Global Influences Impacting Financial Literacy: Alternative Solutions Impacting the Social & Financial Stability Relating to Current Economies & Currencies
Promoting the survival and growth of underdeveloped communities requires understanding the structures in place that support the current economy. The following white paper outlines a brief case study championed by Motiv, a non-governmental organization (NGO) that focuses on empowering people and communities to succeed and thrive instead of relying on aid to achieve basic survival. The project, titled Bitcoin Circular Economies, was designed to help failing communities establish economic stability through education, guidance and by adopting Bitcoin as a circular resource. This paper presents an overview of the issues that hinder economic development in underdeveloped countries, the history of financial technology, and the justification for why Peru was selected for this project. Initial findings are presented, followed by a discussion of whether Bitcoin Circular Economies could become a suitable solution for addressing economic stability.
Introduction and Summary
Even when the global economy is thriving, many communities cannot enjoy the advancements of modern life and the spoils of global economic prosperity when it does occur. While each community has problems to work through, there are many shared characteristics among lesser-developed countries: a lack of a central bank, access to a banking system, or credentials needed to access traditional banking. Why don’t these lesser-developed countries
follow methods used by higher, economically established countries such as the United States and other first-world economies? Because these countries encounter constraints that inhibit participation in traditional banking. Geographical conditions isolate many communities from access to banks, and often an undereducated populace lacks basic financial literacy and the identities necessary to take advantage of the benefits of traditional fiat-based economies.
Many organizations and further-developed countries (by comparison) have attempted to improve the conditions of these communities and countries by providing food, clothes, and other resources. However, it is difficult for these aiding groups to maintain a consistent supply of goods sent to these communities. These acts of charity often only serve to address deeply entrenched problems as the citizens of failed/failing communities have no way to improve their quality of life once they have run their provided resources dry. They would be no better than where they were before receiving aid and are often worse off. In other words, traditional charitable efforts only treat the symptoms of poverty rather than the root cause of poverty in those communities. In order to treat this root cause, a roadmap and form of coaching should be provided that will help them achieve a more sustainable life.
Armed with this knowledge, implementing a new system is essential to helping people break free of circumstances that tie them to an unsustainable life of dependency on others.
However, these systems must be custom tailored for the countries that need them. Additionally, these systems must have designs that ensure these communities can function independently once trained. Section 1 of the paper discusses examples of economic issues many countries face that can hinder economic development. Each of these problems may not be identical to every country experiencing them. However, it is generally implicit that they have similar effects. Looking at these problems concerning other economic indicators can help determine a solution. This section
also discusses potential problems stemming from central banking seen in countries like the United States, explaining why an alternative system can be desirable. Using relevant statistics, this section compares three relatively financially literate countries with three relatively financially illiterate countries. In the end, this section compares Peru’s specific economic factors to substantially more powerful countries to show the differences in abilities from different countries depending on leadership, budgetary focus, and other variables.
Section 2 provides a brief history of financial technology before focusing on cryptocurrency and Bitcoin. Afterwards, it discusses the general definition of a circular economy, explaining its benefits and showcasing examples of their usages. Circular economies have utilized different resources depending on how citizens use them. However, the concept always centers on keeping the economy self-sustaining and ensuring continuous resource reuse.
Section 3 analyzes the project of the nonprofit organization Motiv Inc. and its financial education program, Bitcoin Circular Economies. The project’s process and goal are explained before discussing how Motiv has expanded on the project since its inception and how it could act as a solution to help integrate certain people into society.
Download the full version of the White Paper here.