Nir Kshetri is a Professor at the University of North Carolina-Greensboro. He also is a researcher at Kobe University. He has authored nine books, one of which has been selected as an Outstanding Academic Title by Choice Magazine. He has also published about 150 articles in various journals incl. Wall Street Journal, Foreign Policy, Scientific American, Bloomberg TV, and many more. In 2018, he gave a TED Talk about the potential roles of cryptocurrencies in fighting poverty. He has provided consulting services to the Asian Development Bank and various United Nations agencies.
Kshetri is the 2nd most cited person and 6th most published author in blockchain research. He was the winner of the IEEE IT professionals Most Popular Paper Award in 2019 and 2018 and Outstanding Contribution in Authorships award in 2019. He also won the Blockchain Connect Conferences Most Influential Blockchain Research Paper in 2019. Nir was the winner of the 2016 Bryan School Senior Research Excellence Award. He was also awarded Pacific Telecommunication Councils Meheroo Jussawalla Research Paper Prize twice (2010 and 2008).
Interview Date : 11th June 2020
- Nir Kshetri (All Interviews)
- Literacy and Connectivity
- Extreme Micro-credit Interest rates
- Nepal and Cryptocurrency
- Connectivity is too Weak for Blockchain to Function
- Blockchain Adaptation in Sierra Leone
- Property Corruption in Developing Countries
- Cost of Implementing Blockchain
- Government Embraces Blockchain - Georgia -
- Cellular or Mesh Technology
- Stockholder-centric type of Activities
- Asia Development Bank; Struggles of E-commerce
- Thousand-Year old Farming Method
- 4th Industrial Revolution
- Cannot Speak National Language
- Developing Countries Deserve More Data Privacy
- No ID? No Loan!
- Underfunded Government cannot Issue ID
- 62 of the Wealthiest have 3.2 billion Peoples worth of Assets
- Cryptocurrency Wealth Gap
- Hindering Crypto Mass-Adoption
- ATMs Charge and extremely high Fees
Nir Kshetri (All Interviews)
My name is Nir Kshetri, and I am a professor here at the University of North Carolina-Greensboro, Bryan School of Business and Economics. I was born in Nepal but moved here to America 21 years ago. I have been working and researching on business and economy in developing countries and what benefit they potentially can gain through technology. I am working with United Nations projects in African regions where we work with governments in some African countries.
We try to implement more technology to their systems to lift their situation for the better by using the 4th revolution technologies. Such Technology integration projects are something that I am passionate about working on. Although my roots are from Nepal, that is not my only focus. I engage in working on projects in all the developing countries all around the world.
Literacy and Connectivity
Many developed countries, international agencies, and private donors are spending a lot of money to help to lift people’s living standards in developing countries. However, Approximately 35% of the money that is supposed to help developing countries is at sea due to corruption, mismanagement, and broker fees. If we would adopt and utilize blockchain in such cases, the 10 dollars that are to be sent to the person in need can receive it with no middlemen or any authority involved.
I do more research on blockchain technology than on cryptocurrencies, and I believe that blockchain has a huge potential to solve a lot of problems in the future, especially in developing countries; As people become more educated and the connectivity improves, the potential is likely to materialize.
In places like America or Japan, for example, where the literacy rate is above 90%. We have access to 4G and soon 5G cellular technologies. In comparison to the poorest developing countries where literacy is low. A large proportion of cellular phone users still rely on 2nd generation networks. Problems like not having your identification documents play an important role in your educational and financial situation.
Extreme Micro-credit Interest rates
If an individual would like to use the service of a non-profit organization that allows people to lend money to low-income individuals in developing countries via the internet, that individual like most people who use those organizations, they do not know how the mechanisms work.
Imagine an individual would like to send 25 dollars to a low-income entrepreneur and farmer in Cambodia through such a service. That individual most likely does not know that the receiver has to pay interest and will not get the whole 25 dollars as intended.
Most of the time, those organizations have field-partners at the other end that can charge 70%~80% interest in the wired amount. This interest rate might sound extreme as the micro-credit interest rates in America are usually between 2~3%. However, in Mexico, it is between 60~90%, and in India, it hits the farmers the hardest as they face interest rates usually higher than 100%. Why that is so is because the banks can do so. There is no functioning governance and law.
To solve this problem, exchanges and other such institutions have to teach people in both ends how to utilize blockchain platforms. As more and more people start getting their identification documents and accounts, they can create mass-adoption of blockchain and use it instead of the non-functioning corrupt systems.
Nepal and Cryptocurrency
Cryptocurrency is currently illegal in Nepal. The central bank of Nepal, Nepal Rashtra Bank, has banned the use of cryptocurrencies and marked it as unauthorized forms of financial tender. I do not see a lot of blockchain projects emerging from Nepal, and neither is the much sight of the workforce working in this field.
