[WATCH] Crypto-Humanitarianism: Impact investing and the Blockchain with Philippe Bednarek at AIBC 2021

Category: Blockchain Crypto Executive Interview
Posted by
Ravindu Dabarera

The nascent cryptocurrency market is associated with a broad variety of industries but unfortunately its potential for charity has received a dearth of the attention it reasonably should. In this panel, CEO of GoldFinX Philippe Bednarek leads the discussion on how crypto can be a tool for good

Broaching the topic by referring to the murky terminology of crypto-charity, he states that the consensus seems to have fallen on the term “impact investing” as the main phrase to describe the use of cryptocurrencies to empower social change.

The definition of impact investing is very simple. You just add benefits, social benefits, environmental benefits to profit. Historically, traditional investing didn’t really care about its effects. The maximization of profit was the main goal and we left traditional philanthropy to basically clean up the mess. This is the best case scenario because the worst case scenario is that the state or taxpayers were cleaning up the mess. So impact investing is basically pretty new to that sector.

Moving towards manifestations of this novel form of investing, he noted that microfinance followed by renewable energy and social housing have all been areas tackled by impact investing. This has also been catalyzed by a massive increase in the scale of capital within this sector in the last 10 years which has gone from $200 billion to $715 billion in assets under management for this purpose.

He then moves towards the crypto economy within the area of impact investing. He noted that this economy’s almost inherent slant towards out-of-the-box thinking and innovation due to it being born in opposition to orthodox finance has been a massive boon for the humanitarian use of crypto.

The speed of wealth creation in the crypto economy is staggering. Today, we approach the three trillion mark in wealth creation in less than 10 years. DeFi was born just two years ago and about $200 billion (are locked in) DeFi today. So speed is definitely a big factor in the crypto economy.

With the sector still maturing, the Blockchain’s potential in terms of social impact is still being unleashed.

Moving onwards, Bednarek noted another extremely influential factor in support of the crypto ecosystem and its potential for social and environmental progress. This factor is a natural lean towards problem-solving mainly arising from how most Blockchain projects are intended to solve an existing problem in a new and innovative way.

Problem solving. That’s exactly the intersection between impact investing and crypto. Problem solving is the root of the crypto economy. Remember the first white paper you’ve read was the Bitcoin white paper and it was written just to solve a problem, the lack of trust in the financial world or “how I can pay someone without a third party”. That’s a problem solving approach and that is exactly what we need for impact investing.

He then illustrated an extremely interesting aspect of the crypto economy, its extreme velocity. Pointing towards the projects exhibiting at AIBC alone, he noted that we can see projects that tackled issues from water pollution to mental health to even giving artists their due. Moving towards his own efforts in the field of impact investing, he introduced the mission and current achievements of GoldFinX.

GoldFinX is a decentralized microfinance platform. What we do is very simple. We focus on one problem. That problem is artisanal gold mining. You may have never heard about this. It’s a tiny industry of only 20 million people extracting 20% of the gold production of the world. So basically it’s 600 tons per year. It’s a tiny industry, but we have a huge problem.

Moving forward, he elaborated on the fact that, while gold was a luxury good that could be found in wristwatches, necklaces, rings and a number of other commodities, very few consumers know where that gold is mined from. Most of the gold mined in the world can be traced back to dire situations in under-developed countries, modern slavery being a commonality in the mining of several precious and rare metals.

It’s an industry where slavery still exists. On the top of that, [the industry] has an inherent environmental issue, which is using mercury to extract gold where one gram of gold uses up almost two grams of mercury to extract it. It caused a huge amount of pollution. 40 percent of the mercury you find in the oceans is coming from this tiny industry.

Gold mining as a sector is notorious for putting a massive strain on both the environment and the wellbeing of local inhabitants in developing countries.

He then moves towards the solution GoldFinX presents. The solution is ingeniously simple since the main problem faced by these artisans or gold miners is the lack of access to capital. The project provides this capital through the vehicle of micro-financing, giving miners microloans that allow them to extract gold faster, more efficiently and without using mercury.

We raise money through a token. The proceeds are used to microfinance these operations. We share the output with them and we sell our shares to buy back our token. So this is exactly how crypto can help. This is our current financial operation. We are now operating in the first country, the Ivory coast. This is the type of equipment. It worked. It works today. We want to expand it in the neighboring country.

He concluded this point by noting that, by having this token on the Blockchain, it would also allow the tracing of the sources of gold, countering criminal networks and creating an ethical alternative for the Blood Diamond-esque gold mining industry as it stands. Finally, he went over the rest of the work GoldFinX’s Foundation was doing in the region.

We have a mobile unit going from village to village and try to cure, even if it’s not curable, the effects of the mercury on the bodies. We also finance some schools because I mentioned child labor before. Once the children are not working in the mines, we have to get them back to the schools and these schools have to be financed. This is the spirit of GoldFinX. Thank you very much.

AIBC returns to the United Arab Emirates:

Drawing the leading figures of the emerging tech world to the Middle Eastern metropoles for cutting edge technology, the 2022 AIBC UAE expo plans to unite the policy-makers, developers, C-suite executives, and legal experts of the burgeoning AI and Blockchain sectors. Through three days of educational panels, inspiring keynote speeches, workshops, and networking events, the expo seeks to create the foundation that the Industrial Revolution 4.0 can be built upon. Join us from the 20th to 23rd March 2022, in UAE.