BLOCKCHAIN: MICROFINANCE PLATFORM FOR DEVELOPING COUNTRIES

[silent reader]

In our current era, people are not trying to have access to financial services. However, in 2018 data, it is said that there are still around 1.2 billion people in the world who have no access to banks. Compared to previous years, people who are unbanked decrease, yet most of them who still do not have access are from the developing countries.

According to this article, some of the reasons why people in developing countries are still struggling with financial services are due to:

• The absence of capability and knowledge about the banking system.
• Do not have valid IDs
• Have some doubts about regulations and data security
• Women have lesser access to financial institutions than men in developing countries.
• The lack of usefulness of opening an account

In the developing countries in Southeast Asia, around 300 million people are struggling with credit investment and insurance services since they do not have access to banks. This is why the International Blockchain Monetary Reserve (IBMR) come up to launch a microfinance ecosystem platform 'ARCC.one' with the partnership of Algorand. Using Algorand 2.0, it aims to support ARCC as the first micro asset that will primarily help people with no or low income from Southeast Asia for financial inclusion.

Asia Reserve Currency Coin (ARCC)
It is a debt-free capital micro asset provided to people in Southeast Asia that aims to give financial freedom through this innovative development. ARCC will allow the followings:

• With this platform, users can earn ARCC tokens through Social Proof of Work by completing socio-economic surveys. This token will contribute to ARCC's 'Public Mandate Network' that will verify anonymous data in the blockchain, while it remains indisputable
• The users will also get their own digital ID card that will allow them to have access on events and promotions
• The token earned can be used in micro asset management services
• It can also be used for staking to fund community infrastructure projects with no holding fees or minimum balances
• With the entrepreneurial lottery, winners can get support with investment and training for their entrepreneurial dreams
• They can also make choices from several micro insurance plans.

Algorand

Algorand is the world's first open-source, permissionless, pure proof of stake blockchain mechanism that allows innovation and development not only in financial services but also in wide various industries that enable them to achieve a borderless economy. Aside from that, it is also a promising blockchain since it ensures scalability, security, transparency, and decentralization. ARCC leverage Algorand Standard Asset (ASA) functionality that will allow asset tokenization on Algorand.

The founder and the Managing Director at IBMR.io, Sinjin David Jung said that “After months of discussion, it was clear that Algorand’s strong interdisciplinary approach to monetary economics, technology and ecosystem focus was beneficially aligned with our own social impact mission for empowerment through the creation of the world’s first micro asset, ARCC,”. He also added, “We’re excited to be leveraging what we see as the best blockchain tech and applying it to a new structural solution for the inclusive economic development of emerging markets.”

The COO of ALgorand, W. Sean Ford stated that “It is inspiring to see the convergence of blockchain technology and forward-thinking initiatives like the ARCC that IBMR is launching,”. He was also positive towards the partnership with IBMR, and the development of ARCC, “Together, we have a shared vision for economic inclusivity and frictionless transactions as the model for decentralized finance. Sinjin David Jung and the team at IBMR join a growing list of organizations leveraging blockchain for significant social impact."

With the innovation and the application of blockchain in the microfinance ecosystem, it will give opportunities to urban working poor to have access to financial services. ARCC makes it accessible for people who are struggling with financial services, shows transparency to its users, allows them to earn free token or asset that can help them, has an aim for community development, act as a foreign reserve currency hedge, and also a debt-free capital for investments.

As I am also living in one of the developing countries in Southeast Asia, the lack of access from the financial institution is undoubtedly is common to lower up to the middle class, as well as those who are living in rural areas where financial institutions are far from their places. But with the adoption of blockchain technology that aims to help people in developing countries, it will bring them an opportunity to have financial freedom.




References:
Reference 1, Reference 2