As digital currencies become more and more of a household name, we get an increasingly deeper look at their many potential benefits. One fascinating development, in particular, is the role of blockchain for the unbanked, and how it has helped turn the tides of dozens of banking systems across the globe. Currently, there are nearly 2 billion unbanked or underbanked adults. However, fiscal trends have highlighted instances where cryptocurrency such as Bitcoin have positively impacted these populations. Let’s explore some of these instances, and what they mean for our global economy. 

Benefits Of Cryptocurrency for the Unbanked

The UNCTAD denotes the terms Global North and Global South to describe two fiscally diverse portions of the globe; these do not denote geographical regions, however. Instead, they represent a dichotomy or grouping of countries based on socio-economic and political characteristics. The Global North denotes countries with more stable economies and lower poverty levels, where traditional banking systems remain the status quo. On the contrary, the Global South comprises regions with more economic hardships, where the benefits of cryptocurrency have shined light.

In the Global North, crypto is primarily viewed as a speculative investment. Regulatory uncertainty and questionable user experiences have limited its adoption as an alternative in nations where standard currencies remain stable. Instead, Crypto finds a great deal of its value in the Global South, where traditional banking systems may be inadequate or inaccessible.

Some of the primary cryptocurrency benefits for the unbanked include:

• Accessibility – Cryptocurrency can be purchased, sold, and traded all within a person’s fingertips. Since these populations can utilize such currencies in a more reliable way than a typical bank or financial institution, ease of access becomes a huge stepping stone for a better financial flow. 

• Low Barriers of Entry – Credit score, income, difficulties proving identity, and other socio-economic inhibitors create a smaller barrier of entry for the underprivileged. With crypto, more people can access these means for financial gain, creating a larger and steady digital economy where those who would have otherwise been deterred can join in on the action.

• Reduced Costs – While crypto still features gas and transactional fees, these costs are often significantly lower than bank interest rates, APR, and yearly fees found in the Global North. Countries with less opportune financial stability can prosper from keeping their earnings in a fluctuating market that can increase profits by the hour.

• Faster Transactions – Volatile banking systems make transactions that much more difficult to accomplish, and at a much slower rate. Cryptocurrency benefits these areas where citizens can sell or buy tokens within seconds.

• Political Avoidance – Sure, a country can enact certain laws which prohibit crypto from being traded, but those that allow it have very little say in how it’s operated and regulated thanks to decentralization. Thus, these citizens can trade freely on the blockchain without limitations or political instability having a role in how their finances operate.

The Future of Cryptocurrency and Banks

As the benefits of cryptocurrency gain mainstream acceptance, banks in both the Global North and South may explore opportunities to offer crypto-related services, including facilitating transactions and providing custody services for digital assets. Yet, this evolving relationship hinges on navigating regulatory landscapes and security risks. Nevertheless, collaboration between traditional financial institutions and blockchain technology could create a more inclusive and efficient economic system down the road. And fortunately, these benefits of the blockchain for the unbanked are a fantastic place to begin on such decisions.

Aurpay: Driving the Crypto Revolution

At Aurpay, we consider ourselves a few steps ahead of this connection between cryptocurrency and banks, understanding its potential for high- and low-income individuals. We make it easy for your business to accept crypto payments online with enterprise-grade tools that offer a fast, safe, and cost-effective solution for managing cross-border cryptocurrency payments of any size. Contact us to learn more.