Private and central banks around the world are racing to implement blockchain in attempts to stay competitive, and we are already seeing the widespread adoption of cryptocurrencies in a number of developing countries around the world. In Venezuela, for example, where inflation is staggeringly high, and the local currency has significantly devalued, the demand for bitcoin and other cryptocurrencies has skyrocketed. They are now a common mode of payment for Venezuelans, allowing them to hold on to their assets, buy food and other necessities, and purchase goods from overseas.

While it is still a nascent technology, blockchain has the potential to bring about political, economic and social change, and transform the lives of some of the world’s poorest and most desperate people for the better. They have the potential to lift billions out of poverty and replace corrupt financial systems, unleash innovation and entrepreneurship, and usher in a world where everyone has access to the essential building blocks for financial stability and economic growth. Cryptocurrencies, digital currencies based on the distribution ledger technology known as blockchain, have challenged the conventional belief that money can only work through central planning. As such, they have the potential to revolutionise the economies, particularly in developing nations

For decades, developing countries around the world have been plagued by poverty, corruption, inflation, high unemployment levels and political instability. As a result, some nations are grappling with devastating economic crises that are very difficult to untangle. In countries where people lack access to basic financial tools due to these challenges, cryptocurrencies could provide a way forward. Over two billion people worldwide do not have access to bank accounts, and therefore cannot buy homes, set up businesses, apply for loans or receive government benefits payments. This means they are unable to participate in the global economy and as a result, are disadvantaged. There are a number of reasons for this exclusion; some people cannot afford the costs of accessing finance or are unaware of the benefits of having a bank account. Some live too far from branches or do not have a safe way to travel to them, and others may have IDs that many in the developed world do not possess. Whatever the reason for financial exclusion, giving people in developing economies access to modern banking and financial services is critical for sustainable economic growth and combating global financial inequality. Cryptocurrencies and the technology behind them, are quickly emerging as a viable way to do s

Cryptocurrencies can play a significant role in promoting financial inclusion through following mechanisms:

Accessibility:

Cryptocurrencies can be accessed with just a smartphone and an internet connection, making them particularly suitable for individuals who lack access to traditional banking infrastructure. This accessibility empowers the unbanked to participate in the global economy, access financial services, and engage in transactions without the need for a traditional bank account.

Reduced Costs:

Cryptocurrency transactions typically involve lower fees compared to traditional banking services, especially for cross-border transactions. This affordability can significantly reduce the financial barriers faced by the unbanked, making it easier for them to send and receive money, access credit, and engage in economic activities.

Financial Empowerment:

Cryptocurrencies provide individuals with greater control over their funds, allowing them to manage their finances independently. This autonomy is particularly valuable for marginalized populations who may have limited access to traditional banking services or face discrimination within the financial system. By giving individuals ownership of their assets and enabling them to transact directly with others, cryptocurrencies empower them to participate more actively in economic activities and improve their financial well-being.

Cross-border transactions:

Cryptocurrencies can help people send money to their families living in other countries. They can also reduce the cost of financial transactions, making them more affordable for low-income individuals and small businesses. Traditional financial institutions often charge high fees for cross-border transactions, which can be a significant barrier for people living in developing countries. However, cryptocurrencies can facilitate borderless transactions with minimal costs, enabling people to send and receive money globally. For example, suppose someone lives in the United States and wants to send money to their family in India. In that case, they can use a cryptocurrency to send it directly to their family member's digital wallet. This is faster and cheaper than traditional methods like wire transfers or money transfer services.

Store of value:

Cryptocurrencies can also store value for those who live in countries with high inflation rates or unstable economies. Cryptocurrencies are not tied to any government or financial institution, and their value is determined by supply and demand. This means that they can provide a stable store of value in volatile markets, allowing people to protect their savings from inflation and economic turmoil.

Access to Credit and Investment Opportunities:

Cryptocurrencies enable individuals to access credit and investment opportunities that may be unavailable or limited within the traditional banking system. Decentralized finance (DeFi) platforms built on blockchain technology offer a wide range of financial services, including lending, borrowing, and investing, without the need for traditional intermediaries. This opens up new avenues for the unbanked to access capital, build wealth, and participate in financial markets.

Financial Privacy and Security:

Cryptocurrencies offer enhanced privacy and security compared to traditional banking systems, which can be particularly beneficial for individuals living in countries with unstable or oppressive regimes. By leveraging cryptographic techniques and decentralized networks, cryptocurrencies enable users to transact securely and privately, protecting their financial assets from censorship, confiscation, or surveillance.

In conclusion, cryptocurrency has the potential to revolutionize financial inclusion by providing the unbanked with access to affordable, secure, and convenient financial services. By leveraging blockchain technology, cryptocurrency enables individuals to overcome the barriers imposed by traditional banking systems and participate more fully in the global economy. However, realizing this potential requires concerted efforts from governments, businesses, and civil society to address the challenges and ensure that cryptocurrency is accessible and beneficial for all. Through collaborative action, cryptocurrency can truly bridge the gap for the unbanked, unlocking new opportunities for economic empowerment and prosperity.