Blockchains and cryptocurrencies hold the potential to help Indian women gain financial independence, especially when we are hit by a pandemic.
On the dreadful eve of November 2016, when the Indian government-imposed demonetisation came into force, the rural towns of Tamil Nadu hadn’t yet got wind of the impending apocalypse. Kamala, oblivious of the doom, shoved a 500 rupee note, folded eight times, into the aluminum container that stored tea powder. It had a few more notes, hastily folded, almost torn, and some coins. Hiding all her hard-earned money from her drunk husband, Kamala was one of the 482 million people who stayed out of the banking system in India, earning cash incomes, sometimes sporadically.
These women, who barely have enough to meet the “minimum balance” criteria if they can get away from the watchful eyes of their families to make any form of deposit at all, faced the worst brunt of the demonetisation exercise, which many found to be half-baked.
Four years after the demonetisation, as we find ourselves in a somewhat comparable crisis caused by the coronavirus pandemic, we could ask if the concept of savings could be transformed from its physical form entirely? Would it help a majority of the population in these uncertain times if cryptocurrency became mainstream?
With a projected estimation of 500.9 million mobile phone internet users in India alone, and access to a basic android phone for less than 2,000 rupees, digital currency could help save a lot of livelihoods, of women especially.
The Assistant Vice President of the Internet and Mobile Association of India (IAMAI) Amitayu Sengupta believes there is promise in mass consumerism with cellular internet. As one in three women access the internet, according to the 2018 data, financial freedom seems to be literally at the fingertips of women.
“Affordability is the biggest factor. Handsets have become cheaper. Bite-sized data packs are available. Bundling of data packs with subscriptions has worked very well with the rural women audience as they access daily soaps on the internet,” said Sengupta.
Not only will storing crypto on their digital wallets be an excellent way to gain financial independence, but it will also buffer them from policies such as demonetization and unforeseeable calamities.
Simply put, a cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralised networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers.
India is facing an economic crisis that is similar to what the United States faced during the 2008 sub-prime meltdown. People, especially in the unorganized sectors, are known to borrow money from private microfinance companies. These companies are known for their coercive recovery practices and lending to a point of indebtedness.
The average Indian is a lot poorer than the average American citizen and with zero state support. The borrowers, mostly small business owners, often kill themselves over their inability to repay the said loan. That farmer suicides over loans reaching epidemic proportions does not come as a surprise.
Microfinance, with an annual interest rate varying from 24 to 30 percent, is supposed to be better, compared to the 36 to 120 percent charged by extortionist money lenders. However, as there is an immense lack of education and uncertainties attached to borrowers’ choice of businesses, neither seems to be of any use to them. To counter this anathema, Rang De, a Bangalore-based social investment company came up with a novel idea.
Rang De is an RBI-registered NBFC P2P platform that uses the power of the internet to match small business owners with interested investors. Smita Ram, the CEO and co-founder of Rang De believes there is promise in moving away from fiat currency to cryptocurrencies, owing to the latter’s decentralised nature and privacy features. While it may seem like a far-fetched idea, Smita believes if we bridge the knowledge gap and increase the adoption of digital currency, there is huge potential.
Not to mention, the extensive expenditure with regards to seeking permissions, licenses from the RBI (India’s central bank) and other credit mitigation agencies can burn out any organization. “A large part of the regulatory framework involves paperwork in order to apply for the license. Post that we are subject to regular audits and supervision from various departments. Crypto can be a gamechanger here,” Smita said.
It’s 2020, and our entirely unprepared generation is witnessing an unprecedented pandemic, bemoaning the economic crisis that is about to follow. Although demonetisation might not be as frequent as a COVID-19 outbreak, applying tech during such times could be rewarding.
While the recipients of social investments might be awarded a repayment holiday, the lapse in accrued interest for the investors could take a hit. When I asked Smita how they foresee such cash deficits to affect their business model, she said, “This may not be applicable in our case as, during such situations, investors do not expect to get repaid right away. But I do see the benefit of digital currency in smooth transactions during lockdowns and such situations.”
Apart from cryptocurrencies, blockchain tech is also being used as a tool for information sharing in times of pandemics. The United States’ health protection agency – Centre for Disease Control (CDC) – is working with IBM to use blockchain technology for the collection and dissemination of data. Their current method of storing data on a cloud-based platform is wrought with security risks. Using the blockchain could make it easier to collect data, keep it secure, and log who’s accessed which parts of it.
The immutability, scalability and security that blockchain provides, makes it a potent tool. Blockchains provide decentralised real-time data storage and dissemination, that could enable various agencies across the world to coordinate their efforts against a global crisis such as the COVID19.
Freelancers in India are also at a disadvantage due to the enormous red-tape and restrictions for overseas money inflow into personal accounts. While the Indian government recently passed amendments facilitating limitless anonymous donations to political parties via electoral bonds, freelance writers and graphic designers have to jump through hoops to legitimise paltry amounts received from abroad via PayPal and websites like Fiverr. They are always at the peril of being victims to the draconian FEMA (Foreign Exchange Management Act) rules, over their meager incomes.
Medium, a reputed blogging service, recently excluded writers from India and Brazil from its “Partner Program” – a model in which Medium will pay its writers based on its reach and quality of content – citing regulatory problems faced in the two countries by their payment partner Stripe. If Medium were to adopt cryptocurrencies to pay its writers, such red-tape could be easily averted, and thousands of writers wouldn’t be left in the lurch, especially in times of a lockdown. Anybody could work for foreign clients without constantly worrying about being prosecuted.
Critics say that cryptocurrencies are presently too volatile to replace fiat currencies as a medium of exchange, and their primary use-case is speculation and trading. However, mass adoption could change that very quickly. We are already seeing services such as BitPesa helping Africans transfer money overseas at a fraction of the cost that traditional banking institutions levy. Perhaps someday in the near future, cryptocurrencies will change micro-industries and freelance landscapes in developing nations like India for the better.
Until the March 2020 verdict of the Supreme Court quashed the draconian RBI curb, the Indian government had decreed that cryptocurrencies would not be considered legal tender, (not illegal) and had also asked traditional financial institutions to stop servicing crypto exchanges and websites that deal in the same. Many Indian cryptocurrency exchange platforms such as ZebPay had their operations virtually paralysed, but hopefully, they can restart operations again, now that the ban has been lifted.
The government cites the volatility and fears that it will hurt small individual investors. Also, the untraceable nature of certain cryptocurrencies makes governments very weary of them. They dissuade their proliferation on the pretext of “preventing criminal and terrorist activities.” But the real threat is how cryptocurrencies will make traditional gatekeepers of finance redundant, and take power away from monopolistic totalitarian banking cartels and regulatory bodies.
For millions of Indian women like Kamala, though, crypto holds the power to reshape their lives in a way that the industrial revolution and the world wars did for women in the West, by bringing them out of their narrow gendered roles as housewives and catapulting them into the industrial workforce.