Social

Conceived in the wake of the 2008 global financial crisis, Bitcoin was created as an alternative to central bank-issued currencies. Years later, and the case for Bitcoin as a monetary rival has been furthered by concerns of high inflation in many smaller or less developed countries, which is devaluing citizens’ savings as the price of staple goods rise.

This piece will discuss the legacy global foreign aid system and the challenges faced in traditional foreign aid. We then demonstrate how Bitcoin has dramatically reduced friction in foreign aid with a case study on The Ukrainian Government’s “Aid for Ukraine” initiative, to use bitcoin and other crypto-assets to raise funds in a friction-free way.

One of the most socially compelling use-cases for Bitcoin is its potential to transform the remittance market, which involves the payment of money from one party to another, usually across borders. Whilst the cost of remittances has trended gradually downward, it is still relatively high compared to domestic bank transfer fees, particularly for smaller transfers of money.

It can be challenging to reimagine the current financial system. However, whilst most of us will continue to have access to and use traditional banking systems in the foreseeable future, Bitcoin may play a more significant role for the 31% of adults globally that remain unbanked and underbanked under the status quo.

It is often claimed that Bitcoin offers little use to a society that traditionally operates using fiat currency. Others maintain the perspective that Bitcoin is solely an investment tool used to generate capital gains or diversify a portfolio. Whilst the latter perspective may be valid, it is limited. Bitcoin can be viewed as a highly disruptive technology which may have the potential to evolve our financial system.