Over the past decade, an increasing number of developing countries have started to adopt cryptocurrencies, a notorious outcome of blockchain technology. The enthusiastic response to the numerous blockchain applications (crypto assets, fintech and banking) finds its reason in the decentralised, flexible and permissionless nature of this technology. Due to the underdevelopment in the area of ownership recordings (for instance because of a lack of central institutions), emerging markets constitute a frontier market for blockchain, ultimately targeting many socioeconomic growth factors. Blockchain has developed into a resource addressing technology access, work opportunities, working conditions, fair wages, education access, social protection and institutional inclusion. Its potential to boost human capital renders it the next big social mobility catalyst. Social mobility gauges the state of a country’s economy by analysing the socioeconomic outcomes of individuals regardless of their background. It is such a relevant indicator because the optimal allocation of human capital in a stakeholder capitalistic system is a major driver of productivity. For marginalised communities, blockchain can be a promise for equality of opportunity and upward socioeconomic mobility. With a 90% predicted compounded annual growth rate between 2023 and 2030, understanding how to channel the possibilities of blockchain is the next big challenge in the ESG domain.

Harnessing blockchain for an inclusive financial transformation

Blockchain’s decentralisation and cryptography algorithms have the potential to expand financial services to underserved populations. Decentralised Finance (DeFi) enhances marginalised communities’ empowerment thanks to the absence of traditionally needed intermediaries. Underserved areas would gain access to global markets and strengthen international trade and investments. Furthermore, blockchain-powered applications can address some of the barriers keeping unbanked individuals excluded. The barriers people face vary extensively according to geographical and social situations. However, the lack of documentation is both the most recurrent and impactful, affecting approximately 850 million people, and preventing them from accessing banking or social assistance payments. Solutions can be found in smart contracts and digital currencies that mobilise peer-to-peer lending systems and low-cost seamless cross-border transactions. This feature appears especially beneficial for migrant workers sending back to their home countries some of their income. An estimated USD 8.5 trillion will be transferred between 2015 and 2030 by migrants to their origin countries and these remittances are an essential contribution to SDGs given the associated household investments in education, health and entrepreneurship. Consequently, in the 2030 Agenda, G20 members have committed to lower remittance costs to less than 3% and eliminate remittance corridors with costs higher than 5%. 

New possibilities for microfinance

The lack of intermediaries implies reduced transaction costs that enlarge the pool of people able to lend and borrow money. Blockchain-powered microfinance can address the often high-interest rates and fees imposed by traditional microfinance structures. Blockchain would enable transactions to be recorded on public ledgers (available for all stakeholders), boosting transparency, entrepreneurship and acting as a powerful tool to combat poverty. An interesting case study is the one provided by BanQu, a blockchain and cloud-based SCM software company, that allows marginalised communities to create economic identities by securing records of their personal information, education and work experience (service particularly useful for refugees and internally displaced people). BanQu is a pioneer in enabling microfinance entrepreneurs to guarantee a transparent supply chain and to invest in sustainability-led industries like agriculture, manufacturing and textile production. 

A more secure and innovative gig economy

Decentralised platforms can also improve the conditions of the gig economy’s workers, tackling its potential fickleness and the precariousness of contracts. The number of self-employed people accounts for a third of the world’s working population and seems to be a phenomenon not restricted to just developing countries. In the US, for instance, 9.94 million people are registered in the Bureau of Labor Statistics as self-employed in 2023 -  a condition predicted to cover 50% of the population by 2027. Freelancers relying on these services would be encouraged to take greater control over their own financial status, professional relations and negotiations in a cross-cultural innovative environment. The uncertainty of freelancing may be reduced thanks to the encrypted nature of smart contracts storing sensitive information safely and preventing inequitable payment structures. Ultimately, a growing part of today’s economy has the potential to be rendered more sustainable and inclusive through the adoption of these tokenised, trustless platforms. 

Tackling inequalities at their source

Fairer job marketplaces can also be facilitated by applying blockchain technology to early-stage factors like education and skills development. Socioeconomic advancement is knowingly linked to the level and quality of education, as even kindergarten higher-quality classrooms have been shown to lead to higher lifetime earnings. The social capital acquired in school seems to be correlated with one's long-term economic connectedness and a determinant to escape poverty. Blockchain-based digital education platforms can provide affordable learning opportunities for marginalised communities by overcoming geographical limits and high tuition fees. Moreover, blockchain allows storage and verification of educational credentials on encrypted, transparent and tamper-proof networks which has the potential to lower rates of academic fraud and avoid cumbersome accreditation processes. Some universities in emerging markets, like Chitkara University in India, are already applying blockchain to validate students’ e-documents and addressing academia-recurrent phenomena like intellectual property disputes, authentication of certifications and validation of MOOC courses. 

Conclusion

The adoption of blockchain to leverage economic, social and cultural capital could become one of the most significant assets provided by technology to unleash multiple SDGs in the upcoming years. However, it is necessary to stress how issues of digital literacy, scalability and interoperability on the technical side and regulation are still to be addressed and overcome properly. Investing in these areas can allow blockchain-led applications to operate professionally and ethically. Investing in financial inclusion through blockchain can prove to be a powerful technique to provide marginalised communities with the instruments to improve their daily lives. Nevertheless, the multiple efforts of national and international institutions to try to warn and regulate this technology (especially crypto assets) cannot be ignored. Through the United Nations Conference on Trade and Development, the UN has conducted three policy briefs about the dangers of cryptocurrencies in regard to financial stability, tax evasion and monetary sovereignty. It is ultimately the countries’ singular responsibility to evaluate whether a more cautious approach in line with the EU’s MiCA would benefit the economy or whether taking on the associated risks would be competitively worth it in the long term, which both the UK’s global crypto technology hub plan and Brazil’s Digital Real project agree on.