Roughly 1.7 billion people around the world don’t have access to bank accounts or basic financial services. That’s a fifth of the entire population of the planet. And it’s not just in developing countries, either. Researchers estimate that around 10 million Americans — about 7.7% of American households — are also “unbanked.”
While many tech startups are looking for ways to profit from this massive population of unbanked people, offering apps with bank-like services, the best solution to this problem already exists. Cryptocurrency technology is already making life easier for unbanked people all over the globe. In this post, we’re taking a look at five ways cryptocurrency is changing the rules of the game for people without access to traditional banking.
1. A bank in your pocket. It’s almost impossible to overstate the impact of smartphones on global culture. While the latest high-end models can still cost well over $1,000, many refurbished and budget smartphones can be purchased for less than $50. In addition to everything else a smartphone allows its owner to do — instantly communicate with friends and family, browse the internet, watch videos, and countless other activities — smartphones also offer the option of easily sending and receiving money through payment apps. Unfortunately, most payment apps require the user to have access to a bank account to access or withdraw their own funds. Using a mobile cryptocurrency wallet, anyone can send and receive digital currency, storing their money securely using the power of cryptographic encryption.
2. No middlemen taking a cut. Many of the world’s poorest communities rely on remittance payments from relatives working abroad. To send money back home, workers are forced to use expensive remittance services, and it’s not uncommon for a remittance service to charge fees as high as 7%. This creates a major hardship for families that depend on these remittances, many of whom are also unbanked. Those same funds could be sent for a fraction of the cost using a cryptocurrency wallet app.
3. Instant access to global markets. Without a bank account, it’s basically impossible to participate in ecommerce. The unbanked can’t save money by ordering less expensive products online, and they can’t pay for digital services or subscriptions (such as online classes). Worse yet, unbanked people with valuable skills — programmers, QA testers, translators, designers — can’t earn money by working remotely. Simply by having a mobile cryptocurrency wallet on their phone, this situation completely changes. Workers can be paid directly in cryptocurrency, no bank account required. While not every ecommerce store is ready to use cryptocurrency, the number of those who are crypto-payments ready is growing every day.
4. An investment that beats inflation. One of the biggest reasons people are reluctant to use cryptocurrency is the unstable price. Iit’s not uncommon for bitcoin’s price to rise or fall by 20% in a day, for instance. If you are already struggling financially — as most unbanked people are — these erratic changes in price can be terrifying. Then again, if you live in a country like Venezuela, where hyperinflation of the local currency was more than 1,000,000% in 2018, cryptocurrency is actually a fairly stable investment. It’s also worth considering that cryptocurrency — over the long term — has experienced exponential price growth, beating every other investment by huge margins. Even the best interest rates at any bank can’t match cryptocurrency, and it definitely beats saving your money under a mattress.
5. Incredible security. At the most basic level, a bank is a business that sells the service of keeping your money safe. If someone wants to steal your life savings, they have to rob the bank to do it. If you don’t have access to a bank, you have to secure your money as best you can. Hiding your money in an old coffee tin under loose floorboard isn’t exactly secure. If someone knows where you keep your money, they can steal it. With cryptocurrency, however, stealing your money means breaking military-grade encryption. Even if someone steals your smartphone with your cryptocurrency wallet app on it, if they don’t have your passwords, your funds can’t be moved. As long as you have the wallet “seed” written down somewhere secure, you can easily access your funds on a new device. Your money is as safe as it can ever be, and even the most secure banks in the world can’t offer better security.