Financial inclusion allows individuals and organizations to access different financial products and services. It ensures that everyone is getting affordable and appropriate financial services on time. Government and financial institutions are taking many steps to provide financial services at least a bank account for everyone.
However, a recent report reveals that more than 1 billion people are not getting financial services. There are many reasons such as poverty, remote locations, and less income which are the major cause of not getting the number of enough financial services.
The lack of availing financial services stops people from getting the benefits of the banking system. The people who cannot access the banking system are unable to save or invest or get any other basic financial services. But cryptocurrency can bring a solution to this matter. Read on to understand what are the causes and problems of unbanked people and how can cryptocurrency help them.
Causes of Unbanked
Majorly the unbanked belong to the developing economies. Poverty and economic crisis are the major problems the unbanked. Because of low-income, unbanked are unable to avail of the financial services. As a result, they find it very hard to enter the traditional banking system. Most of the banks have high money handling costs and a lot of regulations related to financial services. These services are too expensive for those low-income category people. Further, people who are living in rural areas are facing a lot of problems, and traveling to a physical bank is inconvenient.
Problems due to Unbanked
Without having access to basic financial services, people are relying on physical money which is not safe to store with them. They can’t save, bring loans, or invest in any assets for their future. This degrades their quality of life because they can’t start a business properly without having proper access to financial services. The lack of a banking system or financial services can affect every aspect of their life and that’s where cryptocurrencies can come to the rescue.
Cryptocurrency Can Aid Financial Inclusion
There is no doubt that financial inclusion is very important to those who do not have access to basic financial services. And cryptocurrency is the solution for creating equality in the provision of financial services. After the invention of the cryptocurrencies, the world got a new way of exchanging things. This gave each individual the power to access financial services, such as saving, investing, and transferring, even without a bank account. The only requirement for access to financial services is a smartphone and access to the Internet.
Today, with the help of a digital wallet the unbanked can transfer money to anyone across the world with a very inexpensive transaction fee. Further, it is not a complex account opening process like the banking process. The distributed network allows everyone to access financial services without visiting a bank. Economies where the banking system is a problem, cryptocurrency can help them by providing a great financial system. Moreover, the unbanked can even invest and grow their money, know all about bitcoin.
Cryptocurrency The Road to Financial Inclusion
Blockchain, the underlying technology behind digital currencies not only allows us to open a digital wallet it has several other benefits over a traditional banking system. First, it is very easy to create a digital wallet as compared to a traditional banking system. Blockchain is a public ledger that doesn’t require any central body or trusted third-party for money transfer.Â
But it is more secure because of the cryptographic encryption. Everyone can transfer money to anyone directly without any intermediary, so the transaction cost is significantly low. In addition, everything is transparent and the transaction data can be traced back.
Conclusion
With all of the benefits, cryptocurrency is the need of the hour to provide financial service to the unbanked. Even though there are many hesitations to the cryptocurrencies due to their volatility nature, these are the future of the financial transaction process. With proper support and appreciation from the government, cryptocurrencies will be the primary medium of exchange in the near future. I hope the above information helped you to understand how cryptocurrency can help the unbanked to access financial services. Please share your opinion on this.
