Why does Hercules want to invest in crypto space?
Tags: Impact Investing, Bitcoin, Blockchain, Cryptocurrency, Defi

by Prince Dhaka, a Research Analyst at Moving

Almost like the twelve labors of Hercules, the world is exposed to numerous social, environmental, and governance issues on an everyday basis. Fortunately, Hercules had the help of Hermes and Athena, sympathetic deities who showed up when he really needed help. By the end of these Labors, Hercules was, without a doubt, Greece’s greatest hero. In a similar fashion, Blockchain and impact investing are two deities that are helping humans push the frontiers of human capabilities. By the time we fully harness the capabilities of blockchain and impact investing, the world will completely change for the better.

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Diving into the deities:

Impact investing:

Impact investing is the practice of investing funds for both a financial return and social impact. It works by directing capital to ventures that are expected to yield social and environmental benefits as well as profits.

“do well by doing good.”

Impact investing is the most profitable, value-generating, and fastest-growing investment strategy. It not only promotes wealth creation but allows the investors to address pressing social, environmental, and governance issues. For example:

“Some of the world’s most intractable social and environmental problems are in need of new solutions. From climate change to resource scarcity to exploding global population growth, the traditional levers of change, including philanthropy and government aid, are insufficient to address the critical issues of our time,” says Fran Seegull.

Furthermore, environmental, social, and corporate governance (ESG) funds have gained ground amongst investors, crossing $2 trillion in funds for the first time on record. Not just that, they are expected to cross $53 trillion by the end of 2025. Moreover, these activities have only increased due to the ongoing pandemic.

Blockchain:

A blockchain is a data structure that makes it possible to create a digital ledger of data and share it among a network of independent parties. By virtue of being an innovative technology, blockchain has helped in solving efficiency, and management problems faced by individuals, industries, and the government at large. Here are a few problems that we have solved/are solving using blockchain:

Moreover, with the use of tokenization blockchain has been able to start disrupting major industries like healthcare, finance, art, and real estate.

Both these deities are serving as helping hands to the world to reach new highs. Impact investing is diverting funds to the right ventures and blockchain technology is the major driving force behind finding social, environmental, and governance solutions. Now they are coming together to solve problems and that's what makes the crypto space most exciting.

The future requirements of the world:

We as humans have always been looking to make things more efficient and less cumbersome, this time we are worried about some ethical issues. These issues have turned into issues about power, control, governance, freedom, and inclusion. Let’s discuss a few of them

Data privacy and surveillance:

Invasion of privacy is considered a sin in Bible. Need I say more? It’s a breach of trust between agents. Increasingly data privacy concerns have risen with news about tech companies using data about individuals to optimize their profits. The problem starts when data is collected without consent. Here are the biggest data breaches in history:

There is fear and people feel vulnerable to the misuse of their data. In recent years, concerns about digital threats to individual privacy have been growing more acute. From high-profile data breaches to hijacked doorbell cameras, we’ve seen a steady increase in the scale and volume of privacy-related incidents. This issue gets even more amplified when it comes to state censored surveillance. This gives governments power over individuals that has hardly any safeguard against misuse. But 2020, driven by a global pandemic and worldwide protests calling into question the surveillance powers of governments, was a turning point.

In 2021, decentralization’s role in supporting end-to-end encryption has become more important than ever. Decentralization will play a crucial role in ensuring the resilience of end-to-end encryption.

Transparency and freedom:

In a panopticon-like setup, surveillance states mull our free speech. We may want to criticize people we know to others yet not share that criticism with the world. A person might want to explore ideas that their government does not like. These voices are strangled. Therefore political and social activities are silenced. What we need from the future is freedom of expression.

Moreover, fascism as a political doctrine is on the rise in many countries. Therefore, transparency and accountability have become distant dream for many citizens in terms of public spending as well.

Financial inclusion:

The costs attached to transactions are extremely high right now and have plenty of barriers to entry for new businesses. The democratization of finance from traditional financial institutions can provide us with more autonomy associated with our wealth. More freedom!

Plenty of their parties are involved in a single transaction and the power that resides with traditional financial institutions has curbed our financial autonomy. Not just that, we face the repercussions of the profiting-seeking nature of these banks, which isn't ideal.

What's the answer?

The answer is to these problems is Blockchain. It can help in the decentralization of power in all the areas of problems. From government power to data privacy, blockchain solves it all. Blockchain-powered technologies like Defi and Web 3.0 are on the verge of existence and these technologies will change the future for good. They make use of blockchain technology and cryptocurrencies to democratize finance and online interaction. Web 3.0 in particular is built largely on three new layers of technological innovation: edge computing, decentralized data networks, and artificial intelligence. Defi on the other hand is focused on democratizing finance, therefore, it makes the use of smart contracts and cryptocurrencies.

The investments will come from the rising investment strategy of impact investing, the world is warming up to its idea. You can be an impact investor as well. The direction in which the world is headed through the joint efforts of blockchain tech and impact investing is towards crypto-enabled businesses. The world’s economy is changing. The businesses that follow the flow of innovation will be able to save money and build a reputation in the new, trusted, digital world. The blockchain, together with smart contracts and digital currencies will make the trade and governmental processes safer, faster, efficient, and scalable. And the economy will continue its path towards decentralization as more and more small players, supported by digital technologies, join the market.

In a nutshell, we need a world that is decentralized, safe, and secure in addition to solving ESG problems. Crypto-backed businesses enable us to meet ESG goals without compromising on the requirements to the world. Therefore, they seem like a natural fit for immense value creation potential.

Now, if you ask me? I’d put half my eggs in the crypto basket!