We all know the importance of financial inclusion. Right? Can cryptocurrencies drive financial inclusion, and if yes, then how? Let’s dive deeper into understanding the role of blockchain in enabling financial inclusion for developing countries like India and Africa. So let’s get started.
Table of Contents
- Overview of Cryptocurrencies and Financial Inclusion
- Blockchain- A Backbone of All
- Hike in Cryptocurrency Adoption
- How Blockchain Drives Financial Inclusion
- Concluding Lines
Overview of Cryptocurrencies and Financial Inclusion
Can you imagine living without access to any of the financial services like opening a bank account, having a debit or credit card, and so on? I know it’s hard even to imagine. However, billions of individuals around the world currently lack basic financial services, and thus they are unable to take part in their local economies.
The introduction of digital currencies, empowered by blockchain technology, can be seen as a potential for empowering financial inclusion globally. It even allows developing nations like India to overlook traditional banking services and transact using just a mobile phone. Gaining access to financial services through digital currencies will allow people to improve their standards and raise their household incomes.
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Blockchain- A Backbone of All
Lack of financial inclusion opens a window to develop financial solutions tailored according to the needs of the people. Presently, developing nations are adopting a supportive infrastructure to accelerate their financial inclusion by utilizing cryptocurrencies, whose underlying technology is blockchain.
Blockchain is a peer-to-peer, decentralized, distributed ledger technology that operates without involving any third party or middleman, making it exceptional from the traditional banking system. The disruptiveness of blockchain can transform the global payment landscape and provide individuals a safer and faster way to verify the information.
Hike in Cryptocurrency Adoption
In the past few years, the creation of cryptocurrencies that are not governed by any central authority but by the people has found its special place in the global market. Presently, developing countries like India and Africa have the most promising markets for cryptocurrency adoption and financial inclusion.
Number 1: Case of India
After RBI confirms no ban on crypto exchanges in India, adoption really takes off. Since then, multiple retail investors, various startups, and new players have moved forward in the crypto space. The phase of lockdown also shows a notable factor for the growth in crypto volumes.
Ajeet Khurana, former head of the Blockchain and Cryptocurrency Committee of the IAMAI and former CEO of Zebpay, mentioned that during the lockdown, many people are trading more, adding “Trading volumes are quite robust. Daily crypto trading volume in India maybe $10-$30 million.”
Tim Draper, an American venture capital investor, mentioned that he has “met several Bitcoin and crypto startups” from India and that he “hopes to be able to fund a number of them.
Apart from that, CoinDCX, a cryptocurrency ecosystem that allows cryptocurrency traders to experience trading, announced $1.3 million of funding that would be used to increase crypto awareness and adoption in India. Moreover, it is also looking to initiate a long-term project, ‘TryCrypto,’ to introduce 50 million consumers to cryptocurrencies in India.
Africa, Number 2 in the List
Fearing the destruction of the banking industry, Africans without access to banks could be attracted more towards cryptocurrency. Africa is also keeping an eye and adopting cryptocurrencies as a means of payment for various purposes. Cryptocurrency related firms in Africa are coming up as financial tools and services that allow users with a seamless and cheaper exchange.
Experts believe that “conditions of the continent are great for virtual currency.”
In the past year, various cryptocurrency-related operations began in Africa, and numerous cryptocurrency-based remittance services have risen up. These services include Abra, in Malawi and Morocco, GeoPay in South Africa, BitMari that operates in Zimbabwe, among others.
How Blockchain Drives Financial Inclusion
As we already mentioned, cryptocurrencies work under the principle of blockchain; let’s explore how this technology drives financial inclusion.
- Blockchain addresses the high fees issues by enabling almost real-time and accurate payments, thus reducing transactional costs.
- Technology facilitates a decentralized approach to identity management and helps in managing financial entitlements.
- Most importantly, blockchain reinforces trust among the two participating parties.
Undoubtedly, cryptocurrency can drive financial inclusion as there is an urgent urge for monetary innovations, especially in the developing countries that will help in decreasing the cost of processing transactions, making the world less dependent on cash, and obviously increasing the mobility of money across the globe.
According to you, how much potential do cryptocurrencies hold in empowering financial inclusion? Share your views in the comment section below.