DeutschThe term “Unbanked” refers to people who do not have access to the traditional banking system and modern financial services. In most cases, people who are considered “Unbanked”. In particular, People who do not have a stable internet connection or live in a developing country, are affected. These people have no way to open a bank account or take out loans. They are practically excluded from participating in the global economy. In recent years, however, cryptocurrencies and blockchain-based technologies have created an alternative way to solve the problem of the unbanked.
Blockchain-based technologies such as cryptocurrencies have the potential to give people access to financial products. Through fintechs and industries like Decentralized Finance (DeFi) and blockchain technology people without bank access can be supported. The goal is to achieve global financial inclusion. Through cryptocurrency, people around the world can make transactions without having a bank account. Cryptocurrencies could also serve as a store of value. Unlike fiat money, the value of cryptocurrencies is not influenced by central banks. This is particularly relevant for countries with an unstable currency.
DeFi and Unbanked
An interesting aspect is the decentralized financial services (DeFi) that are made possible by blockchain technology. The term DeFi encompasses a variety of financial products such as loans, insurance and savings programs that are operated via smart contracts on the blockchain. These products are not dependent on traditional financial institutions and can be used by anyone with a crypto wallet and an internet connection. This offers an alternative to people who are excluded from traditional financial services.
Another advantage of cryptocurrencies and blockchain-based technologies for the unbanked is that they have lower transaction costs than traditional financial services. In some countries, transaction costs for traditional bank transfers can be very high, especially for smaller transactions. Crypto transactions, on the other hand, often have very low fees, making it easier for people to carry out transactions.
Challenges
One of the biggest problems is the lack of infrastructure and technical support. Many people without bank accounts do not even have access to an internet connection or a smartphone. This poses an obstacle to the use of crypto, as it requires an internet connection and a device to use crypto wallets.
Another problem is the complexity of blockchain technology. It requires a certain level of technical understanding and skills to use blockchain technology. This means that there needs to be more education and training to teach people how to use crypto and blockchain-based technologies.
As in many other areas related to cryptocurrencies, the aspect of legal frameworks and (missing or inadequate) regulation is also a problem here. The fact that many countries do not enact specific laws regarding the use of blockchain technology can create uncertainty, especially in the context of protecting user data and transactions.
Conclusion: this is What You should Know about the Topic of “Unbanked”
Cryptocurrencies and blockchain technology offer a great opportunity to help the unbanked people around the world. These technologies are cross-border, cheap and easy to use. However, there are also challenges, such as understanding cryptocurrencies and blockchain technologies, as well as regulation and security. With the right education, regulation and technology, however, blockchain technology could help improve access to financial services and reach the “Unbanked” population around the world.
