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The Philanthropic Potential of Bitcoin

Michael Hudson
31 July 2015

I could quite easily title this post, ‘Why I invest in bitcoin’ and it would fit equally well. From the day I took the time to educate myself about bitcoin (yes, I’d also dismissed it as technological mumbo-jumbo-hype in the early days), I saw that it had incredible potential to make significant strides for philanthropy. Could I invest my money elsewhere and earn better returns? Perhaps. Would my investment contribute to a structure positioned to change the lives of billions of people across the globe? Not a chance!

Today I’d like to discuss the side of bitcoin often lost in a sea of sensationalised headlines punting bitcoin as the anarchistic currency of illegal activities. Have people used the pseudonymous nature of bitcoin to carry out transactions for less than savoury purposes? Sure. Does this mean that’s all it’s good for? Not a chance!

Philanthropic Opportunities of Bitcoin

Socio-Economic Freedom

Out of a population of around 7.3 billion, a slim 1 billion are considered globally economically active. The rest? Unbanked or underbanked individuals, more often than not the innocent victims of autocratic governments, constrained by the shackles of a cash-based society, with little hope of living above the breadline.

Little hope, but incredible motivation. And ready accessibility to a tool of liberation.

Even in the most impoverished of countries, there’s a massive demand and adoption of mobile phone usage. Mobile phones are these people’s door to a global economy. An economy that has no centralised agenda and requires no permission to transact. An economy that can help them raise themselves from government-driven poverty by plugging them into a payment processing system that allows for reach beyond the borders of their shanty town and instant access to funds, at a microscopic fee (compared to traditional options).

Joseph's Scenario

Let’s consider Joseph.

Joseph is an ambitious, young gentleman who has a passion and impressive talent for website design. He’s taught himself how to code using YouTube videos and online tutorials and has set up websites for a number of local businesses. But Joseph dreams of a thriving business. One that allows him to sufficiently provide for his wife and two children, and his extended family who live with him. The problem? Joseph is Ugandan. His country's political history is one of instability and, despite reforms, he still faces restrictive government controls. He serves his countrymen, who can't afford to pay him what he's worth. And even when they can, it's a difficult process with exorbitant banking fees swallowing up a significant portion of his desperately needed income.

So here you have a driven young man, who despite being highly talented and skilled, lives hand to mouth, barely able to provide a balanced meal for his family on a daily basis, let alone raise them from poverty.

Until he discovers bitcoin.

Andrew, a UK businessman, met Joseph while travelling Uganda for business. Andrew visited the local internet cafe and noticed Joseph working on a website design that he thought was fantastic. After a little informal conversation and introductions, Andrew asked Joseph whether he had heard of bitcoin. He hadn't and so Andrew explained how Bitcoin worked and how it could open the world to him and his business. Andrew went on to set up a bitcoin wallet for Joseph and even started him off with a £10 transfer to show him how it worked. Joseph was overjoyed with this new discovery, especially when the internet cafe owner, who had been eavesdropping on the conversation, asked Andrew to help set up his wallet too so that Joseph and any other customers could pay for his services in bitcoin.

With a bitcoin wallet, and his easy accessibility to the internet, Joseph is able to do business with anyone, anywhere in the world, and receive his payment not only instantaneously but at a miniscule fraction of the cost of traditional methods too.

He's now in the process of developing websites for a number of international clients and is running online coding classes, with payment in bitcoin. He's able to buy groceries to feed his family for a week at a time and he's saving up for a new computer too. Being able to transact in bitcoin has liberated him from his geographical and socio-economic constraints and is helping to elevate him, his family and all those he eagerly introduces to the cryptocurrency from a life of survival, to a life of substance.

Here's the thing, though. Bitcoin needs increased adoption and investment. This will help stabilise its current volatility and, as a result, encourage further acceptance by merchants and smaller traders, which has a positive knock-on effect of individual investment.

And yes, there's the promise of incredible long-term financial gains on that investment, but I'm not in it for the money alone. The latent philanthropic power of Bitcoin is what keeps me pushing my pound into bitcoin, knowing that my financial investment has a direct impact on the social wellbeing of billions of socio-economically strapped individuals, like Joseph, determined to emancipate themselves from poverty and carve a new path of opportunity for their children and for the generations to come.

Photo credit: UG_RIS_Bwera_Aug09 (30) via photopin

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