What was the last technology you heard about that created so much hype in such a short period of time? Just ten years ago, Satoshi Nakamoto formulated Bitcoin which is actually a form of digital currency based on blockchain technology. Since then the technology that powered Bitcoin, blockchain has captivated everyone’s attention. From entrepreneurs, economists, bankers, venture capitalists to general public, everyone in one way or the other is trying to figure out how Blockchain will unfold in future and what applications it can potentially offer other than cryptocurrencies.
The world is moving towards globalization. Everything and everyone is interconnected, time zones have shrunk, distances have shortened and everything has become super-fast taking only minutes or even seconds to reach from one end of the world to the other. As a result of globalization, there is a lot more money being generated. However, it is concerning that most of the wealth generated as a result of this globalization goes to those who are already rich further increasing the inequality in society. According to a report by Oxfam International, Reward Work Not Wealth, 82% of all wealth created in the last year went to the top 1%. Therefore, stronger measures are needed to ensure the wealth generated due to globalization is more fairly distributed.
Let’s see how blockchain technology and blockchain software development companies can impact global wealth distribution.
Every technology that the world has embraced has pushed the world farther into globalization therefore it is safe to assume that blockchain technology as well with its growing borderless networks such as Bitcoin and Ethereum will do the same.
The potential for a more equal distribution of wealth lies in an important property at the core of the technology: decentralization. Cryptocurrencies such as Bitcoin and Ethereum have no central authority regulating them; they run autonomously on thousands of systems all over the world. Blockchain-empowered globalization if done right will lead to a fairer distribution of wealth and reduced inequality.
Blockchain has a decentralizing and democratizing effect on industries that adopt it. For example, ICO (initial coin offerings) is a new way for blockchain companies to raise money by selling their cryptographic tokens. This is different from crowdfunding where contributors donate money in exchange for perks or products. Buying ICOs in a company is just like buying shares. Now with ICOs being decentralised, anyone in the world can invest in a company. Before ICOs to invest in a start-up, you either had to be really rick, a venture capitalist or a bank.
Capital raised through blockchain-powered funding mechanism, ICO, in turn provides capital to invest in other blockchain businesses which further decentralise and disrupt other industries. Decentralized products, funded by ICOs, may help in more equal wealth distribution all over the world reducing the inequality. How so? Everyone sharing their disk space in a blockchain network will get a share of the wealth generated by that product. Moreover, everyone will get a ROI by selling their cryptographic tokens obtained during the ICO unlike in traditional funding where ROI goes to just a couple of venture capitalists. This pattern can be followed by other blockchain products, where the middlemen and intermediaries are no longer needed in an investment project and the wealth generated by the product goes to a lot more people than in a traditional company and investment.