Mention Web3 and wealth creation, and most picture a bunch of dudes trading pictures of monkeys, seemingly creating money out of thin air. This narrative, dominant in the mainstream, can be a huge turnoff for the uninitiated.
It’s true, Web3, especially NFTs and cryptocurrency, has generated a significant amount of wealth amongst a small group of people, but the money itself is not what’s inherently bad; it’s the inequality of its distribution. Imagine a world where wealth is created at scale and distributed directly to the billions of people all around the world living in extreme poverty who need it most.
Thanks to Web3, this is now possible.
Advances in blockchain technology have enabled the creation of an alternative financial system that is global, open sources, and accessible to all who have access to the internet. A key feature is the possibility to distribute universal basic income, or UBI, directly to the 1.1 billion people in the world who have smartphones but remain “unbanked,” or excluded from traditional financial services. UBI is a regular income that is given unconditionally to people to help cover the cost of living. First proposed in the 18th century, more recent proponents of the idea include Richard Nixon, Martin Luther King Jr., Milton Friedman, Andrew Yang, and Jack Dorsey.
UBI experiments historically have been promising, but difficult to scale. The world’s unbanked population lives predominantly in extreme poverty or hard to reach rural areas. Lack of income to deposit, distance to the nearest bank, and lack of personal documentation prevent the unbanked from accessing traditional cash-based UBI and other much-needed financial services.
Banking isn’t just a nice-to-have convenience; it connects the global economy, and those excluded from it are at a disadvantage. For this reason, financial inclusion is not only one of the United Nations’ Sustainable Development Goals, but also is cited as a must-hit target in order to achieve a whopping eight of the total seventeen goals.
Though mobile phones and mobile money are a giant step forward for financial inclusion, alone they only scratch the surface. Money transfer in the traditional financial sector requires identification and intermediaries, and fees are taken out at every step of the way. Best case scenario, those intermediaries are non-corrupt, but unfortunately that isn’t always the case. With Web3 DeFi (decentralized finance) technology, however, impact practitioners can overcome this with programmable, verifiable, distribution on the blockchain. Such protocols are already being tested by millions of people around the world, with the potential to connect billions to the global economy with low-cost, automated financial services by sending money directly.
“We would never be able to do what we are doing without this technology,” said Jessica Gaubert, COO of impactMarket, a decentralized human empowerment protocol that delivers financial services and education with the aim of eradicating extreme poverty. “Every transaction happens on the chain from the donor directly to the beneficiaries, so no money is lost in the transaction, and at the same time, trust is built when everyone can follow where the money goes.”
Founded in 2020 with a pilot designed to provide relief to Brazilians struggling economically as a result of the COVID-19 pandemic, impactMarket now distributes UBI on the blockchain to over 46,000 people in 30 countries. Anyone in the world can participate and support impactMarket’s mission by purchasing $PACT tokens, earning interest, and redirecting that interest to communities in need. Beneficiaries receive UBI in the form of tokens deposited in their crypto wallets and have access to the functionality that a normal bank would give them. They can pay, receive, and see their balance, all without needing any form of formal ID.
“It’s not only about the money,” says Gaubert. “Because beneficiaries feel empowered, they are able to create a whole ecosystem. Economic empowerment is about having the ability to make your own choices.”
Stephen Etugbo, Nigerian Team Leader for GoodDollar, an anti-poverty DeFi protocol, agrees.
“Gateways are opened to people if they have the funds,” he said. “You claim GoodDollar and you can start saving, investing, staking, and using other DeFi tools. Maybe the money will be used by your children, who will also benefit from this in the future.”
By leveraging market forces and the principles of social investing, GoodDollar distributes a reserved-backed cryptocurrency called GoodDollars every day to anyone in the world who claims it. Instead of a formal ID, users need only a selfie to get started and make a wallet. Since its official launch in September of 2020, the GoodDollar community has grown to encompass more than 466,000 people in 222 countries and territories, including 132,000 people in Nigeria alone.
“The way that people interact with digital money is far more advanced in places like Kenya and Nigeria,” said Jessica Salama, GoodDollar Community Lead. “UBI protocols are a bridge into digital entrepreneurship. This is about more than access to cryptocurrency; it’s about giving people access to career opportunities, the chance to build a professional profile and brand, and the ability to connect with others.”
When it comes to the future of UBI blockchain protocols, organizations like GoodDollar and impactMarket are just getting started.
“It reminds me of the internet,” says Gaubert. “Everyone thought the Internet was a ridiculous, crazy idea at first. That happens anytime a new, better system is created and light is shed on some of the bad procedures of the past.”
impactMarket, for its part, recently announced a major expansion of its platform to include a complete education hub for all things financial inclusion on the blockchain. In the next several weeks, the organization plans to launch several new services, including access to microcredit. GoodDollar plans to evolve to a multi-chain protocol, and in the short term, remains focused on empowering its community members to create utility for GoodDollars within their local economies.
“Because of the blockchain infrastructure, we can think about social impact in new ways,” said Anna Stone, Co-Founder and Director of GoodDollar. “This fundamentally changes how we think about beneficiaries. They no longer are just poor. They are active owners and participants within their own communities.”
Consider the Web3 economy as the early beginning of a new, reimagined financial system, one where individuals all over the world, regardless of where they live and whether or not they have a bank account, have access to opportunities, communities, and most importantly, income.
Anyone, anywhere in the world can get involved; it’s as simple as connecting your wallet and claiming UBI everyday. Though the amount may be small, the wealth generated by the strength of the protocols over time will find its way directly to those who need it most, making a real difference in their lives. It’s already happening.
Ask Etugbo how Web3 has impacted his life, and the pride in his voice is clear. “I paid for two people’s kid’s school fees. I went to the orphanage to pay for some things for them.”
The impact is real, and the potential is great.
Sam Flanagan works at the intersection of tech, economic development, and media as a researcher and communications strategist. She is a Co-Founder of Web3ForGood, a media community that highlights how Web3 tech can be used to make the world a better place.
This is not financial advice. If you don't want to spend money investing in crypto or Web3 — you don’t have to. The intent of this article is to help others educate themselves and learn.
