The contribution of cryptocurrencies to financial inclusion can reduce corruption
Financial inclusion, sometimes called access to and usage of financial services, is essential for promoting economic expansion and development. Unfortunately, a sizable population still lacks access to fundamental financial services, especially in developing countries.
According to the World Bank, 1.4 billion individuals globally need access to these services, which restricts their ability to pursue economic opportunities and keeps them impoverished. Due to its decentralized and digital character, cryptocurrency might help with this problem by promoting financial inclusion. Cryptocurrencies do not need a physical banking infrastructure since they may be stored and moved digitally. This makes it possible for those living in distant or underserved regions to access and utilize cryptocurrencies without requiring them to visit a typical bank office, offering an alternate solution for those who might not have access to traditional banking or would rather keep their personal information private.
Cryptocurrency can offer various financial services and give users access to conventional banking services. For instance, Bitcoin may make cross-border transfers more effective, making it a desirable alternative for migratory workers transferring money to their families. Additionally, it makes alternative financial services like loans, savings, and insurance accessible without intermediaries, making it more affordable for users. By producing a decentralized and transparent ledger, cryptocurrency can raise financial system confidence by increasing transparency and reducing corruption. By automating the implementation of financial agreements, smart contracts can help eliminate the need for middlemen.
Additionally, decentralized financial applications like decentralized finance (DeFi) platforms may be developed using blockchain technology. These blockchain-based systems give users more control over their financial assets by enabling them to access financial services directly. Blockchain technology and cryptocurrencies can support financial literacy and education. People may learn about money management and investing securely and conveniently by accessing digital financial services. By learning more about these technologies, people may become more self-sufficient and empowered financially. Cryptocurrency has the potential to significantly advance financial inclusion and give the unbanked population access to banking services. The possibility of cryptocurrencies to offer financial services to the underbanked population, who may have a bank account but lacks access to conventional financial services, represents another potential advantage of cryptocurrencies in promoting financial inclusion. Those with low incomes or a bad credit history might not be eligible for conventional loans or credit cards.
Peer-to-peer lending is one alternative financial service that may be offered using cryptocurrency and blockchain technology that may not have the same criteria as conventional banking institutions. Increasing the underbanked population’s access to financial services can contribute to reducing poverty and expanding economic opportunity. The difficulties must be addressed to advance financial inclusion using cryptocurrencies and blockchain technology. More solutions to the problems will become accessible as the market develops and improves, and more individuals can take advantage of financial inclusion.
