

Accounting for cryptocurrency limits

Cryptocurrency offers a new technical solution to create a new financial system – this achievement should be celebrated because it has the potential to be truly transformative. It can be used by people in economically unstable countries such as Argentina to avoid currency volatility or to conduct anonymous transactions in the face of repressive regimes, such as Venezuela. In politically stable countries, even cryptocurrencies can change everyday life. They offer the means to bypass intermediaries who may not be solid, impose exorbitant costs, collect and sell user data, or exclude marginalized groups.

Cryptocurrencies can create a financial infrastructure that is particularly suitable for dealing with financial exclusion, but without allowing easier access to that infrastructure, its benefits are not fully realized. In response, companies can design easy-to-use crypto products and invest in the education of their users. They could also build decentralized applications optimized for mobile devices, optimize for cheap smartphones and low-bandwidth connectivity, lower technical barriers to become a validator, and create easy-to-understand user interfaces.

But the real barrier is poverty and people’s inability to access basic infrastructure, including the internet and smartphones, which are outside the direct mandate of a cryptocurrency company. Unlike a traditional business, a mission-driven crypto organization will need to dedicate its resources to addressing these more underlying systemic problems. This can take the form of funding initiatives to increase internet access and financial literacy or engaging in social activism by supporting community organizations working on the ground to alleviate poverty.

A mission-driven company will need to understand the problems of today’s society and determine when they can be solved by technology and when they require something more comprehensive.

Active commitment to do good

Companies are not inherently virtuous because they create technologies that could be used for good. Technology is neutral and open to the direction of anyone who can afford it. The good comes from the active development and implementation of technology by mission-oriented individuals and organizations seeking the resolution of social problems. Mission-oriented cryptocurrency organizations, therefore, must take responsibility for how their technology affects people’s lives and deliberately engage in broader social activism. To do this effectively, they must be close to the communities in question and treat them as equal partners in the pursuit of the social good.

Twelve years ago, Satoshi Nakamoto released the technical blueprint for Bitcoin (BTC) during a financial crisis originating from historically exclusive institutions. The crisis of economic inequality, however, has not ended as protests in the United States over racial justice and the COVID-19 pandemic demonstrate, with a serious and disproportionate economic impact on minorities and women. The financial system needs to be reinvented to promote global economic prosperity. In this endeavor, cryptocurrency organizations can be a crucial player when they engage beyond their technical products to address the root causes of financial exclusion as well.

Armstrong is not wrong when he says that the fashionable social activism of Silicon Valley companies has “the potential to destroy a lot of value in most companies.” Doing good costs time and money and is rarely profitable. If it were that easy and rewarding, financial exclusion probably wouldn’t be a problem for billions of people in the first place. But that’s the point. If a company is to claim to be driven by a mission, it cannot simply make its products and assume they will be used forever. While this assumption is correct, a mission-oriented organization must do some of that work on its own if it is to ensure that its products and work are aimed at doing good.

The views, thoughts and opinions expressed herein are solely those of the authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article was written in collaboration with Nikhil Raghuveera is Stewart Scott.