Blockchain technology is the key to grassroots financial freedom

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Traditional finance has produced many good things, such as near-instant payments, intuitive mobile apps, etc. But on the other hand, its centralized and siloed infrastructures have created deep financial inequalities across geographic and cultural boundaries. About one percent of the world’s population owns over $87 trillion in financial assets, or more than 43% of total global financial wealth. More than 63% of their wealth is in financial assets, while the majority owns 37%.

Blockchain can fix this. Grassroots participation is the soul of decentralized wealth creation protocols and financial networks. But we shouldn’t take it lightly. Especially when legacy players like Blackrock, VanEck, etc. enter the space with a range of centralized products and ETFs.

Institutions wield a double-edged sword

Along with macroeconomic factors like easing inflation pressures, exchange-traded funds (ETFs) have played a major role in bringing bulls back to crypto. The optimism around such developments is understandable. Gaining exposure to blockchain-based digital assets through familiar vehicles could provide a stronger impetus for mainstream users to join.

Could this be the milestone we’ve been chasing all these years? Yes. As long as we don’t inherit persistent problems like high barriers to wealth creation and instead optimize for inclusivity.

Access to asset management firms in the U.S. requires a minimum of $2 million to $5 million in investable assets, whereas large fund managers like Blackrock only serve high-net-worth individuals with portfolios over $100 million. Only the global financial elite can meet either of these criteria.

Offering crypto-related products is unlikely to automatically make incumbents more inclusive, because the roots of exclusionary business models run deeper than the policies or intentions of this or that company.

Pervasive information inequality is inherent in the centralized and siloed nature of traditional financial systems. This has evolved over decades and has led to an uneven playing field that is difficult to fix. In fact, most attempts to find workable solutions within old financial paradigms have so far failed. For example, the STOCK Act has failed to prevent members of the US Congress from engaging in insider trading. To date, no member of Congress has been penalized under the Act, primarily because, despite centralized ledgers, it is very difficult to determine the extent of ‘material information’ that influenced a particular trade.

Such half-baked approaches to ensuring level playing field in the world of user-centric and pseudonymous blockchains are unlikely to work. However, the underlying technology has unique capabilities to provide equal access to all while inherently promoting fairness.

Wealth and financial freedom for all

Blockchain is one of the most powerful wealth and access equalization technologies since the Internet. It brings new revenue streams and investment vehicles directly to the average user. The peculiar dynamics of the ongoing market cycle make this clearer than ever. As Mike Mallazo recently wrote:

“The real egalitarian appeal of crypto is not that it will democratize payments; it’s that a ZYN-fueled degenerate living in his mom’s basement can outperform an MIT-educated quantitative analyst who spent a decade at Goldman.”

Institutions have so far led the way for retail users in certain wings. But in parallel, grassroots users are also generating life-changing wealth through memecoins etc. For example, a trader recently turned $2,275 into $2.6 million in about eight hours (not financial advice). That’s pretty common these days.

This is possible because the barriers to entry are very low and almost non-existent. Anyone can start their wealth creation journey with as little money as they want. No doormen. No questions asked. No minimum income requirements. Degen and prince are almost on the same level.

Unlike Tradfi systems, blockchain-powered financial networks actually offer the underdog a significant and fair chance to rise. Even more so with advanced wealth-building protocols where the average user can make millions by investing alongside top asset managers.

The emerging social investing paradigm unlocks a merit-based environment where experienced investors and amateurs can mutually benefit. The former can monetize their battle-tested strategies, while the latter gain a stress-free path to profit.

It is also possible to create accessible wealth management systems that support a wide range of asset classes including meme coins, defi, NFT, RWA, etc. This will further democratize the space and open up financial opportunities that are only available to the wealthy elite.

No matter who or where they are, anyone can become financially free using blockchain-powered tools. Users are the biggest winners in this change. It is the embodiment of justice.

Finally, robust blockchain native infrastructure is the way to offset the potential negative impact of widespread institutional adoption. We will only fully reap the benefits of greater institutional participation when decentralized, community-driven systems are equally strong.

This is a battle of narratives and perceptions where the fundamental voice of crypto needs to be heard louder than those who seek to misuse the technology for selfish gain. ETFs etc. can bring in new users and that’s great. But local protocols and their communities should set the standards. We shouldn’t repeat the historical mistake of exclusion.

Abdul Rafay Gadit

Abdul Rafay Gadit is the co-founder of Zignaly.com. He believes in a world where financial independence is a necessity, not a luxury. A former corporate banker who spent six years at Standard Chartered, Rafay is now fully committed to building Zignaly’s Layer-1 blockchain, ZIGChain. His mission is to unlock wealth creation opportunities for everyone. ZIGChain provides an infrastructure for developers to build protocols that can be used by fund managers and seamlessly accessed by the retail investor community.