Is Cryptocurrency the Answer to Financial Inclusion Issues?

May 2019
Global, May, 02 2019 - Whilst Bitcoin has the goal of destroying the fiat monetary system there are other noble goals. Providing financial inclusion for the huge amount of people left unbanked is one of these.

When Bitcoin first started gaining notoriety, one of the selling points for the cryptocurrency was that it could help bank the unbanked. According to the World Bank, around 1.7 billion people do not have access to regular banking accounts as of 2017.

These people are largely from the global south in continents such as Asia and Africa. For them, cash remains king. By not having a bank account though these people remain excluded from the traditional realms which creates a perpetual system of economic disparity. Can cryptocurrency solve these issues?

Why are people still unbanked? There are numerous issues preventing such a large amount of people from financial inclusion. Many of the world’s population remains unbanked is largely due to economic hardship.

800 million people are still living on less than $5 per day, which means for many people having access to a bank is unnecessary. The cost of setting up a bank account is cited as another issue for many.

Further infrastructure issues complicate the matter. 22% of people live too far a distance from a bank to travel there. In many nations where the governmental infrastructure is lacking, it means that vital documents such as a passport or a birth certificate necessary to get a bank account are difficult to obtain.

None of these issues are particularly new or surprising. There is a distinct lack of effort from banks to solve these issues precisely, because their main goal is profit. Banks do not see the necessary returns in their balance sheet to help these people.

For many cryptocurrencies, however, the issue of profit is non apparent. Sure, people may gain wealth from the Bitcoin price increasing but no single company or person owns the currency, unlike a bank.

How can cryptocurrency help? The use of cryptocurrencies can help mitigate some of the above issues. Unlike a bank there is a very low barrier of entry. Yes, whilst Bitcoin may look inaccessible at some prices you can still buy a fraction of a Bitcoin for $5 and send it to anyone, anywhere that – as long as they have a Bitcoin wallet.

As everything is done via the internet, distance stops being an issue. No need to travel long distances to get to a bank or a service. Of course, the caveat with this is that there must be a stable internet connection for a person to be able to use cryptocurrencies.

For many citizens in the global south they may have to deal with issues of inflation, Venezuela is a clear example of this. Bitcoin can help in preventing such negative effects of currency inflation, but this is largely dependent on the Bitcoin price itself not dropping substantially.

Bitcoin could solve many of the issues that banks have left by the wayside, but has it?

Has cryptocurrency helped so far? There are a few examples of cryptocurrency helping those in need. Venezuela’s dire economic state at the moment has caused many citizens to turn to cryptocurrency as an alternative. Both Bitcoin and Dash are popular there. They are used as a means of protecting wealth but also for everyday payments as well.

Crypto exchange Huobi have stated their aims in helping to provide trading services to bank the unbanked in South Asia, Africa and the Middle East.

UN research has also suggested that cryptocurreny could become a new frontier for Africa, with interest high on the continent. There are, however, still issues. Many predators have also targeted the global south promising vast wealth for their scams. This could hinder the growth of cryptocurrencies in the long run.

Whilst each of the examples above are heartening, Bitcoin and other cryptocurrencies have still failed to gain mass adoption. The price volatility coupled with scepticism from the mainstream are two factors for this.


Since their creation, cryptocurrencies have only resolved financial inclusion issues in relatively small ways. Further adoption from the global south education will be key.

There is certainly the possibility that cryptocurrency can help solve financial inclusion issues. The tools are there for it to succeed and the banks have left this issue under the carpet for too long.

Whilst Bitcoin has the goal of destroying the fiat monetary system there are other noble goals. Providing financial inclusion for the huge amount of people left unbanked is one of these. Time will tell whether either goal is achieved though.

Source : Yahoo Finance

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