Cryptocurrencies have often received a negative reputation because of their volatility and illicit uses for purchases on the internet. The advantages and disadvantages of cryptocurrencies have also been circulating since their invention. The invention of cryptocurrency was primarily to make peer-to-peer-based online payments without the interference of any financial institution.
When cryptocurrency was first introduced, the world regarded it as a sophisticated means of monetary transactions which only a few could afford. In the initial years of Bitcoin, almost no one gave it a thought that cryptocurrencies could be helpful in addressing global poverty.
In developing countries, several residents who wish to trade open find themselves limited by financial resources that are, on the affordability of a bank account. In several countries establishing a bank account implies a deposit that is most affordable and often more than the daily wage of an average wage earner.
How can crypto reduce poverty?
The records of financial transactions are recorded on a blockchain system that is maintained across a distributed ledger and cannot be altered by companies or individuals, thus, preventing theft or fraud. For this particular reason, blockchain has been considered as a potential method of payment in developing countries to build trust among individuals about the security of the currency.
This means that more and more people will be able to invest in cryptocurrencies especially the ones who are below the poverty level.
- Providing services to underbanked and unbanked people
Cryptocurrencies that function within blockchain technology can particularly allow people to have access to financial services, especially those people who are mostly unbanked or underbanked residents of developing or underdeveloped countries.
Once it was a herculean task for people to understand how cryptocurrencies and blockchain technologies function, but the recent flow of services and applications have made technology easier and simpler to use than ever before.
The biggest advantage of cryptocurrencies for blockchain over other financial institutions is that it is based internationally unlike other payment modes which are centralized. Which cryptocurrency is cross-border trade is possible by anyone across the world.
Cryptocurrencies are equipped to bring monetary services to the unbanked and underbanked people at a low cost of the transaction. Since cryptocurrencies have no physical branches for delivering the services and maintaining staffing costs, the savings made on blockchain technology’s distributed networks can be passed from one user to the other at a minimal transaction fee.
This particularly allows small monetary amounts to be easily passed between businesses or individuals and also helps in removing third-party barriers in financial exchanges.
- Economic banking and identity
Financial identity for unbanked and underwent people can be provided through cryptocurrencies, most of them who are living in developing countries. Almost two billion adults express barriers such as the location of banks’ transaction fees, lack of necessary documents, and most commonly lack of warrantable acids against an account.
Including financial restitution is crucial for poverty reduction as it allows people to manage their savings, build credits and receive loans.
Several countries are now using blockchain technology to create an efficient financial alternative in a scalable and transparent manner. Through this step, countries can not only elevate their citizens from poverty but also increase financial funds from other resources such as tourism, agricultural profits, and https://bitql.app/
- Saving money in uncertain situations
For emerging economies, long-term savings are problematic for many people due to high levels of inflation, risks of assets being seized by the government when stored in local financial institutions. and overall government corruption.
Cryptocurrencies are an excellent way to avoid the local financial institutions giving people the chance of increasing their savings through cryptocurrencies without the possibility of risks.
Thus, even though blockchain technology and cryptocurrencies have received negative reviews and have often been considered unreliable, it has been observed that cryptocurrencies can help elevate transparency and limit corruption through automatic systems and digitization.