Summary: Financial inclusion is critical in raising people out of poverty. Cryptocurrencies are emerging as a real solution for critical financial problems in the developing world and have the potential to give billions of citizens access to banking tools and to the global economy for the first time.

Private and central banks around the world are racing to implement blockchain in attempts to stay competitive, and we are already seeing the widespread adoption of cryptocurrencies in a number of developing countries around the world. In Venezuela, for example, where inflation is staggeringly high, and the local currency has significantly devalued, the demand for bitcoin and other cryptocurrencies has skyrocketed. They are now a common mode of payment for Venezuelans, allowing them to hold on to their assets, buy food and other necessities, and purchase goods from overseas.

While it is still a nascent technology, blockchain has the potential to bring about political, economic and social change, and transform the lives of some of the world’s poorest and most desperate people for the better. They have the potential to lift billions out of poverty and replace corrupt financial systems, unleash innovation and entrepreneurship, and usher in a world where everyone has access to the essential building blocks for financial stability and economic growth. 

Cryptocurrencies, digital currencies based on the distribution ledger technology known as blockchain, have challenged the conventional belief that money can only work through central planning. As such, they have the potential to revolutionise the economies, particularly in developing nations. 

For decades, developing countries around the world have been plagued by poverty, corruption, inflation, high unemployment levels and political instability. As a result, some nations are grappling with devastating economic crises that are very difficult to untangle. In countries where people lack access to basic financial tools due to these challenges, cryptocurrencies could provide a way forward. 

Over two billion people worldwide do not have access to bank accounts, and therefore cannot buy homes, set up businesses, apply for loans or receive government benefits payments. This means they are unable to participate in the global economy and as a result, are disadvantaged. There are a number of reasons for this exclusion; some people cannot afford the costs of accessing finance or are unaware of the benefits of having a bank account. Some live too far from branches or do not have a safe way to travel to them, and others may ID that many in the developed world do not possess. Whatever the reason for financial exclusion, giving people in developing economies access to modern banking and financial services is critical for sustainable economic growth and combatting global financial inequality. Cryptocurrencies and the technology behind them, are quickly emerging as a viable way to do so. 

Blockchain technology, the platform that facilitates cryptocurrencies, has the potential to give everyone in the world access to banking services and therefore, the global economy. In places like sub-Saharan Africa, where two thirds live without access to bank accounts and 90 percent live without smartphones, blockchain can allow people to create their own financial alternatives in an efficient, transparent and scalable manner. 

Cryptocurrency services such as MPesa and BitPesa have already given millions of unbanked people access to banking services and financial instruments through mobile phone apps, and they are removing one of the biggest obstacles to entrepreneurship in developing nations; lack of access to banks. 

Traditionally, entrepreneurs in developing nations have been unable to enter the import or export market because they have no way to convert their currencies into more widely accepted money like the US dollar. However, new cryptocurrency solutions are beginning to solve that. There are no fees on wealth stored via cryptocurrencies and it takes relatively little time for funds to clear, so instead of taking days to transfer money or exorbitant fees to cash checks, blockchain technology allows for seamless flow payments and allows people to send money across borders without paying the steep fees charged by traditional gatekeepers.  

Private and central banks around the world are racing to implement blockchain in attempts to stay competitive, and we are already seeing the widespread adoption of cryptocurrencies in a number of developing countries around the world. In Venezuela, for example, where inflation is staggeringly high, and the local currency has significantly devalued, the demand for bitcoin and other cryptocurrencies has skyrocketed. They are now a common mode of payment for Venezuelans, allowing them to hold on to their assets, buy food and other necessities, and purchase goods from overseas. 

In Kenya, the MPesa peer to peer app has over 20 million users and more than USD 10 billion was deposited and withdrawn using the app between July and September 2016. Indeed, the UN’s World Food Program is now using the cryptocurrency Ethereum to send funds to refugees, who lack access to banks but often have mobile phones, helping ease financial exclusion and allowing a way for displaced people to get back on their feet.

The opportunities for cryptocurrencies to combat financial inequality and promote a better and more open economy in developing nations are endless, and it is highly likely that they will play a huge role in supporting financial inclusion around the world. 

While it is still a nascent technology, blockchain has the potential to bring about political, economic and social change, and transform the lives of some of the world’s poorest and most desperate people for the better. For the world’s “unbanked”, cryptocurrencies could be the future - they have the potential to lift billions out of poverty and replace corrupt financial systems, unleash innovation and entrepreneurship, and usher in a world where everyone has access to the essential building blocks for financial stability and economic growth. 


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