Consider Aaliyah, a single mom in Johannesburg, South Africa. She operates a small online business, selling handmade crafts to customers around the world from her home in Harvard. Ethereum, with its offer of no fees and instant transactions, was her saving grace. It enabled her to avoid crazy expensive fees of legacy banks and get paid directly by her customers. Until last weekend.
When news broke of Iran-Israel tensions shuddering the world, Ethereum felt that jolt as well. Aaliyah’s hopes deflated as she watched the price of her ETH tank. She had saved that money in advance to cover her children’s school fees and other required school items. The one tool she used to stay out of financial ruin was now one that was going to doom her further into it. This is more than just political dollars and cents. More importantly, it’s about real people like Aaliyah, whose lives are directly affected by the events thousands of miles away.
Is Decentralization Truly Decentralized?
Ethereum is frequently claimed to be a decentralized, censorship-resistant blockchain, free from the control of governments and corporations. Is it truly immune? The recent price swings, triggered by geopolitical anxieties, reveal a stark reality: Ethereum, like any other asset, is susceptible to the fear and uncertainty that grips global markets. While the technology itself might be decentralized, its value is deeply tied to centralized power structures and international relations. Is true decentralization really feasible, when passion and geopolitics still control the steering wheel?
The data paints a grim picture. ETH is bottoming out but has an uphill battle ahead. The first volatility spike, which soared 15 points to 83%, illustrates how wildly volatile it can get. Investors liquidated hundreds of millions in losses, and short-term holders of ETH fled for the exits, selling their ETH en masse. Who really feels the pain? It's not the institutional investors who can weather the storm; it's Aaliyah and others like her, who are trying to build a better life using this technology.
Whose Empowerment Are We Talking About?
We hear how these technologies are empowering, that cryptocurrencies such as Ethereum are offering financial inclusion to the unbanked and underserved. But whose empowerment are we in fact discussing. The current system seems to disproportionately benefit those who are already wealthy and have the resources to absorb market shocks. They can "buy the dip," as the saying goes, while those on the margins are left scrambling to salvage what's left.
ETH’s volatility is a made-pocket change reality. Realities such as those created by the ongoing Iran-Israel conflict wreak havoc on its astounding promise to be an unarguably inclusionary finance mechanism. Whether it’s building a stable business or saving toward retirement, building wealth is hard. As we know, geopolitical turmoil can wipe out the value of your assets overnight. Ethereum needs to live up to the hype. In order to do this, we need to address its susceptibility to external shocks and develop policies that guard at-risk users.
Beyond the Tech: Human Cost Matters
The focus is often on the technology itself – the smart contracts, the scaling solutions, the potential for decentralized finance (DeFi). Yet we have to move the debate from the bottom-line expenditures to the human toll inflicted. The story of Aaliyah is not unique. Millions of people and small enterprises in developing economies rely on cryptocurrencies to survive. They are using this digital currency to combat issues such as inflation, corruption, and lack of access to traditional financial markets. When Ethereum's price plummets due to factors completely outside their control, it's not just an investment loss; it's a setback to their livelihoods and their dreams.
Perhaps the answer lies in exploring more stablecoins, developing risk management tools specifically tailored for crypto users in emerging markets, or promoting financial literacy to help people make informed decisions. Perhaps then, we should take a step back and question whether Ethereum, as it exists today, really is the best tool for these populations.
Six-figure inflows into US spot Ethereum ETFs are a boon for investors able to afford entry. What about those who are unable to do so? That’s the disparity created by the current system, which builds a two-tiered financial world. The rich just get richer while the poor or marginalized get pushed down even more.
What we need is a more equitable, more resilient financial system, one that really empowers everyone and isn’t just rigged for the well-connected. The current Iran-Israel conflict has underscored Ethereum’s flaws. It provides the impetus and opportunity to build a better, more inclusive future. Let's not squander it.
This is an opinion piece for informational purposes only and should not be considered investment advice. The writer does not have a position short or long in any of the above securities.
