Exploring financial freedom through crypto and the end of traditional finance era
When the California Gold rush began in 1849, the aim was to get gold and get rich or die trying. With more men flocking to the wild wild west to try their hands at gold mining, staking, or prospecting, towns began to spring up and more families migrated. The economic implications of the gold fever resulted in a distribution of wealth whose impact is still felt today in global gold supply, trade and investment. Today, a different kind of Goldrush has got the world in a frenzy and it’s cryptocurrency and the blockchain. However, rather than having just 300,000 prospectors participate in the wealth rush, there’s an easy entry with few limiting factors. For instance, the number of crypto wallets on blockchain.com reached 70 million in 2021 and that’s just one crypto wallet service provider.
Seeing as it took the world almost a century to build global impact from the effects of the gold rush and global gold mining, one question that needs to be answered is — Can cryptocurrency compete with the already existing traditional system? Of course, we have to remember the original intention of cryptocurrency as detailed in the Bitcoin whitepaper written by Satoshi Nakamoto the grand patron of all cryptocurrencies. Satoshi wanted a system of the payment free from the manipulations of central figures and middlemen and a system that ensured financial freedom.
Financial Freedom? A historical perspective
Back in the day, having a good job signified financial superiority. There was also a sort of award attached to having and holding a job. For instance, in the 1940s, after active years of service in a company, an employee is given a gold wristwatch which symbolises the years he had spent with the company. The practice can be traced back to a Pepsi campaign that repays its employees with gold wristwatches for the time spent with the company which usually spans decades.
However, there was no direct correlation between the lives of the retirees and the years spent with the company, and the retirement gift. This paints a picture that for centuries, access to wealth was centered in the hands of a few. The documentary, The men who built America showcased great men such as Cornelius Vanderbilt, John D. Rockefeller, Andrew Carnegie, J. P. Morgan, and Henry Ford and their efforts towards building America. However, we also see a timeline of wealth distribution in the hands of a few limiting access to the financial freedom of many. On the other hand, we see a different picture today, with the blockchain creating wealth for people without having to spend decades labouring which still remains a puzzle to many.
Financial freedom varies dramatically across cultures of the world and governmental systems. Unlike the free for all wild West, the government of a country has significant control over the economic and financial freedom of its people. However, in terms of the availability of resources and standard of living, only 5 countries enjoy financial freedom. Leaving the world with countries that are mostly free, moderately free, mostly unfree, and repressed financially according to data by Heritage.org. Now, we can blame a lot of factors for creating the visible gaps in access to wealth but, the culprits are not far from poor monetary and fiscal policy. So, how do we build a global economy where anyone can plug in just by using the internet and launch themselves into legit money-spinning opportunities without traditional limitations? The solution — Crypto.
Cryptocurrency and financial freedom
Among the drivers of economic freedom, trade, investment, business, labour, property rights, and monetary freedom rank tops. The place of cryptocurrency per economic freedom is sure-fire with ingrained features and tools that put it above the traditional system. However, let’s take a look at some of these features.
Open Source & decentralised: The crypto market is designed to increase financial, trade, and investment freedom with its decentralised design free from the manipulations and influences of government and traditional institutions. Anyone in the world can trade in a shared network that the government has no control over.
Access to Property Rights: Thanks to smart contracts and Non-Fungible Token (NFTs) owning properties without the manipulation of the government or third parties has become easier. Owners can stipulate their agreements on the smart contracts and have them triggered upon meeting certain conditions. The great thing about NFTs is that everyone involved in the process (creation to sales) gets to benefit from it.
Accessible to all: The crypto space is free for all ecosystem that allows all with internet access to participate. Its ease of access has enabled many people to change their from countries like, Venezuela, despite US sanctions and scaling inflations, people have turned to cryptocurrency to transform their lives outside the influences and manipulations of the government. The Venezuelan government created its own crypto hedged on the country’s natural resources, petroleum. While the citizens have focused solely on transacting with cryptocurrency rather than the Venezuelan bolívar, its legal tender. Cryptocurrency also increases economic freedom by reducing entrance and exit barriers.
Global relevance: While the traditional finance systems are limited by policies that make it difficult for people to transact with ease across the globe, cryptocurrency is borderless.
Out with the Old and in with the New
Conversely, cryptocurrency may not directly influence some factors of economic freedom such as tax policies, government integrity, and fiscal health amongst others. However, cryptocurrency has established its mark in global finances. Currently, there are over 51,200,000 active cryptocurrency traders pushing over a $3 trillion market capitalization across the globe and over 6,000 cryptocurrencies in circulation. With several innovations ongoing in the crypto market, The crypto market is laden with products that are capable of disrupting traditional finance systems and each product offers financial freedom. It is also remarkable that cryptocurrency has managed to achieve these remarkable feats in a little over a decade
One remarkable feature or by-product of cryptocurrency and blockchain that is giving traditional financial systems a run for their money is Decentralised Finance (DeFi). Cryptocurrency thrives on creating coins and giving users transaction access and utility without the regular go-betweens,, DeFi seeks to supplant traditional financial systems by offering wide-ranging financial products on the blockchain. For a few, they see DeFi as the complementary buddy of Traditional finance.
However, on philosophical grounds, DeFi was conceived to be the karma of its centralized counterparts which have at different moments in history brought the world to its heels. For instance, the great depression of the 1930s saw investors withdrawing money from the banks as a reaction to stringent monetary policies made by the US Feds.
Fast Forward to the great inflation of the 1970s, and we see inflation caused by greedy businessmen, rapacious union leaders, oil prices, and currency speculators. The grand patron of all financial crises that herald the era of decentralised finance has to be the economic meltdown of 2008. The great recession of 2008 was fueled by financial institutions propagating cheap credit and tax which in turn caused a housing bubble that left investors in the dust.
But with DeFi, the control isn’t in the hands of institutions, but the people. With features that allow anyone to borrow, lend, stake, yield farm, and even have insurance, DeFi offers the opportunity for users to control their wealth in the way they deem fit. It is also designed to accommodate ease of entry as there are no cumbersome KYC/AML policies that usually excludes the majority of persons from accessing the blockchain. With DeFi, a lender and borrower meet within the same pool and each earns from the transaction with ease. Unlike a bank that has a high-interest rate on loans and gives little profit to the individuals involved. An advantage Defi has over traditional finance systems that seem keen on making the institution richer than the parties involved will be yield farming. An investor can create wealth by staking his coins for yield, loaning his coins to borrowers and earning interest or simply farming yields.
Times have changed and finances have changed as well. Cryptocurrency offers more financial freedom for its users than the traditional system and we can see why more people flock in its direction. Products such as Polkacipher makes it easier for users to navigate products in the DeFi space with its unique integration of two unique features of the blockchain, NFT and DeFi to create a solution. Asides PolkaChiper, other products in the DeFi market have brought on remarkable transformation. For instance, in 2019, the total value locked in DeFi was just $275,000,000. By February 2020, the number has grown to $1Billion and over $40 billion by January 2021.
While the figures seem so interesting, for Polkachipher, we are pulling every resource possible to create an ecosystem with scalable products built to satisfy everyday users as well as promote financial freedom and inclusion.
PolkaCipher is a privacy-preserving oracle network on the Polkadot Blockchain focused on bringing the use case of private NFTs to off-chain businesses and being a bridge for seamless integration to on-chain Defi apps.
PolkaCipher’s unique offerings help push the use-cases of the NFTs in real-world scenarios while still being connected to a cross-chain network that is fair and accurate. PolkaCipher intends to achieve business goals by helping users transact privately and securely using NFTs as a mode of access to different decentralized apps (Dapps) and real-world business rewards.