As a researcher with a background in traditional finance and a stint at Standard Chartered under my belt, I’ve seen firsthand how deeply entrenched financial inequalities are across the globe. The statistics speak for themselves – it’s disheartening to know that less than 1% of the world’s population owns over 43% of the total global financial wealth.
In essence, conventional finance has brought about numerous beneficial aspects such as swift transactions and user-friendly digital tools. However, it’s important to acknowledge its drawbacks too – these include a centralized and compartmentalized structure that fosters significant financial disparities across regions and cultures. Strikingly, only about 1% of the global population holds more than $87 trillion in financial assets, which amounts to over 43% of the world’s total financial wealth. Remarkably, this elite group owns more than six times (63%) as much in financial assets compared to the majority (37%).
As someone who has witnessed the evolution of financial systems over the past few decades, I’ve seen firsthand how traditional institutions have often prioritized their own interests over those of individual investors. This is why I am particularly excited about the potential of blockchain technology to democratize wealth generation and create more equitable financial networks.
Institutions wield a two-edged sword
In addition to economic factors that help control inflation, exchange-traded funds (ETFs) have played a significant role in revitalizing the interest of investors in cryptocurrencies, often referred to as “the bulls.” The enthusiasm towards these advancements is logical, given that investing in digital assets linked to blockchain through familiar tools could motivate more mainstream users to participate.
Is this potentially the turning point we’ve long sought, if we focus on overcoming persistent issues such as high obstacles to wealth creation and prioritize inclusivity instead?
To work with wealth management companies in the U.S., one typically requires at least $2 to $5 million in investable assets. On the other hand, large fund managers such as Blackrock cater only to high-net-worth individuals who possess portfolios worth more than $100 million. Consequently, only a select group of financially affluent individuals worldwide meet these criteria.
It’s not guaranteed that providing cryptocurrency services alone will instantly make traditional institutions more welcoming. The foundations of exclusive business practices often extend beyond specific company policies or intentions, running much deeper within the system.
Inherent to traditional financial systems, which are often structured in a centralized and compartmentalized manner, is a significant disparity in access to information. This has developed over time, creating an uneven playing field that’s hard to level out. Efforts to find workable solutions within these established financial frameworks have generally fallen short. For instance, the STOCK Act, designed to prevent insider trading among US Congress members, hasn’t been effective so far. To date, no Congress member has faced penalties under this act, primarily because it’s difficult to define and regulate ‘material information’ impacting a specific trade, even with centralized records.
In the anonymized and user-oriented realm of blockchain technology, traditional methods aimed at creating a balanced playing field might not be effective due to their semi-developed nature. Nevertheless, this system inherently possesses distinctive abilities to ensure universal access and uphold fairness as a fundamental feature.
Wealth and financial freedom for all
As a technology analyst, I firmly believe that Blockchain stands as one of the most powerful tools for wealth and access equality since the advent of the Internet. It uniquely empowers everyday users by providing new avenues for income generation and investment opportunities. The intriguing patterns unfolding within our current market cycle are making this increasingly evident. To quote Mike Mallazo, “Blockchain is demonstrating its potential as a game-changer more clearly than ever before.”
“What makes cryptocurrency truly intriguing isn’t just the idea that it could equalize transactions, but rather the possibility that someone with nothing more than ZYN vape and a basement setup could outshine a financial expert from MIT with years of experience at Goldman Sachs.”
Institutions have traditionally led the way in certain areas of investment. At the same time, ordinary users are also amassing significant fortunes through meme coins and similar assets. For instance, a trader recently transformed $2,275 into $2.6 million within approximately eight hours (not financial advice). Such occurrences are becoming increasingly frequent these days.
As someone who has struggled to get ahead in life due to financial constraints, I wholeheartedly support the concept of low or non-existent entry barriers for wealth generation. My own journey has been marked by numerous roadblocks and obstacles, and I can only imagine how much easier it would have been if I could start building my wealth with minimal resources. The idea that anyone, regardless of their background or social status, can begin their journey towards financial freedom without the need to navigate through gatekeepers, answer intrusive questions, or meet minimum income requirements, is truly empowering. This level playing field offers an unprecedented opportunity for those who have been historically marginalized and excluded from traditional wealth-building avenues. In my opinion, breaking down these barriers can be the key to unlocking a more equitable and inclusive economic system that benefits everyone, not just the privileged few.
In contrast to traditional financial systems, blockchain-based networks provide a meaningful and equitable opportunity for underrepresented individuals to thrive. This is particularly true in the context of sophisticated wealth-creation methods, where even an ordinary investor could potentially amass millions by collaborating with top asset managers.
In this new approach to social investment, there’s a level playing field that fosters mutual advantage for experienced and novice investors alike. Skilled investors can capitalize on their proven tactics, while beginners gain an effortless way to earn profits.
It’s feasible to construct inclusive wealth management platforms that cater to diverse asset types such as meme stocks, DeFi, NFTs, RWAs, and more. By doing so, we can broaden access to this sector, breaking down barriers and making financial opportunities accessible to a wider audience beyond the traditional wealthy elite.
Regardless of their identity or location, anyone has the potential to achieve financial independence by utilizing blockchain technology. In this transformation, it’s the users who stand to benefit the most. This embodies a high degree of fairness.
To summarize, a resilient infrastructure built directly on blockchain technology is crucial in mitigating any potential downsides associated with widespread institutional involvement. We can truly capitalize on the advantages of increased institutional engagement when both centralized and decentralized, community-focused systems are equally robust.
As a crypto investor, I firmly believe we’re in a struggle between narratives and perspectives. The genuine spirit of cryptocurrency should resonate more powerfully than those attempting to manipulate the technology for personal gain. ETFs and other such tools can certainly attract new participants, which is fantastic. However, it’s the native protocols and their communities who must establish the guidelines. We must learn from past mistakes and ensure that we don’t repeat the error of exclusion.
Abdul Rafay Gadit serves as a co-founder for Zignaly.com, a platform he envisions as essential for achieving financial independence rather than a luxury. Previously, Rafay spent six years in corporate banking at Standard Chartered. Today, he pours all his efforts into developing ZIGChain, the Layer-1 blockchain of Zignaly. His goal is to open up wealth-generation opportunities for everyone. The ZIGChain serves as a foundation for developers to create protocols that can be used by fund managers and easily accessed by retail investors.
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2024-08-05 16:33