# Why EthicHub

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**Blockchain's initial promise** was the **creation of a new financial system** **where no one is left excluded**, because massive dysfunctions of the traditional financial system have generated huge inequalities (according to the World Bank, a quarter of the world's population lacks access to these services) .
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The **most severe consequence of this exclusion may be the vast majority of the unbanked being small farmers** who, despite having profitable activities, do not have access to formal credit. That is, a fifth of the world's population lives in poverty despite producing a third of the world's food. 

There are different causes for their lack of eligibility within the traditional credit system, such as 

* Lack of connectivity;
* Irregular ownership of their small lands or geographical difficulty of access;

to name a few. 

The unmet financial need of this sector is close to a trillion dollars annually, so it is at the same time a huge problem but also a great opportunity and for this reason, **there are many fintech companies interested in serving the unbanked**, but their solutions rely on data to develop a risk assessment or on assets that act as collateral for loans. 

**These solutions are having great success in urban and even rural areas**, but unfortunately they continue to exclude the agricultural population, located in more remote regions, without access to the Internet, and their assets (small land) are not eligible as collateral. 

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This is why **EthicHub designed an alternative way to serve these farmers without traditional data or collateral**, building an **innovative and disruptive Crowd Collateral** similar to blended finance, where third parties provide collateral to back the loans.
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Loans are made affordable by eliminating the financial intermediation that makes small international transfers so expensive. Implementing audited smart contracts on a public blockchain, efficiency, transparency and traceability is provided. 

**With a great vision for the future, the Inter-American Development Bank supported this initiative from a very early stage and we can say with great pride that EthicHub was the first project in its portfolio that used cryptocurrencies to solve real problems.**

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**In 2017, EthicHub was born** and pioneered the use of blockchain technology for financial inclusion solutions adapted to small farmers around the world. By providing affordable financing in a sustainable, win-win model, **unbanked farmers can free themselves from the cycle of poverty** (expensive and insufficient working capital that prevents them from saving to invest in improving their productivity).

**In June 2018, EthicHub launched its smart contract-based crowdlending platform**, leveraging on the global paradox of different interest rates: millions of small farmers pay absurd interest rates (even above 100% per year) for scarce working capital, while people in other parts of the world barely get a return on their savings in banks. 

By connecting complementary economic regions, **EthicHub's lending platform generates benefits for lenders and borrowers in a synergistic and mutually beneficial relationship.**

**After 3 years with real experience in the field and a default rate of less than 2%, the EthicHub team developed its crowd collateral platform to support loans and attract more investors by reducing the perception of risk associated with loans to unbanked farmers.**

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**Money is a tool and EthicHub is proving that ordinary people can use it as a superpower to fix an unbalanced world, reducing inequalities and opportunity gaps.** Investing in the productivity of small farmers is not only profitable but also rewarding: it is the one investment that no one will regret.
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