When people and businesses have access to relevant and reasonably priced financial products and services, this is referred to as financial inclusion. Over 1.7 billion adults worldwide do not have access to a bank account, according to the World Bank. This lack of accessibility may result in a variety of unfavorable outcomes, such as:
Fewer economic opportunities: People without bank accounts frequently can’t save money, borrow money, or make online bill payments. They may find it challenging to engage in the official economy as a result, which may keep them mired in a cycle of poverty.
Heightened susceptibility to fraud and theft: People without bank accounts can be compelled to store their money in cash, which leaves them more open to fraud and theft.
Reduced access to government services: In certain nations, receiving government assistance requires a bank account. This implies that people without bank accounts might not be able to use these advantages.
Financial inclusion for the unbanked may be accelerated by cryptocurrencies and Web3 technology.
The following are some ways that cryptocurrencies and Web3 can be beneficial
- Low entry barriers: Neither a bank account nor a credit background are necessary to access or use cryptocurrencies. They are thus a desirable alternative for those who are not part of the established financial system.
- Transparent and safe transactions: Blockchain technology, which is used by cryptocurrencies, provides a safe and transparent means to record transactions. Users may feel more at ease as a result of knowing their money is secure and their transactions are protected.
- Global reach: Regardless of location or time zone, cryptocurrency transactions are possible everywhere in the world. They are thus a desirable choice for people who reside in nations with shaky economies or who must send money to family and friends abroad.
Cryptocurrencies have the ability to be programmed to carry out certain tasks, including processing payments automatically or keeping money in a savings account. Users may have more financial control as a result, which may encourage them to budget more wisely and save money.
Naturally, adopting Web3 technology and cryptocurrencies carries some risks as well. These dangers consist of:
- Volatility: The price of cryptocurrencies is very erratic and subject to large swings in value. Because of this, using cryptocurrencies as a store of value or to send money might be risky.
- Fraud and theft threats exist since cryptocurrencies are still a relatively new technology. It is crucial to be aware of these risks and take precautions to keep oneself safe.
- Regulatory ambiguity The legal environment surrounding cryptocurrency is continually developing. Because of this, it may be challenging for organizations and people to understand the laws and how they will be applied.
Despite these dangers, cryptocurrencies and Web3 technologies have a lot to offer in terms of potential advantages for financial inclusion. These technologies have the potential to increase the accessibility of financial services for millions of individuals worldwide as they advance.
Here are some more ideas on how cryptocurrencies and Web3 could promote financial inclusion:
- Microloans can be made with the use of cryptocurrencies: Small loans known as microloans are frequently used by business owners in underdeveloped nations. These entrepreneurs may be given microloans using cryptocurrencies, which may aid in the launch or expansion of their company.
- Remittances are payments made by migrants to their family back home, and they can be transmitted using cryptocurrencies. Remittances can be sent using cryptocurrencies more rapidly and affordably than using conventional means.
- The creation of savings accounts that give better interest rates than conventional savings accounts is possible using cryptocurrencies. People who do this may be able to save money and increase their financial security.
- The creation of insurance goods using cryptocurrencies is possible. Compared to traditional insurance products, cryptocurrencies can make insurance products more accessible and affordable. This can assist people in securing their financial security.
Cryptocurrencies and Web3 have enormous potential to promote financial inclusivity. These technologies have the potential to increase the accessibility of financial services for millions of individuals worldwide as they advance.
