Globally, billions of people still lack access to traditional financial services, such as bank accounts and credit cards, leaving them unbanked. These populations often rely on international remittances to send and receive money across borders. However, traditional remittance services can be slow, expensive, and inaccessible to those without formal banking channels.

This is where cryptocurrency comes in as a potential game-changer. Built on the revolutionary blockchain technology, cryptocurrencies offer unique advantages that can address financial exclusion and transform the remittance landscape.

 

Addressing the Unbanked: Crypto’s Role in Financial Inclusion

 

The term “unbanked” refers to a group of people who don’t have access to traditional financial services. According to the World Bank, there are 1.7 billion adults who fall into this category, which means they are unable to utilise tools for saving, borrowing, and investing. It might seem surprising, but this is not necessarily due to a lack of financial literacy.

Instead, it is often the result of systemic, geographical, and economic barriers.Fortunately, cryptocurrency can help address this issue by offering more inclusivity. 

By leveraging blockchain technology, cryptocurrencies make it possible for individuals to access financial services who have been excluded from traditional banking systems. The decentralised nature of cryptocurrencies means users can bypass conventional banking setups and independently receive, store and transfer funds.

Case Studies: Impact of Cryptocurrency on Unbanked Populations 

Philippines – The Growth of Crypto Remittances

 

In the Philippines, the power of cryptocurrency has transformed the lives of many unbanked citizens. Through innovative companies like Satoshi Citadel Industries, crypto remittances have become a game-changer, drastically reducing the high costs of cross-border transactions.

As a result, more money now reaches the intended households, benefiting those who need it most. This is a shining example of how technology can empower people and transform economies.

Africa – Empowering the Underserved with Mobile Wallets

 

Innovative collaborations between mobile network operators and cryptocurrency firms are empowering individuals in remote African regions. By providing digital wallets accessible via basic smartphones, these partnerships are bridging the gap between the fiat and cryptocurrency economies.

Through this integration, even the unbanked can access global cryptocurrency markets without the need for traditional bank accounts. Startups like Tala are also making strides in empowering individuals with limited financial histories by offering small loans disbursed in cryptocurrencies. 

By accepting repayments in the same currency, these individuals can build reliable and traceable financial records. These developments are helping to create a more equitable financial landscape in Africa.

Venezuela – Crypto Remittances as a Lifeline in Economic Turmoil

 

In Venezuela, amidst hyperinflation and economic instability, cryptocurrencies have emerged as a vital lifeline for many citizens. With the national currency experiencing rapid devaluation, a significant portion of the Venezuelan population has turned to cryptocurrencies like Bitcoin and Dash for savings, transactions, and most importantly, remittances.

Crypto remittances allow Venezuelans living abroad to send money back home more securely and with lower transaction fees compared to traditional remittance services. This has not only provided much-needed financial support to families but also introduced a level of financial autonomy and security previously unattainable through conventional banking methods.

The government’s launch of the Petro, a state-backed cryptocurrency, has also sparked further interest and adoption of digital currencies in Venezuela. Despite facing challenges such as power outages and limited internet access, the use of cryptocurrencies continues to grow in Venezuela, providing a glimmer of hope amidst their economic turmoil.

Collaborations to Promote Inclusivity in Financial Services

 

Collaborations between conventional financial institutions, non-governmental organizations, and cryptocurrency companies are transforming the financial landscape by bringing the unbanked into the fold. By joining forces and merging the expertise of established entities with the pioneering spirit of blockchain startups, these partnerships are crafting inclusive platforms that connect communities while adhering to regional regulations.

The Role of NGOs in Crypto Adoption

 

Non-Governmental Organizations have historically been at the forefront of financial inclusion efforts. Crypto-focused NGOs, like GiveDirectly and Blockchain Charity Foundation, are using cryptocurrencies as tools to provide direct and transparent financial aid to the unbanked in a secure and efficient manner. 

By eliminating the need for traditional banking, they are streamlining the delivery of monetary support, thereby reducing the time and cost associated with disbursing these funds.

Banking Institutions Bridging the Gap

 

Financial institutions are starting to acknowledge the potential of cryptocurrencies in serving the underbanked. Banks like BankFrick, based in Luxembourg, now offer clients a safe and legal way to diversify their savings into cryptocurrencies while adhering to the necessary regulatory frameworks. 

This not only provides cryptocurrency access to the bank’s existing customers but also expands their customer base to include those seeking to leverage cryptocurrencies for financial growth.

Technological Innovations Driving Inclusion

 

The success of cryptocurrency in reaching the unbanked wouldn’t be possible without the technological advancements that accompany it. 

Mobile penetration and the availability of the internet have become catalysts in leveling the financial playing field, where technology-enabled solutions are providing the most marginalized populations with a tool for economic mobility.

Leveraging Mobile Phones for Financial Services

 

Mobile technology has proven to be an essential enabler in financial inclusion. With the aid of simple mobile applications, individuals can now access various financial services, from digital asset transfer to loans and insurance. 

Platforms like Paxful and LocalBitcoins have proliferated across regions with high mobile penetration, enabling peer-to-peer cryptocurrency trades using mobile phones as the primary device.

The Growth of Digital IDs and Blockchain

 

Digital identities are essential for accessing different services, particularly financial ones. Blockchain technology, with its secure and immutable ledger, is being used to provide individuals with verifiable digital IDs. 

This is particularly important for the unbanked, who often lack the necessary formal documentation to open a bank account. Projects like the World Food Programme’s Building Blocks initiative are using blockchain technology to give Syrian refugees in Jordan a digital wallet. This initiative allows refugees to purchase food and supplies without the need for traditional banking methods.

 

In Conclusion

 

Cryptocurrency’s rise as a tool for financial inclusion has brought forth challenges, but its impact on the unbanked population is undeniable. The potential of cryptocurrency to empower individuals with financial sovereignty and limitless economic opportunities is already a reality. 

It is crucial to continue supporting the infrastructure that can make inclusive finance a global reality. By promoting access to cryptocurrencies, we advocate for equality and empowerment. With each case study, we realise that cryptocurrency transcends borders in effecting a global shift towards a more equitable financial ecosystem.