To take an example from the neighboring country of India, even though there are around 2 million software developers, only 0.25% know about blockchain technology. That is mainly due to the Indian regime’s unfavorable policies related to cryptocurrencies.
For some reason, Nepal is looking at India as if it is Nepal’s role model. Since the Reserve bank of India had banned cryptocurrency as well, thus the main people working on Blockchain technology did go outside of the country to places that were crypto friendlier. Unfortunately, I do not see any significant blockchain projects emerging in south Asia as of now though India is pushing it forward, and I hope that other countries will follow in a more positive direction.
Connectivity is too Weak for Blockchain to Function
One of the main problems that hinder development in developing countries is connectivity. In developing countries, many people do not have any internet access. A lot of people already have a phone, but mostly the phones are very straightforward operating mobile phones from the 2000s. According to the United Nations “the Least Developed Countries” classification list, 73% of people in those areas have phones, although the latest number from the International Telecommunication Union shows that less than 12% of people have internet access.
If we go a little higher on that list of developing countries, for example, China or India, things are different. These countries have an enormous population with an immense workforce. We see them as countries with huge potential, but still, the reality is less than 47% of the people have internet access.
People might have phones but no internet access, and you cannot use any technology without internet access. In such circumstances, we cannot just go to more advanced solutions like blockchain when more than half the country does not have access to the internet. Blockchain is already very complicated even for the people in developed countries, so we cannot just imagine and think that people who have never seen a computer, and are using mobile phones from the 2000s will understand this concept.
In many countries in African, a reason for why people have their ATM cards is that if you carry money around with you, you will get robbed. However, ATM cards come with pin codes, and those four digits to remember looks like it is harder than we think for people who are not so used to having passwords, pins, and codes. So they cannot remember it, and therefore, many people write the four-digit pin on the back of their ATM cards. So in an environment that makes it so hard for people to remember their four-digit code, we cannot expect them to the blockchain, or cryptocurrency. Those complex concepts are already too hard to understand so you would need excellent connectivity, which is not in those developing areas as of now. That is one of the big challenges right now.
Blockchain Adaptation in Sierra Leone
KIVA, a non-profit organization that allows people to lend money to low-income individuals in many different countries, has set up a blockchain-based ID system in Sierra Leone, which is one of the countries struck hardest by poverty. If I want to give 25 dollars to someone in Sierra Leone, I can directly send that to that person’s wallet thanks to blockchain technology. I do not have to rely on brokers with high-interest charges anymore. This allows borrowers and lenders to connect directly.
Property Corruption in Developing Countries
Another thing that is a huge problem is property rights in developing countries. If you are from a developing country like Honduras, and you have a property, that property can easily be taken away from you. People in power will invalid your property papers that identify your ownership, and come with a bulldozer to wreck it whatever you have built on the property. Your property can be gone just like that. Due to this, a lot of the land properties in Honduras belong to government bureaucrats and officials. That is a centralized system which also a part of the problem. The way they are handling the centralized system in Honduras is a classic example of corruption.
In India, for example, 60%~70 % of all court cases are related to property issues. Nor the authorities or the people know who owns what land property. There is corruption everywhere, right from the start of the chain. At present, if you want to sell land in India, it takes at least 3 to 4 weeks to get your documents, and you have to pay anywhere from 60~80 dollars as bribery and other charges, only then can you get your documents. Things at the current state are very inefficient, which has created disadvantages leaving the country with no opportunity to lift its development.
In 2019 however, one of the states, Andhra Pradesh state, declared that the administration wants to start adopting blockchain technology for land records and land registry projects. They stated that corruption is at every level. Thus, misconduct occurring in the system can be minimized if all these matters applied to the blockchain system.
Cost of Implementing Blockchain
Using a local blockchain company in developing countries might cost a lot for its adaptation. Nevertheless, blockchain developers who are experts in blockchain technology charge thousands of dollars, and that is a lot of money. Thus, we have to educate more people about this technology and its development. There more and more institutions, universities, and schools that teach classes covering this technology and this industry.
If they can create and invent this technology domestically with no help from other countries and foreign developers, then this would reduce the costs of installations and implementing it into infrastructure. Presuming that you are not able to do it domestically, even so, if you invest 1 million dollars into this technology that in the future will save you 1 billion dollars of corruption in your country, I would say that would be something good to invest. For a private person, the costs for implementing blockchain might be extremely high, but not for a government. The main reason why many governments in developing countries are not installing this technology is that they are not motivated to do so.
