The media headlines shriek about Ethereum hitting new price milestones. But who is really celebrating? Crypto believers in Silicon Valley are popping champagne bottles. At the same time, Amahle, a new single mom in Soweto, struggles to make remittances survive to her family back in rural KwaZulu-Natal. Is this surge actually helping her? I doubt it.
Ethereum Price Increase Is Relevant?
Let's be brutally honest. The underbanked aren't glued to CoinMarketCap. They’re concerned about how they are going to feed their family, not gambling on cryptos. Specifically, Ethereum’s price shot up 19% in only two weeks largely thanks to short squeezes and over-leveraged long positions. This amazing progress makes the tragic reality that millions of people around the world still find financial services out of reach painfully obvious. Dangerously, this trend is less democratization of finance and more a tool for the ultra-rich to evade taxes.
Just keep in mind that the cost of transactions on the Ethereum network, aka “gas fees,” can be extremely variable. During these high-demand periods, these fees increase exponentially. That can even render Ethereum completely impractical for smaller transactions such as remittances, which are extremely important to the underbanked. Even if ETH is trading at an overall price of $2,500, Amahle could be losing $20 just to send the equivalent of $50 home. Where is the inclusion?
Is Crypto Really Helping Anyone?
So putting that all together, here’s what I learned in a conversation with Thabo, a local entrepreneur in Johannesburg who operates a small spaza shop. He explained to me that he had heard about crypto, but that the complexity and the risk involved were huge deterrents. "I don't understand all this talk of 'golden crosses' and 'short squeezes'," he said. "I just need a reliable way to accept payments and access credit." His sentiment is echoed throughout the community. We know that the technical jargon in the crypto world can be intimidating. This complexity, coupled with the market’s volatility, creates an intimidating barrier to entry for would-be participants. Decentralization offers liberty and opportunity, but that’s usually just hot air. Because our system is so difficult to navigate for the common person, it often becomes inaccessible.
- Barrier 1: Complexity of the blockchain technology
- Barrier 2: Volatility of the cryptocurrency
- Barrier 3: Expensive transaction fees
Should we really be pumping fist at this new highwater mark created by speculative trading when tens of millions are still locked out of our current financial system? The current narrative feels deeply unsettling. It is a celebration of the accumulation of wealth, disconnected from the social impact that wealth may—or may not—have.
What Should We Do About It?
Let's focus on real solutions. How do we use this blockchain tech to really serve the underbanked—like, give them cash, instead?
That means:
- Advocating for Layer-2 scaling solutions: These solutions can significantly reduce transaction fees on the Ethereum network, making it more accessible for small transactions.
- Developing user-friendly applications: We need apps that are intuitive and easy to use, even for those with limited digital literacy. Forget complex trading interfaces; think simple, accessible tools for sending money, accessing microloans, and managing finances.
- Providing digital literacy training: Education is key. We need to empower communities with the knowledge and skills they need to navigate the world of digital finance.
- Promoting responsible regulation: Regulation should protect consumers and prevent illicit activity without stifling innovation. We need a balanced approach that fosters responsible growth and ensures that the benefits of blockchain technology are shared by all.
- Decentralized Identity Solutions: Develop blockchain-based identity solutions that allow the underbanked to prove their identity and access financial services without relying on traditional forms of identification.
The Ethereum surge may just be the spark of optimism we need to usher in the long-promised sea change. Only if we hold them accountable that it is. Only if we push back against that inertia and stand up for a better, more inclusive, more equitable financial system. We need to keep in mind that behind every price graph are living, breathing individuals such as Amahle and Thabo. Their lives can only be positively impacted by the promise and potential that blockchain technology holds. Let's make that promise a reality. Don’t simply cheer as the price rises, insist that it raise everyone up around it.
Like with many emerging technologies, it’s imperative that we make sure the underbanked are reaping the rewards of this technology. Otherwise, we’ll only reproduce the same inequities we claim to be combating. Let the awe of innovation be matched by the outrage of injustice.
