Cryptocurrency in Bulgaria

In the years following the fall of the Eastern Bloc, Bulgaria still struggles in comparison with the rest of Europe. As of 2016, the government of Bulgaria reported that an estimated 23.4 percent of its population lived below the poverty line, while as of 2017 the unemployed constituted around 6.2 percent of the population. Bulgaria also happens to have the lowest annual salary, minimum wage and average pension amount in Europe, while also suffering high rates of outmigration, governmental corruption and overall mortality. Though these problems may appear overwhelming, the use of cryptocurrency in Bulgaria provides a means by which steps may be taken to mitigate these issues.

Fundamentals of Cryptocurrency

As a medium of exchange, cryptocurrency by its very nature expedites humanitarian aid to distressed regions. This is because it sidesteps the need for a financial institution as an intermediary between grantor and recipient, thus providing a means of direct payment for potentially large amounts. The realities of governmental and organizational corruption and incompetence that hinder international aid may be entirely evaded, resulting in more effective and efficient aid conveyance even to the most turbulent locations.

Furthermore, an estimated 40 percent of adults, mostly residing in the developing world, face impediments to the formation of a financial identity that may appear nearly insurmountable. However, cryptocurrency provides an alternative means by which people without easy access to financial institutions or who lack sufficient capital to open a bank account may establish a financial identity and improve their chances of escaping poverty. Moreover, despite the market volatility of cryptocurrency in Bulgaria and throughout the world, it provides a fairly stable alternative compared to entrusting one’s assets in banks and other financial institutions. Savings stored as cryptocurrency are less likely to be subject to the vicissitudes of inflation, corrupt governments and asset appropriation.

How an NGO Uses Cryptocurrency in Bulgaria

The BitHope Foundation, an NGO established by Vladislav Dramaliev, provides a global crowdfunding platform for humanitarian initiatives. As the first charitable platform of its kind established on the basis of cryptocurrency in Bulgaria, it seeks to facilitate NGOs and individuals alike in their fundraising efforts. This organization hopes to incentivize businesses that accept cryptocurrency to invest in these causes, which will further bolster the public impression and acceptance of cryptocurrency as a legitimate medium of exchange.

Many crowdfunding campaigns hosted through the BitHope Foundation’s website are considered to be humanitarian successes in Bulgaria. For instance, the “Support Burgas Municipality After the Floods” campaign raised €1,749 in cryptocurrency or approximately $1,925, in response to floods that damaged parts of Burgas municipality, a region of Bulgaria on the Black Sea coast. These charitable contributions went toward the purchase of household needs including refrigerators and microwave ovens for those affected by the floods.

Specific Campaigns by BitHope

  • “Every Child Deserves A Holiday” aimed to raise charitable funds for families living below the poverty line, raising €588 or approximately $647, in cryptocurrency.
  • The “Support Positive and Character Education” campaign, which raised the equivalent of €786 (approximately $865), sought funding for programs designed to inspire children and parents to persist with schooling regardless of what predicaments may arise.
  • The “Sports Charity League” campaign enabled the funding of sports competitions for children and adolescents, after raising a cryptocurrency total of €1,522 or $1,674.
  • The 2017 funding campaign “Preeclampsia? I want to know” raised €1,132 ($1,373) for the acquisition of biomedical tests for use in screening pregnant women without charge for the potentially serious medical condition preeclampsia.
  • Also in 2017, a campaign called “Hope for Mental Health” accrued €358 ($434) in funds to assist mentally disabled children and adults in obtaining health care.

BitHope in the Present

These successes emerged in spite of numerous impediments standing in the way of using cryptocurrency in Bulgaria. Besides a global decline in the total market cap of cryptocurrency from $604 billion to $131 billion in 2018, the Bulgarian government persists throughout 2019 in its refusal to allow cryptocurrency-based organizations to open a bank account for the storage of cryptocurrency. Although this complicates the withdrawal of funds, the cryptocurrency conversion process, accounting, tax payments and payments to internet service providers, such difficulties have made the BitHope Foundation more resilient in its fight to address humanitarian issues in Bulgaria.

– Philip Daniel Glass
Photo: Flickr

Cryptocurrency and Poverty Reduction
An increasing number of nonprofit organizations are looking to cryptocurrency to help reduce global poverty. The immediacy, inclusivity and stability that cryptocurrency promotes could be invaluable for those who are in crisis, lack access to a bank or struggle due to hyperinflation. Here are four examples of how cryptocurrency and poverty reduction are coming together:

GiveCrypto

GiveCrypto is a nonprofit organization that links cryptocurrency and global poverty reduction. Since founding members currently cover operating fees, 100 percent of the funds GiveCrypto accumulates goes to the recipients. While Bitcoin is the most recognized cryptocurrency GiveCrypto uses, this nonprofit also transfers money through Bitcoin Cash, Litecoin, Ethereum, XRP and Zcash. GiveCrypto emerged on June 20, 2018, and has raised $4 million so far. The founders hope that GiveCrypto will improve the well-being of individual people struggling in their communities. However, they also intend for GiveCrypto to build up the economies of these communities. For this reason, the ultimate goal of the organization is “to help spark economic growth by giving access to property rights and financial services on an open network.”

