Fixing finance: How the technology powering Abra opens access to the world’s markets
Daniel McGlynn - Friday, May 24th, 2019
Now that crypto winter seems to be in full thaw, and the crypto headlines have turned to all-out-rally cries, it’s a good time to underscore some of the big picture crypto themes, and where Abra fits in.
For many of the inbound crowd — to all the new crypto investors we welcome — crypto represents a once in a generation opportunity to invest in something that will change the world.
But, when crypto prices are growing by double-digit percentage points a day, it’s easy to forget some of the major underpinnings of these innovative technologies.
It turns out that cryptocurrencies offer a real solution to a few major problems. To name just a few:
Open: cryptocurrencies allow anyone to participate. It doesn’t matter where you live, what kind of job you have, if you have a bank account, or if you are considered an accredited investor. Instead of all those criteria, crypto, for the first time, enables anyone with an interest and access to the internet the opportunity to participate in new forms of digitally-driven economic activity.
Security: Cryptocurrencies will make it safer and more secure to transact on the internet without a trusted third party.
Store of value: Cryptocurrencies are also creating a digital store of value that will rival traditional systems, which are based on precious metals and fiat reserve currencies.
Programmable money: Crypto is creating the infrastructure needed for the future of finance through innovative smart contract platforms.
Accessible: One of the biggest problems that cryptocurrencies solve is the ability to build blockchain-based infrastructure that is open and accessible to all. Ever since the early days of money, when kings and rulers used to print their faces on gold and silver to prove authenticity, money has been a concept based on permission and proximity.
Abra is using the programmable money features of the Bitcoin blockchain to create products that allow anyone in the world to get investment exposure to some of the world’s most dynamic and valuable markets.
The goal is to leverage the potential of blockchain and cryptocurrencies to create a single, easy-to-use financial app that provides open access to a large spectrum of investing opportunities.
Visualizing the future of finance
To better articulate some of the problems that Abra’s technology is solving we partnered with Visual Capitalist over the past several months to produce data-driven infographics. These graphics provide a high-level overview outlining some of the issues facing the current financial system and explain how the emergence of blockchain-based decentralized finance offers solutions.
Here’s a graphic look at the traditional financial system and the emerging decentralized alternatives:
Lack of access: Approximately 1.7 billion people today still do not have a bank account or access to traditional banking services. This image was pulled from the infographic called “7 major flaws of the global financial system.” Graphic by Visual Capitalist.
Complexity: Financial literacy remains low globally, in part because of the complexity and compartmentalization of the financial system. This image was pulled from the infographic called “7 major flaws of the global financial system.” Graphic by Visual Capitalist.
Costs: It still costs a lot to send money through the traditional financial system — an average bank cost of 10.53% per transaction globally. One of the UN Sustainable Development Goals is to drive that cost down to below 3% by 2020. This image was pulled from the infographic called “7 major flaws of the global financial system.” Graphic by Visual Capitalist.
Low trust: According to the Edelman Trust Barometer, the financial services sector is the least trusted of industries worldwide. This image was pulled from the infographic called “7 major flaws of the global financial system.” Graphic by Visual Capitalist.
Increasing inequality: Geographic proximity and access to information continue to influence impact the ability to participate in world markets. This image was pulled from the infographic called “7 major flaws of the global financial system.” Graphic by Visual Capitalist.
Currency devaluation: Politically-based fiat currency (in other words, the money issued by governments) is subject to manipulation and devaluation. This image was pulled from the infographic called “7 major flaws of the global financial system.” Graphic by Visual Capitalist.
Systematic risk: Currently, the global financial system is subject to manipulation and devaluation. This image was pulled from the infographic called “7 major flaws of the global financial system.” Graphic by Visual Capitalist.
One potential solution to the shortcomings of the global financial system is to create alternatives based on decentralized principles and technologies, which is what Abra is doing. This image was pulled from the infographic called “Decentralized finance: An emerging alternative to the global financial system.” Graphic by Visual Capitalist.
Decentralized finance relies on tools like Bitcoin’s open and permissionless blockchain, which provides an infrastructure layer for everyone to build on. This image was pulled from the infographic called “Decentralized finance: An emerging alternative to the global financial system.” Graphic by Visual Capitalist.
The distributed and flat-hierarchy of decentralized finance helps drive down costs and increase the ease of access. This image was pulled from the infographic called “Decentralized finance: An emerging alternative to the global financial system.” Graphic by Visual Capitalist.
Decentralized finance also offers a more secure alternative to centralized systems, which become targets for hacking. Abra, for example, is built as a non-custodial wallet, which means that users are issued a private key, which is used to control funds. This image was pulled from the infographic called “Decentralized finance: An emerging alternative to the global financial system.” Graphic by Visual Capitalist.
One powerful application for decentralized technologies like the Bitcoin blockchain is to create better investing tools, like Abra. This image was pulled from the infographic called “How decentralized finance could make investing more accessible.” Graphic by Visual Capitalist.
In addition to the low-cost and better security attributes mentioned earlier, decentralized investing also solves for the proximity to global market centers that exist within traditional finance. This image was pulled from the infographic called “How decentralized finance could make investing more accessible.” Graphic by Visual Capitalist.
And blockchain-based investing (or in the case of Abra, where investments are collateralized by Bitcoin contracts) investments can be made in fractional amounts, which puts really valuable assets in the reach of everyday investors. This image was pulled from the infographic called “How decentralized finance could make investing more accessible.” Graphic by Visual Capitalist.
Maybe most important of all, decentralized apps can be used to make finance simple, intuitive, and easy-to-use, which address some major issues related to complexity and poor financial literacy. This image was pulled from the infographic called “How decentralized finance could make investing more accessible.” Graphic by Visual Capitalist.
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