Most of us know that Ethereum is one of the most popular cryptocurrencies in the world. In just six years, Ethereum has acquired a market cap of more than $200 billion. And 99% of the people had been so focused on its price that we completely missed out on the fact that the technology and application of Ethereum such as smart-contracts are so powerful that they can bring about a revolution as big as the Internet. And just like the Internet, they are also capable of giving rise to the next generation of super enterprises. The question is, what is so special about Etherium applications?
On 3 September 2015, a heartbreaking image went viral on the internet in which a three-year-old Syrian boy tried to escape from Syria along with his family. He was one of the millions of Syrians who tried to escape Syria to take refugees in Grease. But in between, their boat collapsed and the entire family just drowned in the sea. When this story broke out, the world understood that it’s not just about a picture. It is, in fact, a representation of the horrifying conditions of millions of refugees all across the world. Millions of refugees from countries like was stricken Syria are trying to seek asylum in Greece, millions of refugees from countries like Venezuela, which is suffering from hyperinflation, wherein 1/10th of the entire population is trying to seek asylum in the rest of the world. And as of 2020, the world refugee population stood at 82.4 million individuals. And these are individuals who got forcibly displaced worldwide as a result of persecution, conflict or human rights violation. And out of this humongous population, less than 5% will get asylum this year.
And when they get asylum, most people think that their struggle ends. But you know what? It just gets started even after taking asylum in a particular country. The proof of my identity takes weeks, sometimes even months to be processed. And since these people have to start from nothing, the government needs to provide special provisions just so that they can survive in the country. And here’s where another problem arises. Most people don’t get their documents at all. Some try to forge their documents and try to misuse the government’s provision by forging their identity. And refugees don’t get loans because the bank has no record of their past behaviours. And hence it almost becomes impossible for a refugee to thrive in a new country. And in some countries, this reaches extreme levels. Now, we don’t want to take the names of these countries, but here’s where the identity of the refugees is purposefully destroyed, just so that they can be forced into prostitution, child labour and other horrific things.
But you know what? There is one country wherein they are doing such an amazing job with refugee settlement that the refugees in this country are happier than the citizens of most countries. The question is, which country is this? And while leading countries like the US and Canada are struggling to tackle this issue of refugee settlement, how is this country able to handle this global issue so well? Well, the country that we are discussing is Finland, and they’re doing it by using a remarkable application of blockchain, which is something called Smart Contracts. For those who don’t know, Smart contracts are self-executing contracts with discrete terms of an agreement between two parties, and this agreement is directly written into lines of code, and these contracts render transactions that are traceable, transparent, and irreversible.
Now, to understand the application of the Smart contract, let’s have a look at Finland. In 2015, Finland saw a rapid influx of refugees, and this influx was ten times more as compared to 2014, and this time they were struggling to deal with refugee settlement. During this time, usually, the government hands out cash disbursements. But in the case of Finland, instead of the traditional cash disbursements, the Finnish Immigration Service partnered with a local startup called Momi, and this startup came out with a wonderful idea of a prepaid Mastercard. And this Mastercard was specially designed for asylum seekers who do not have a bank account. This card is linked to the unique digital identities stored on a blockchain, which is also in sync with the Finnish Immigration Services. And this turned out to be such an amazing solution that, let alone identity.
This system works better than most traditional banks, wherein the accounts are not just accessible by smartphones but also have an amazing feature to receive special government benefits and salary disbursements. And by bringing all the refugees officially into the banking system, Moni Services has enabled the asylum seekers to not just have an identity, but also to start contributing to the economy as soon as possible. Now, just to give you a better understanding of the system, let’s take a very simple example. If John is an asylum seeker, then for the first year if he is eligible for 30% subsidy in essential commodities and 5% subsidy for gas, and in the second year if he is eligible for only 20% subsidy in essential commodities and 3% in gas, then automatically his Mastercard will get updated in such a way that when he goes to pay for his fuel using his Mastercard, he will automatically receive only 3% subsidy. And when he does the same for the grocery for essential commodities, specifically, he will get a 20% subsidy.
And this smart contract could be so sophisticated that it can also put a limitation, that is, if John’s income exceeds $10,000 for three months consecutively, then automatically the smart contract will revoke the subsidy because now John is rich and he no longer needs a subsidy. In addition, there is also a wonderful feature called The Circle of Trust. And the way this works is if John borrows or lend money to his friends through his card, all of his transactions will get recorded, and he will get a credit score. So if he consistently pays back all the loans that he has taken from his friends, the credit score of John will go up. At the same time if he’s cheap and he doesn’t pay back the money, then the credit score will go down. And all of this is documented on the blockchain. And can be done at zero interest and without any extra charge. In this case, it becomes all the more amazing, why? Because asylum seekers arrive at the new country with zero credit history. And this smart contracts calculation of credit score gets them in a position where they can borrow money from financial institutions. And this is done with a vision that in the next five to ten years, these very same asylum seekers should be in a position to go on to take loans so that they can go on to build businesses. And once these businesses start processing, they can go on to become major contributors to the economy.
And the best part is everything, including the proof of identity, government subsidy access, credit scores, loans and salary disbursements. All of these processes are done on the blockchain without a centralized system and more importantly, with minimum human interventions, because of which there is no corruption. And guess what? These kinds of case studies have become so amazing that now the European Union is planning to spend $2 billion on a blockchain-based solution to solve the most pressing problems in Europe. This is the power of Ethereum and smart contracts.