CareBit

The founders of CareBit specifically designed the CARE coin for charity purposes. Unlike GiveCrypto which is merely a platform to distribute several different types of cryptocurrency to those living in poverty or financial crisis, CareBit is its own cryptocurrency. The purpose of creating the CARE coin is to link cryptocurrency and poverty reduction more directly. Currently, CareBit is the only independent charity on blockchain, a technology that documents and decentralizes transactions. By directly implementing a charity model into blockchain, CareBit is able to trace transactions to ensure that 100 percent of each donation reaches its intended recipient. The ultimate goal for CareBit is to increase transparency and to decrease fees, corruption and fraud in any given transaction.

BitGive

BitGive emerged in 2013 and is Bitcoin’s first nonprofit charity. BitGive partners with international relief organizations and local charities such as The Water Project, Medic Mobile and Save the Children. Just like CareBit, BitGive implements its charity directly into blockchain in order to effectively track donations and increase its efficiency. Additionally, BitGive uses the blockchain technology GiveTrack to publicly track financial information and share this information in real-time. With GiveTrack, donors can track funds and ensure donations reach their final destination. The other benefit of BitGive is that processing fees are considerably less. On average, 3.61 percent of donations go towards processing fees for the average nonprofit. On the other hand, BitGive spends less than one percent of donations on fees.

Binance Charity Foundation

The Binance Charity Foundation (BCF) is the philanthropic extension of Binance Exchange. BCF uses Binance Coin to integrate cryptocurrency and poverty reduction. In contrast to the nonprofits mentioned above which focus on financial poverty reduction, BCF specifically focuses on improving the overall health of women in developing countries. For instance, BCF has recently partnered with 46 other organizations to provide a one-year supply of sanitary products to approximately one million women. Women will receive these sanitary products by using the Pink Care Token (PCAT), a redemption-only token on the Binance blockchain.

Uniting cryptocurrency and poverty reduction initiatives demonstrates the increasing demand for improved donating systems in response to a lack of trust in how charities spend their funds. Thus, the increased transparency that cryptocurrency offers through blockchain’s traceability feature could potentially reassure donors and encourage them to donate. Whether or not cryptocurrencies will become influential enough to directly strengthen the economies of the developing world, however, is still unclear.

– Ariana Howard
Photo: Unsplash

Venezuela's Oil-Backed CryptocurrencyVenezuela is a region rich in oil and minerals, yet it suffers from poverty and political turmoil. Venezuelan president Nicolas Maduro is launching a new blockchain currency called Petro, an oil-backed cryptocurrency. The U.S. believes this to be an attempt to circumvent sanctions against the Venezuelan government and is cracking down on Venezuela’s oil-backed cryptocurrency.

Venezuela suffers from the “resource curse,” a phenomenon whereby its large reserves of oil negatively impact its economic growth and stability. Rather than a blessing, these energy reserves lead to fraud, corruption, wasteful spending, military adventurism and the authoritarianism of the Maduro regime. This curse exacerbates global poverty through the destabilization of the oil industry, dulling the effect of foreign assistance and creating a breeding ground for terrorism and instability.

Although the country has a vast supply of oil money, instead of going to Venezuela’s poor, the money ends up in the pockets of the rich. U.S. Senator Marco Rubio tweeted on February 9, 2018, regarding the Maduro regime, “Soldiers eat out of garbage cans & their families go hungry in #Venezuela while Maduro & friends live like kings & block humanitarian aid.”

Venezuelans are deprived of human rights guarantees and press freedoms, facing political persecution and public corruption by the Maduro regime. The U.S. regards the Maduro regime as a dictatorship, whose power has overridden the democratic will of Venezuelans. The nation’s population is greatly subjected to sex trafficking and forced labor, sexual exploitation and domestic servitude. People from other nations are trafficked for sex and labor in Venezuela. Cuba trafficks thousands of Cuban citizens and doctors into forced labor in Venezuelan social programs, in exchange for the provision of resources to the Cuban government.

The most recent U.S. sanctions were imposed in August 2017 against Venezuela’s dictatorship, blocking U.S. citizens from buying new debt, bonds, dividends or other distributions or profits from Venezuelan government-controlled entities and its state oil company, Petroleos de Venezuela (PDVSA). This followed December 2014 sanctions imposed by the U.S., aimed at preventing U.S. entry by persons involved in the erosion of human rights guarantees, political persecution and public corruption. These sanctions do not target the people or the economy of Venezuela; they are aimed at protecting the will of Venezuelans and preventing U.S. involvement with the corruption of the Maduro regime.

Maduro responded to these sanctions by implementing strategies to free the oil-centered economy from the U.S. dollar, despite its universality in global trade. In September 2017, Maduro ceased publishing Venezuelan crude oil market prices in U.S. dollars, instead publishing prices in Chinese yuan. His December 2017 announcement to implement the oil-backed cryptocurrency was in direct response to the August 2017 sanctions, stating that Petro could “help defeat the financial blockade.”

