Although the world is taking tremendous steps toward financial inclusion, a staggering number of people still do not have access to traditional banking services. According to 2018 data from World Bank, 1.7 billion adults across the globe are “unbanked.” For those without checking or savings accounts, alternative options like cryptocurrency can provide a much-needed lifeline.
In lieu of accounts at traditional or online-only banks, hundreds of millions of individuals rely on cash for all their purchasing needs. Without access to financial products like bank accounts, these people often struggle to complete basic financial tasks like paying bills. The unbanked population includes a disproportionate number of low-income people. Their lack of access to banking services prevents them from achieving the financial security they need to live comfortable lives.
This is where cryptocurrency could come in.
Remarkably, the majority (two-thirds) of the unbanked population owns mobile phones that would allow them to utilize digital financial apps and other solutions. With as little as an internet-enabled mobile phone, anyone can begin using cryptocurrency to both receive and send money—no matter where they live or what their financial situation may be.
Cryptocurrencies come with few barriers for entry, making them an attractive option for the unbanked. Not only is crypto technology flexible, but it is inexpensive to get started and offers better security than other digital banking solutions. Those who pay using cryptocurrency also pay lower fees than those who rely on credit cards, and these costs will only drop as more people adopt crypto solutions.
In recent years, Bitcoin ATMs have begun to pop up across the globe, giving the unbanked population even more opportunities to exchange their cash for crypto. As of 2020, there were more than 8,000 of these machines around the world. Along with other cryptocurrency technologies, these ATMs are part of the decentralization of financial services. This further minimizes costs for the unbanked by eliminating the need to involve (or pay) an intermediary authority when sending and receiving funds.
Cryptocurrency has already seen a number of real-life applications among the unbanked. In Venezuela, for example, where the national financial system recently collapsed, many residents turned to crypto to avoid hyperinflation. Africa has also seen increased interest in crypto in response to the high cost of sending money via local banks. Money transfers come with hefty fees of up to 17 percent per transaction. By sending funds in the form of Bitcoin, people only incur fees of a few cents.
As cryptocurrencies continue to permeate our financial systems, it could provide even more opportunities for the unbanked to take charge of their money and move toward financial freedom.