Cryptocurrencies have become among the most discussed topics due to their uniqueness and decentralization. In a world of innovation and a rapidly changing environment cryptocurrencies occupy an essential place in the public space and attract the attention of investors. Cryptocurrencies have potential to promote financial inclusion.
Cryptocurrencies have gone global in attempts to replace the current financial system. People look at cryptocurrencies from various perspectives. Some look at transactions, some for rewards and some for investment. Transaction in Cryptocurrency proceeds over the blockchain, which is a decentralized form of transaction that does not include a third party.
The network of nodes maintains the system. Nodes are an integral part of the blockchain that validates transactions. It uses cryptography which secures information. Cryptography uses public key to encrypt and private key to decrypt data.
Financial Inclusion is the process of ensuring access to financial products and services needed by all the sections of the society such as weaker sections and low-income groups. Financial inclusion can help the society and the economy. It has the ability to generate positive outcomes. It leads to an increase in savings, and investment and promotes economic growth.
How can Cryptocurrencies promote financial inclusion?
- Give people control over their money
Many people are cautious of banks and financial institutions keeping all of their cash at home is not at all a good option. Crypto is not subject to the rules and regulations imposed by the banks. Anytime, people can get control over their money.
It is a decentralized form of transaction it does not require any central authority to make transactions. People enjoy more financial independence.
- Offer a stable alternative to unstable currencies
The instability that some countries’ currencies have experienced is shocking. Crypto can provide more stability to those living in economically volatile countries.
- Cross-border transactions
Cryptocurrencies can make cross-border transactions which reduces the cost of financial transactions, making them more accessible for low-income people. Traditional banking charges high fees for cross-border transactions. Cryptocurrencies facilitate cross-border transactions with minimal cost enabling people to send and receive money globally.
- Low entry barriers
Cryptocurrencies require smartphone and internet access. People who may not have access to traditional banking can also use cryptocurrencies. It does not require any bank account.
- Change the money transfer process
Bank-to-bank transfers take longer time especially if the transfer is international. The transfer of cryptocurrency doesn’t require all of the same processes that a bank requires. Whether a national or international transfer, Crypto transfers are instant, do not require any fees, and can be securely stored in the blockchain. Through this cross-border payments can be easily made.
Related: Top 10 Crypto Wallets for Beginners
Cryptocurrency has been making a huge impact all over the world even it has the potential to take over the world. The possibilities of cryptocurrencies are endless. It allows consumers access to a global payment system – anywhere, anytime in which participation is restricted only by access to technology rather than having any bank account or credit history. It is changing the future of money by providing greater financial inclusivity.
Frequently Asked Questions (FAQs)
How do cryptocurrencies help the unbanked?
Cryptocurrencies can help the unbanked by providing them access to financial services.
Why do people use cryptocurrency?
People use cryptocurrency for fast payment, no need to rely on a third party, more secure than regular transactions.
Can Crypto replace banks?
Crypto can easily replace fiat in all its uses as a store of value, medium of exchange and unit of account. The new reality tends to look like centralized authorities will be adopting blockchain technology to avoid the risk of becoming extinct.
What are the negative effects of crypto?
Prices of cryptocurrencies are very volatile, their value can change in a short amount of time. Due to the lack of proper regulation, there are risks and uncertainties in crypto world.
Why do banks reject cryptocurrencies?
Bank rejects cryptocurrencies to safeguard their customers from potential fraudulent activities and unauthorized transactions.