Cryptocurrency is decentralized, uncontrolled by banks or governments. It can benefit those living in politically unstable regions, because the government can neither control its value nor transfer it from state to state. In Venezuela’s case, the cryptocurrency will be backed by oil, an industry largely controlled by dictators. Because Petro is a cryptocurrency, it is difficult for the U.S. government to regulate, threatening the U.S. sanctions that prohibit investing in PDVSA.

Petro is one of many foreign exchange (FX) mechanisms introduced by Venezuela. Most of the FX failed to meet market demand for dollars, resulting in Venezuela’s robust black market. Although FX is prohibited on the black market, it is the driving force of hyperinflation. Continuously on the rise, one U.S. dollar is now equivalent to 9.9875 Venezuelan bolívar.

The U.S. addressed Venezuela’s oil-backed cryptocurrency in a letter by senators Marco Rubio and Bob Menendez to the U.S. Department of the Treasury, stating “we are concerned that a cryptocurrency could provide Maduro a mechanism by which to make payments to foreign lenders and bondholders in the United States, actions that would clearly thwart the intent of U.S.-imposed sanctions.”

In early February 2018, U.S. Secretary of State Rex Tillerson toured Latin America and the Caribbean. Afterward, Tillerson alluded to U.S. considerations of restricting oil sales from Venezuela due to its worsening political situation. Developments in trade sanctions are imminent as the U.S. cracks down on Venezuela’s oil-backed cryptocurrency.

In opposition to the Maduro regime, the Venezuelan Parliament stated that Petro’s creation only serves to “evade financial sanctions, [and is] openly violating the Constitution and legitimizing illicit transactions.”

As the U.S. cracks down on Venezuela’s oil-backed cryptocurrency, the government aims to combat the use of Petro to circumvent U.S. sanctions, prohibiting investors on U.S. soil from profiting or investing in the PDVSA, the driving source of Venezuela’s poverty and humanity crisis. These policies and sanctions will be heavily enforced in the face of Petro’s introduction to the market and will serve to reject the political corruption and economic failure to its people of the Maduro regime.

– Alex Galante

Photo: Flickr

Blockchain Technology and Poverty
Since its conception, blockchain technology has become widely synonymous with the cryptocurrency Bitcoin. However, the utility of blockchain comes not necessarily from its manifestation in online currency but the nature of its security and accessibility. These two features are what make blockchain technology and poverty so interlinked. It holds promise as a secure and equalizing tool for the world’s poorest and most rural.

The inner mechanisms and mathematical coding of blockchain are highly complex. The principle is simple. It is a public ledger, stored and spread across multiple networks in countries around the world, making an impermeable information network. The decentralized nature of the data stored on blockchain allows for its application across all sectors without risk of disruption.

Significant to alleviating poverty, blockchain technology’s secure nature allows for it to be used as a financial services platform. In both urban and rural areas of developing countries, banks can be hard to come by, expensive to set up an account in and somewhat unreliable.

Cryptocurrency services can be scaled up and down to be incorporated into everything from the most basic phones to the world’s most sophisticated smartphones. This cryptographic technology would allow its users to send money directly to other individuals without a middleman or “trusted third parties” which take a percentage as a fee for its services and can be largely inaccessible.

Estimates suggest that by 2020 over 70 percent of the world will have access to smartphones. With financial technologies such as blockchain services, there is a real chance for those in rural or economically unstable countries to secure themselves without huge risk. Blockchain technology and poverty could have a progressive and important relationship.

By using cryptocurrencies or internet-money, individuals in financially insecure nations can take steps to avoid financial vulnerabilities, such as fraud or hyperinflation. M-PESA, a mobile money-transfer and micro-loan financing company, operates all across Africa and in parts of central Asia. Numbers from early 2017 suggest that M-PESA’s user base allowed approximately 186,000 families, two percent of Kenyan households, move from poverty into sustainable working conditions.

Blockchain’s financial services allow for mass participation in the most remote parts of the world. A wide range of business owners can build financial credibility. Currently, Chinese pharmaceutical companies receive assistance from Yijan, a blockchain created by IBM and Hejia, a Chinese supply management company.

Significant and notable players on the international landscape are quickly getting involved in blockchain techniques. The Bill and Melinda Gates Foundation’s Level One Project aims to use digital financial services to bring the impoverished into the formal economic ecosystem, providing them with the tools necessary for financial mobility.

In early 2017, the United Nation’s World Food Programme (WFP) incorporated blockchain technology and cash-based transfers into its humanitarian aid outreach in Pakistan. By using mobile-transfers, the WFP ensured that those in need were receiving financial aid without the risk of the disruption possible with cash-based aid. The technology-based transfers also allowed for the WFP to streamline its tracking system. Since the success in Pakistan, the WFP has chosen to expand blockchain to other humanitarian efforts.

These are a few of blockchain’s many applications. Its reach and potential as a tool for poverty alleviation are great, especially if utilized jointly by governments and NGOs. Although it may be no panacea, the incorporation of blockchain technology may be a significant macro approach in solving the systematic issue of poverty. Blockchain technology and poverty disruption may be one of the most exciting aspects of the new digital age.

Sydney Nam