Unbanked people could lead the world to a bankless society. Blockchain is the revolutionary movement behind this idea, and it could eventually change how banks operate, says Carlos Chang, project analyst for Mexo.
World’s unbanked population
More than 2 billion people in the world still do not have a bank account. Specifically, the World Bank stated that 45% of Latin American adults do not have an account at a financial institution. 207 million people do not have a bank account in LATAM in 2022. In addition, the World Bank announced that 30% of the population, or 187 million people, lived in poverty in LATAM in 2022.
In addition, millions of Latin Americans will still not have access to financial services due to poor infrastructure in rural areas, where until recently people did not have bank accounts. Therefore, a significant challenge in many Latin American countries is providing banking services to low-income families living in remote areas with little or no access to physical branches of banking institutions.
Presumably most of them live in middle-income emerging markets, but even in high GDP countries, large numbers of people are excluded from traditional financial services due to various barriers:
1. Lack of reliable local banking infrastructure in remote areas
2. Inability to maintain the minimum deposit required for an account
3. Failure to provide valid ID to register as a customer
Without access to savings and credit, these unbanked individuals cannot participate in the virtuous circle of economic growth and the security and interest offered by banks. The unbanked constitute a vast market that no existing institution can serve well. In developing countries, traditional banks are reluctant to grant them credit. These are often high interest rates to offset the risk, which is a significant point for the unbanked.
The Unbanked and the Crypto Solution
Cryptocurrency provides banking services to people who do not have a bank account.
Cryptocurrency can provide banking services to people who don’t have bank accounts, allowing people without bank accounts to quickly send and receive funds across borders. For people without a bank account, cryptocurrency is the perfect solution. It’s a great way to use blockchain and cryptocurrency to help people without bank accounts take advantage of financial services.
Small transactions have been costly for banks, and these frequent payments can dramatically increase transaction volumes and pose serious problems for banks. Blockchain and cryptocurrency can significantly reduce the operating costs of these financial institutions. With blockchain and cryptocurrency, small payment transactions are no longer a problem. Blockchain can process transactions at a fraction of the cost, providing more convenience and greater security for people’s money. As cryptocurrencies become less volatile, they have become an excellent alternative asset to traditional finance.
Bankless business has already started
Fintech companies now hold the key to making payments in the future. The future is even more critical when artificial intelligence, Web 3.0, robots, data analytics and computer vision crystallize in finance. For example, the development of blockchain technology allows anyone to generate a non-custodial wallet, a decentralized system and an investment account without the need for a trusted intermediary to protect and allow access to funds. As a result, Bitcoin, Ethereum, and thousands of other cryptocurrencies allow anyone to open private banking and investment accounts anywhere on the blockchain without the trust of a third party.
Bankless company developed on blockchain and cryptocurrencies
Blockchain significantly improves traditional finance, allowing everyone to build a self-sustaining and sustainable cryptocurrency portfolio. At the heart of this revolution is blockchain-based technology that allows transactions to be authenticated using an immutable and trusted network of computers without human intervention. These rules can dictate actions, lock in value, automate trades, and create massive market efficiencies at a fraction of the cost of our current systems.
Bitcoin provides an unprecedented mechanism for transparent participation. Income and expenses occur on-chain, meaning all cash flows are auditable. In addition, cryptocurrencies have a comprehensive security system, which encourages investors. Cryptocurrencies also provide reliable transactions at a much faster rate than the standard features of traditional banks. As a result, cryptocurrencies have proven to be essential in ushering in a better, cashless financial era.
Cryptocurrencies are the future of the unbanked and the bankless society
One of the significant benefits of cryptocurrency is that it helps fight financial inequality. Cryptocurrencies have narrowed the financial services gap and brought financial services to unbanked worlds.
Cryptos have an extensive distribution network, which provides a robust financial infrastructure and is decentralized, which means that cryptocurrencies can circumvent these advantages and provide many opportunities for their users.
Cryptocurrencies also offer the opportunity to innovate and finance the capital needed by entrepreneurs, especially in the growing global market, where cryptocurrencies are a significant boost for countries with financial infrastructure and currencies are weak.
In terms of financial inclusion, cryptocurrency is starting to play a crucial role in finance. It has even proven to be more inclusive than microfinance institutions. As a result, they are making changes to a bankless society.
About the Author
Carlos Chang is a project analyst for Mexo, providing comprehensive analysis of cryptocurrency operations. He specializes in performing operational cost assessments, trading status market liquidity analysis, and cryptocurrency revenue product analysis.
Got something to say about unbanked people and cryptocurrency, or something else? Write to us or join the discussion on our Telegram channel. You can also find us on Tik Tok, Facebook or Twitter.
All information contained on our website is published in good faith and for general information purposes only. Any action the reader takes on the information found on our website is strictly at their own risk.