Domestic governments who provide foreign aid need to start thinking about how a global digital currency could help provide more accountability for the money their taxpayers contribute to developing nations. Charities also need to be mindful of this new type of currency that is on the verge of being ready for mainstream adoption; carrying the potential to increase transparency for donors, digital currency is a topic they best be informed on. Backed by blockchain technology, cryptocurrencies are paving the way for comprehensive donation tracking, and have the potential to streamline audit efficiency. Fund distribution can be monitored in near real-time, therefore discrepancies or irregularities that look suspicious can be reported immediately. People would also be more likely to send money to private charities if donors could see the entire contribution making its way directly to those in need.
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Along with increasing accountability, a global blockchain based currency that exists outside the realm of a national agenda, will connect people in impoverished nations with the outside world. Entrepreneurs in these countries will bring global wealth into their local economy, which could help break the foreign aid welfare cycle. The implementation of a new global digital currency will also help improve local business organizational systems, marketplace efficiency, and overall economic transparency.
Although cash is still more practical on a local level, it may be a wise idea to supplement fiat with a stable and transparent cryptocurrency, which provides a gateway for business partnerships and commerce with the outside world, and drastically reduces the cost of remittance payments. My stance on this issue has changed slightly, in that I now believe the right cryptocurrency will compliment fiat currency by working with it to help diversify our monetary supply, rather than replacing it altogether. CEO of DNotes Global Inc. Alan Yong said it best, "The DNotes vision is to build DNotes as a trusted global digital currency to supplement national fiat currencies in global commerce by simplifying its use so that anybody in the world can participate."
Famine and Financial Relief
Famine is a tragic event caused by a number of factors ranging from overpopulation and climate, to war and corruption. During these difficult times the people who are starving to death probably don't have the energy to run a fundraising campaign for themselves, but there are many individuals willing to exploit the peril of these starving people for financial, or political gain. Sometimes even their own governments are culpable of using guilt tactics to exploit their civilians misfortune in an attempt to manipulate naive people from well established nations into making donations they think are helping the destitute, but are really being used to pad coffers of the corrupt. A transparent blockchain based currency will help ensure the money these 'sometimes gullible, yet goodhearted people' give, reaches its destination.
Poorly allocated donations can also have other unintended consequences. By blindly donating money with little regard for its final destination, you could be making life harder for the people you intended to help. Foreign capital introduced into a market means there are more dollars chasing the same amount of goods, which drives up prices. Foreign goods introduced into a market puts strain on local producers by flooding the market, which lowers prices and hurts their locally based business. Both of these scenarios also create a reliance on non-domestic resources, decreasing sustainability.
Perhaps most relevant to recent world events, blockchain can be used to record personal identification documents, which are crucial in times of large scale social upheaval, and mass relocation. Had the people fleeing recent middle eastern conflicts recorded their identities on a blockchain designed for such a purpose, it would have greatly expedited refugee resettlement, while making everyone safer by providing additional information for officials vetting the refugees. Counterfeit identification, and identity theft are also serious problems that can be solved by blockchain's inherent anti-counterfeiting, anti-theft measures. In fact there are already companies working to develop blockchain based digital identity services.
Transferring wealth with a reputable cryptocurrency would allow the opportunity to monitor where the money is going, and have better data on how that money is impacting the local economy. This will ensure aid money is being spent by intended recipients on local goods, by local consumers, and not being used by warlords who are bankrolled by corrupt government officials. The cryptocurrency used to facilitate such transactions will had to have been founded with regulatory compliance and transparency in mind. Anonymous currencies just won't cut it, because these currencies will empower corrupt government officials to embezzle even more foreign aid money by obfuscating the audit trail.