Cryptocurrencies are democratizing the financial world.

Many people don’t realise that opening a bank account, sending money to their friends, applying for a mortgage, and other basic financial services they take for granted are luxuries in the developing world. According to the World Bank, close to one-third of the world’s adults are “unbanked”, meaning they don’t use formal financial services. That’s nearly 2 billion people lacking access to the traditional financial system. They can’t protect their money, gain access to wealth-building tools and services, or effectively plan for their future.

But the problem isn’t just in the developing world. The Federal Reserve found that 22% of adults in the United States are either unbanked or underbanked. That’s roughly 63 million Americans who either have no bank account at all or rely on “alternative financial service products” such as money orders, check cashing services or payday loans to fulfil their financial needs. These problems are exacerbated when a pandemic like COVID-19 hits. According to Oxfam, nine months into the COVID-19 pandemic, roughly one-third of the world’s population, or nearly 3 billion people, had no financial safety net to fall back on.

This year has been off to a notable start for crypto and blockchain. On Jan. 7 the total cryptocurrency market hit an all-time high exceeding $1 trillion for the first time. Renewed interest in and conversations around, blockchain technology and digital currencies from industry and government leaders have accompanied the rise. At the same time, the challenges of 2020 continue, including global pandemic. COVID-19 dominated by the need for digital solutions and real-time multi-party access to consistent information highlighted across multiple sectors. I always wanted to add my thoughts on cryptocurrencies since last year and fortunately this year I had to write this article as the founder distributor of a WorldCoin which is a cryptocurrency with the vision to give everyone across the globe the power and freedom to their finances.

All the positive trends towards increased financial inclusion can now be accelerated by blockchain technology and, more specifically, cryptocurrencies. Blockchain is a decentralised ledger where participants can confirm transactions without the need for a central authority. Cryptocurrencies are a digital medium of exchange that have blockchain as their underlying technology — two of the most popular being Bitcoin and Ethereum. The fact the technology is decentralised is the main reason why no existing financial institution or government owns or manages Bitcoin or WorldCoin. Ten years after the inception of Bitcoin, cryptocurrencies are finally reaching mainstream adoption globally — particularly in developing countries. For example, almost a third of Nigerians now own some form of cryptocurrency. Nigerians were actively using cryptocurrency for buying or selling goods and services and sending money across borders to family and friends. Until recently when the Nigerian government banned the use of Crypto thus a story for another day Why they Banned it! However high rates of cryptocurrency adoption have also been recorded in developing countries, like Vietnam, Turkey and South Africa. Increased cryptocurrency adoption paired with increased cryptocurrency innovation have a real opportunity to democratise the traditional financial system

The future of finance is digital: consumers and businesses are more and more accessing financial services digitally, innovative market participants are deploying new technologies, and existing business models are changing. Digital finance has helped citizens and businesses tackle the unprecedented situation created by the Covid-19 pandemic. For example, online identity verification has enabled consumers to open accounts and use multiple financial services at a distance. A growing proportion of in-store payments are now digital and contactless, and on-line purchases (e-commerce) have significantly increased. Fintech solutions have helped to broaden and speed up access to loans, including loans supported by the government in response to the Covid-19 crisis. Ensuring safe and reliable operation of digital infrastructures has also become more important, as more people access financial services online and financial sector employees themselves work remotely. If there was still any doubt it is now clear: digital finance has a lot to offer, and the people and businesses have to be ready for it.

Cryptocurrencies have long been discussed and debated, but they’re only now coming to light as financial tools that can be accessible and useful to more than only die-hard connoisseurs. Cryptocurrencies have the potential to enable social and economic growth throughout the world, including in developing countries, by offering easier access to capital and financial services. Cryptocurrencies have a highly utilitarian, yet also disrupting quality that has slowly, but steadily started to interfere with the way the traditional financial system works. Cryptocurrencies are democratizing the financial world through the following:

1. A Beneficial Rise in Economic Activities

There is already an entire industry built around cryptocurrencies and it’s held by institutions dedicated to supervising all the digital coin exchanges taking place throughout the world. The rate at which the cryptocurrency industry is growing is earth-shattering and this can be confirmed by early adopters that became rich overnight and found opportunities to grow financially. Bitcoin, the most famous of these cryptocurrencies, has already permitted many people and companies to develop and flourish, while many also rely on trading as their source of income. The economy is slowly shifting to adapt to these needs and cryptocurrencies have a great potential in satisfying them.