Government Embraces Blockchain – Georgia –
Georgia is a country in the Caucasus region of Eurasia where the regime is very open to blockchain technology and has embraced it with open arms. Today, it has one of the most advanced blockchain-based land registry projects. Yet, the main problem remains to be education; educating government bureaucrats and others, and making them aware of the blockchain technology. Bureaucrats in some developing countries may oppose blockchain technology since they are benefiting from their status. However, this does help in the further development of that country and puts a halt to further innovation.
Cellular or Mesh Technology
Prepaid phones and P2P functions such as sending each other balance charge or battery life using mesh technology is not a rare sight in developing countries. These are functions that are very convenient when used through mesh technology. The benefits can become magnified by combining with blockchain. It is not the cellular technology, so it does not have to through your Wi-Fi router to get to the receiver. You can send a message directly from one device to another. Cellular technology networks are very slow, not reliable, and it just does not work in many places with no advanced network system.
Stockholder-centric type of Activities
I am a consultant at the United Nations agencies. Right now, I am working with the United Nations agency the South-south Cooperation, which is technical cooperation among developing countries in the Global South. What I found out was that companies are focused entirely on making a profit, even if they state that it is not their intent. I wrote an article and referred critically to Stockholder-centric Activities. Stockholder-centric activity means that companies and institutions have their focus on only one thing, which usually is making a profit. The administration is also not motivated to change anything. These are hard challenges and issues people need to overcome.
Stockholder-centric activities also apply to blockchain companies. When the blockchain companies started, they said they want to bring change, but all they understand is the technology. They do not know about regulations, government systems, or what it means to be poverty-stricken in developing countries. These are some of the main matters we at United Nations agencies try to solve.
Asia Development Bank; Struggles of E-commerce
I work as a consultant at the Asia Development Bank. The main project which I did there was about e-commerce and to help them with technology. Countries like China, for example, have in the past ten years invested in e-commerce and technology, and so far, they have been very successful. So, why have other countries not been able to reach the same level of success? I have to point out that regime governance is a vital factor in the development of FinTech, blockchain, Artificial Intellect., etc. All the countries have the potential to get better, but the general trend is that they one thing and act one another. At the Asian development bank, even though we see that there are improvements in different aspects, the lack of a functioning body and infrastructure is not providing connectivity to the country. Thus, when there is no connectivity, debit cards, credit cards, ATMs, etc., it will not be useful when there is no network that it can run on. Companies and corporations do say that they will help those underdeveloped areas, yet, the money these companies are spending on technology to help has been decreasing every year.
Thousand-Year old Farming Method
Before coming to America, I was working as a consultant in Nepal, and I was working at GTZ (German Technical Cooperation Agency), the Food and Agriculture Organization of the United Nations and Agricultural Development Bank of Nepal. My job was to go all over Nepal and teach farmers modern ways of managing their farms to increase productivity. The farmers there are using the same method of farming used thousands of years ago. I know this from first-hand experience as
I was born in an extremely remote area in Nepal. Methods have not changed for thousands of years, and no one helps them. Four billion people in the world live in areas where they have no street names. They are not able to get themselves out from that situation either as it is the people in power who have put them in these poor conditions.
When the western countries send money with a good intention of supporting those areas, that money goes to the authorities and never reaches the people in need. If they would just get some small fixed in their farming techniques and knowledge, that would increase their productivity a lot, but the technology is not there yet. That is where modern technologies such as blockchain can be a potential solution in these remote areas.
4th Industrial Revolution
21 years ago, I started studying the latest technologies for poverty-stricken countries and developing countries. That was in 1990 when the internet was the new thing. Soon after, e-commerce started, and so I started researching and writing about the internet, e-commerce concerning developing countries. After a few years, the so-called Cloud Computing and Big Data were new topics. Fast-forward today, I am working on Artificial Intelligence and blockchain for the developing countries. This all type of different technologies integrated and applied in real projects is the 4th Industrial Revolution, and if you combine all different kinds of technology, the effect will be substantial. Most of the books that I have written cover those urgent issues. The current matter we are working on right now is how to ensure the 4 billion insolvent people can benefit from the 4th industrial revolution.
Cannot Speak National Language
When you come from a remote village, it is excruciating to get out and get a job as a consultant. Normal people in Nepal cannot even go to the bank because the employees at the Banks, for some reason, speak English. The people from the villages cannot talk in Nepali, let alone English. It is estimated that approx. 50% of the people in developing countries cannot talk in one of their national languages.
Another simple problem that many people expect poor people to easily be able to use the devices integrated with technology to solve the issues. They do not know that the village people cannot go to a bank, and this not only due to the language barrier but because of the security guards that are outside the banks. When someone looks like they are uneducated or from a village, the guards will not even allow them to go into the bank.
