Financial inclusion is vital in every country. But the traditional financial system has made this almost impossible in some countries due to its shortcomings. Bitcoin is promising to drive financial inclusion, especially in developing countries.
Overview of Financial Inclusion and Bitcoin
A significant percentage of people in developing countries can’t access financial services like credit and debit cards and bank accounts. For this reason, such people can’t participate in the local economies.
Digital currencies like Bitcoin use blockchain technology to enhance financial inclusion worldwide. That’s because this cryptocurrency allows people in developing countries to overlook conventional banking services. With this virtual currency, individuals can use a mobile phone to transact. Thus, individuals can now access financial services via a digital currency, enabling them to improve their living standards and increase household incomes.
Blockchain- The Technology behind Bitcoin
Inadequate financial inclusion has created a window for developing financial solutions to the needs of individuals in developing nations. Currently, developing countries are embracing supportive infrastructure for accelerating financial inclusion. And blockchain is the underlying technology for this infrastructure.
Blockchain is a decentralized, peer-to-peer, distributed public ledger technology that doesn’t involve intermediaries in its operations. And this makes it exceptional from the conventional banking system. Essentially, blockchain has disrupted the global financial system by providing a faster and safer way of transferring value and verifying information.
Increasing Bitcoin Adoption
Many people worldwide, including in countries that don’t accept cryptocurrencies as a legal tender, are embracing Bitcoin. This virtual currency doesn’t have a central authority that governs it. However, this digital currency has a special place in the worldwide market. Today, people are purchasing and selling this virtual currency on sites like thecryptogenius.io using fiat money. These platforms facilitate Bitcoin trading and investing for people in all parts of the world. Thus, even individuals in countries that have banned cryptocurrency can use the platform to trade Bitcoin. And, developing nations in Africa and Asia have promising markets for Bitcoin adoption and its use as a tool for financial inclusion.
Using Blockchain to Enhance Financial Inclusion
As hinted, blockchain is the underlying technology for Bitcoin.
Here’s how this technology enhances financial inclusion:
- It addresses issues like high transaction fees by facilitating accurate and real-time payments, thereby reducing business costs.
- It allows for a decentralized approach to financial entitlement and identity management.
- It reinforces trust among the parties in a transaction.
In developing countries, people have little access to financial systems since traditional banks minimize their exposure by using many bureaucracies and paperwork. Bitcoin can fix this problem by providing a convenient and secure way of accessing the financial markets. In addition to the value storage aspect of this digital asset, the technology behind Bitcoin enhances sustainable development via services like supply chain digitization, micro-scale international commerce, and crop insurance contracts.
With the increasing adoption of Stacks 2.0 and Lightning Network, people will learn innovative ways of enhancing inclusivity in the global markets’ economic opportunities. Nevertheless, the world must address infrastructure issues like electricity and internet access. Additionally, Bitcoin use as a digital asset and traditional financial institutions must co-exist for some time. s
Final Thoughts
Bitcoin can undoubtedly enhance financial inclusion by allowing more people to access capital and services that improve their participation in their economies. As constituted, the conventional financial system requires innovation that will lower transaction costs and minimize cash dependence. Bitcoin facilitates this by eliminating intermediaries. What’s more, this virtual currency allows people to access funds without opening bank accounts. Additionally, people can use crypto exchanges to own Bitcoin even without understanding how it works by purchasing it on crypto exchanges.
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