2. Great Opportunities for Poorly Banked Countries

More than a third of the world population does not have access to basic banking services that can help them out in case of a personal financial crisis — loans, checking accounts and the list can go on. These people that in most cases are already financially disadvantaged typically resort to doubtful and dangerous lending practices. The interest rate of these practices is anything but fair, which consequently leads to more instability among the people who requested the loan. This is where cryptocurrencies come in with their high volatility and ease-of-use. There are now many apps and programs that facilitate the use of cryptocurrencies and bring them closer to the wider audience. An added benefit of cryptocurrency use is that it’s completely decentralized, so trading can be done freely across borders. The use of technology will facilitate a financial revolution that will leave everyone more financially connected, empowered and enabled.

3. Reducing Transaction Costs and Time

The power of cryptocurrency affords two crucial assets to any person in the 21st century: time and money. Specifically, cryptocurrency improves developing countries and the situation of foreign workers by reducing remittance fees. These are fees for the transfer of money by a foreign worker to an individual or family in their home country. Rebit, a Philippine-based holdings company for Bitcoin-related ventures, exemplifies this notion, as they empower users to send money to the Philippines without high costs. Workers in the United States can transfer dollars into bitcoins and then have their families back home withdraw the money in pesos. Consider Haiti, a country whose workers abroad send money to their families that is equivalent to 26 per cent of Haiti’s GDP (approximately $1.5 billion). However, remittance fees range from 8 to 10 per cent if the sender is in the Dominican Republic, the United States or Canada, which adds up to as much as $150 million in fees annually. As the money being sent home is for individuals who earn less than $500 per year, the extra hundred million in fees has an immense impact.

Fortunately, there have been competitors in the market for cross-border money transfers and one in particular stands out. Abra is a cryptocurrency application that can reduce transaction costs by up to 90 per cent. Under its system, money is transferred into Bitcoin, sent across the digital blockchain to the recipient of the money and transferred to a local currency. The entire transaction occurs without the customer witnessing the Bitcoin transaction. Plus, Abra is available to people who do not have bank accounts.

According to Forbes, banks and cryptocurrency are in a competition of sorts since cryptocurrency offers what banks cannot: avoidance of higher cost fees for transactions. Due to the fact that cryptocurrency does not need expensive private infrastructure to function, the fees and charges common to bank accounts and mobile banking transactions are cut down.

4. Increased Transparency of Transactions

There is substantial research that highlights the link between corruption and poverty. For example, research from Transparency International, the world’s largest anti-corruption NGO, shows the relationship between indicators of poverty to the percentage of the population who paid bribes in the past year. Moreover, corruption is estimated to increase the cost of successfully completing the U.N. Millennium Development Goal on water and sanitation by about $48 billion. Singapore is the perfect example of a country that, although once rife with corruption and poverty, prospered after a successful anti-corruption campaign by the People’s Action Party. By eliminating corruption, Singapore promoted a sustainable and attractive environment for foreign direct investment and economic development, which led to the reduction of high unemployment and ultimately, the eradication of poverty. Cryptocurrency improves developing countries by delivering an innovative and important method of cracking down on corruption. Government projects can now track how funds are spent and who is spending those funds. Also, authorized spenders of these funds are allotted specific timeframes of access and can only use the funds for the intended purposes.

According to the Brookings Institution, blockchain technology can eliminate what would be a 15-month corruption investigation at the touch of a button. In fact, cryptocurrency has the potential to reduce illegal public sector bribes by $1.5 trillion to $2 trillion annually, a possibly groundbreaking enhancement in development efforts. Cryptocurrency also promotes transparency through its tracking features and its handling of data. The data encompassed in the blockchain software is stored in many computers, which minimizes the risk of data loss. The encryption in cryptocurrency allows for greater security of data, while the trackability of transactions makes all transactions publicly available and searchable. There is no ambiguous or anonymous user, and since every transaction is traced, corruption can be prevented while transparency is enriched.

5. More Power to Entrepreneurs

There’s never been a more prosperous time to do business than it is now, in the sense that blockchain technology and cryptocurrencies can help entrepreneurs receive payments in more currencies. BitPesa is one such company that helps business owners in Africa make financial transactions with European, American and Asian companies. The aim is to help small and medium business everywhere get better financial coverage and a liberated financial connection with the rest of the world. By using BitPesa and TenX’s digital wallet, entrepreneurs are able to quickly convert altcoins into fiat currencies that they can later redirect to business investments, purchases and payments.

In conclusion, the world is changing and it’s changing quickly. The speed at which cryptocurrencies are taking over is a clear indicator that traditional financial institutions can no longer hold the fort so well and that other financial needs are arising and need to be addressed. Similarly, the world is facing a growing need to tear down borders, in search of a complete social and financial inclusion — this blockchain technology has everything it needs to address such issues. It will only be a matter of time until these cryptocurrencies definitively find a way into our lives, shaping them for the better, with economic growth and inclusion in mind. Millions of people will now have the opportunity to invest, send money across borders, save money and start a business thanks to the amazing possibilities that cryptocurrencies bring to the table.