Developing Countries Deserve More Data Privacy
The attitude towards data privacy for developing countries is biased. The wealthier people need data privacy, but poor people do not need data privacy is what they think when you talk with many people from the developed world. They express this when they say: “we need to observe the poor people in developing areas to reduce their poverty, that is why we need data about them”. Many people to like this want to have these kinds of data so they can write a paper and mark themselves as a professional. I think this is absurd, and in fact, the people unsafe and developing areas do need even more privacy than us as there is ethnic violence going on, or there are dictators in power.
When my data is misused, I can become exposed to physical security risky. Therefore I would say that data privacy is more important to secure for the most poverty-stricken regions than for rich people. Telecommunication companies and social media companies do not do much about protecting anybody’s data. There is no law or regulations in those place that penalizes you for misuse of other data like you would expect the FBI or the court do.
No ID? No Loan!
Not having identification papers and not being able to show who you are is a common major obstacle in many developing countries. The biggest issue it creates is that it affects people’s financial lives. However, one type of identification documentation may not be sufficient. In Nepal and developing other countries, I would need four different identification documentation as like your driving license, your employment papers, etc. to open an account. It is crucial in today’s day and age to have identification documentation, and yet around 1 billion people all over the world do not have any identification document. An additional 3.4 billion people do have some sort of identification documents but it is useless because it cannot be used for anything online as identification. After all, IDs can be forged very easily in many developing countries. I would be left with nothing to do anything like starting a small project, agriculture, or even go to school.
Underfunded Government cannot Issue ID
Reasons for why these people do not have any id in the first place is because the government does not give you your Id. A country needs a government agency, and this needs funding so it can operate. When there is no funding just as in places like the Democratic Republic of Congo, Zambia, Tanzania, etc., no one can issue your identification documents. It is not like the people do think that they do not need any identification documents, rather the people desperately want to get it. But no agency or government can provide them with it. Moreover, it is very expensive for governments as well.
In Nigeria, for example, the cost to issue and maintain an identification document for the government is five US dollars to issue 1 ID. I do not know how much the government is charging the people, but for a poor government with 200 million people, 5 dollars per ID becomes very expensive.
•Sierra Leone or Zambia, Nepal, etc.
If I am Sierra Leone, Zambia, or Nepal, for example, and I don’t have an ID. I can take someone else’s ID, take their photo off, and paste my photo on it. And there I have my ID.
62 of the Wealthiest have 3.2 billion Peoples worth of Assets
62 of the wealthiest people of earth half as much assets as half of all the assets of 3.2 billion peoples from developing countries. Solving this wealth inequality problem is a very huge challenge. You cannot just go to the rich people and ask them to share their wealth, and so the only practical solution for this is having a motivated government working on stimulating entrepreneurship and engaging in blockchain technology to create transparency helping to erase corruption. The good thing that I have understood about the millennials now is the millennials today hate corruption. So I hope that this new young force will be a positive force for development.
Cryptocurrency Wealth Gap
There is a huge wealth gap in the crypto industry. In one of my recent articles, I wrote about scams in and crypto industry, where the largest 1,000 bitcoin accounts hold 40 percent of all the bitcoins in existence – with almost 20 percent held in just 100 accounts (https://theconversation.com/how-can-criminals-manipulate-cryptocurrency-markets-97294). They can manipulate the price, change orders, etc, and this is something which many people do not know about. Almost all of the volatility that is happening in bitcoin and cryptocurrencies is due to those a few big holders, and they are aware of what they can do. So, One has to be careful when dabbling into investing in it.
Hindering Crypto Mass-Adoption
Switzerland is among the countries with the most developed regulations and policy frameworks in the field of blockchain technology and cryptocurrencies. Other cryptos and blockchain-friendly countries are Japan, Luxembourg, Singapore, etc., but in places like China, the USA, and many other countries, regulatory uncertainty is the main problem that is hindering its development and adoption of this technology. Governments have still not figured out how to handle it, they are concerned about taxes, anti-money laundering, and it can be a threat to fiat currencies. Unless the governments figure out and solve those problems incl. terrorism, capital out-flow problems, and administration, this may take some time.
Especially after the 9/11 terrorist attack that happened, the U.S. government has been concerned about the money that may go to terrorist accounts. So they have tightened the security for transfers of money from America to another. Also, Banks in developing countries are getting a lot of pressure from developed countries such as the U.S. If someone would want to open a bank account in Nepal for example, they need to have 4 different documents to verify their identity
ATMs Charge and extremely high Fees
Using a bank ATM is going to charge me a lot and that goes for every person who uses it. I have to pay different types of charges such as a foreign transaction fee, the ATM fee or my bank fee, etc. Also, the banks and the current systems as an intermediary are extremely inefficient right now. Blockchain-based cryptocurrencies in the future are likely to address this.
Interviewer , Editor : Lina Kamada
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