Should we look to cryptocurrencies to solve issues of corruption in developing nations?
Should we look to cryptocurrencies to solve issues of corruption in developing nations?
Over the past few years there has been a growing interest in the use of cryptocurrencies (or cryptoassets as they are sometimes referred to) in the field of public policy and management.
It’s easy to understand why that is. If the technology gets adopted by central banks and becomes mainstream economic behaviour, the effects on the public finances of nations could be massive, as it is not uncommon for central banks to support the budgets of governments as well as other forms of revenue-generating activity.
It is in the area of development, however, that SOAS academic Alberto Asquer believes the real potential for the cryptocurrency industry lies.
“In some developing countries to have a form of digital record of real estate property promises to be incorruptible over time. It’s safer – more secure – than paper records.
“There could also be greater developments in other areas, such as financial inclusion – to make it more accessible to a larger number of people to access financial tools and resources.”
Despite the potentials, Alberto is not naive about the significant challenges that need to be overcome in order to enact such significant technological changes in national and international financial management systems.
“It is of course difficult to make the case for cryptocurrency as it is so complicated to understand. From a technological standpoint, I had to spend a lot of time to grasp the fundamentals as I am not trained in the computer-science of cryptocurrencies. But I think the public understanding of cryptocurrency has been further undermined by the prevalence of scam schemes. This is not un-deserved, to a large extent, and is why I am in support of much more regulation.
“There are some issues we need to resolve before we get too enthusiastic about it – tracking, for example, in relation to digital records is still very expensive. There’s a huge energy cost, which also means an environmental cost at some stage. So we need to find better ways to make it work more efficiently and faster.”
So is Alberto optimistic that 5, 10 years down the line we will have figured these things out?
“There is so much uncertainty about the future. But for me, the potential positives far outweigh the negatives. And when you consider the money that has been invested and committed to projects around Blockchain technology, this seems to me be the proof that people are really serious about it.”
Alberto Asquer is a senior lecturer in public policy and management and Director of the Centre for Finance and Management Studies (CeFiMS) at SOAS University of London. He joined SOAS in 2012.