The last quarter has seen a noticeable decline in the market for cryptocurrency exchanges. In the broader context, this may seem like a slight dip in the view of crypto as an often volatile speculative financial tool. Crypto may now be reaching its age of maturation where it has pushed its boundaries outside of mere currency transactions and to broader functionalities.
This transition in the past couple of years has been from the use of crypto as a pure asset or investment to an application-specific tool. As analyst Sid Kalla mentions, “The value of these crypto tokens came, not so much for their use in the exchange of goods and services, but rather the use of the underlying service that required these tokens to operate.”
During this time, crypto token use has crept into formal sectors of the economy, from real estate property to agriculture to human development. Tokenization has been used for a variety of purposes, from a reward mechanism to a means of keeping track of personal data. One common accusation has been that in the brainstorming phase, blockchain solutions are often provided for nonexistent or insignificant problems. Still, this pushing of the envelope can be seen as a positive phenomenon even if it has remained largely focused on tokenizing the formal sector with solutions that refine current processes. Often these solutions fail to take advantage of the inherent strengths that blockchain provides.
An area ripe for token expansion is the informal sector. This includes exchanges and human interactions that are undocumented and unaccounted for. There is tremendous potential for having tokens represent transactions that fall under the radar and have them be recorded in an immutable digital ledger. The scope for this form of tokenization is only limited by the creativity of those designing the solutions.
To give an example, our Rohingya Project has finished a pilot program called ‘R-Coin’ with UNHCR in Malaysia. The pilot had refugee participants earn tokens (on an e-wallet developed by our technology partner Datarella) through community service and volunteering, with each hour of work represented by 1 R-Coin. Refugees can later redeem these tokens for prizes, but the real value of the token is not monetary or asset-based. Rather, in a country where refugees are not allowed to work and are socially marginalized, the R-Coin represents social capital and recognition for the volunteer work which normally goes unnoticed. The R-Coin can hopefully then become the means to formalize their invisible contributions and record this record of service as refugees’ own digital CV.
Of course, it is easier to make this case for tokenization when dealing with populations who are literally off the books and are starting their digital selves from scratch. But how many other migrant workers are there whose pay is completely undocumented? How many community organizers are there whose work is unnoticed? How many struggling artisans are there who have a social impact that is unmeasured? Crypto can make a case for not just digitizing these forms of invisible social and economic activity, but creating a ledger where we can paint a clearer tokenized picture in about how our society actually looks in terms of human contributions. The formalization of the informal can be the next domain for cryptocurrency.
Author Name: Saqib Sheikh
Saqib is the Project Director for the Rohingya Project, a grassroots initiative for the financial inclusion of stateless Rohingya refugees worldwide using Blockchain technology.
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