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Is cryptocurrency the solution to financial inequality?

Experts predict that cryptocurrency will soon release FIAT money as the preferred medium of exchange, perhaps as early as 2030. What does this mean for those in financial difficulty now? Do cryptocurrencies have the potential to solve these types of problems?

In order to understand how cryptocurrencies like bitcoin can affect people in poverty, it is important to first explore some of the reasons behind our nation’s current income inequality crisis.

Income Inequality in America

Income inequality in America means that 33.98 million people, or just over 10%, live below the poverty line. And given the ongoing worldwide COVID-19 pandemic, this number is likely to grow until we are completely out of the woods.

The causes of these inequalities can be linked to a variety of factors, but the most common are:

Education: The changing ability of a person to receive an education. While education in one area or country may be easy to find, it may be much more difficult in another, and factors such as race and class can influence access to education. Consolidation of health: Where the majority of wealth is already held and consumed among the wealthy. In essence, only wealthy people succeed. Technology: Some jobs can become obsolete due to advances in technology; for example, an order selector in a warehouse.Gender: The gender pay gap is one of the most famous examples of economic inequality, especially among single women who want to live independently.

Of course, there are more factors behind financial inequality, but it would take far too long to put together a list of them and why they would contribute. Suffice it to say, it is these four that contribute most.

How Cryptocurrency Can Help

So, with all the rampant financial inequality going on, how is cryptocurrency the answer? We’ve all heard the saying that the rich get richer and the poor get poorer, right? Well, let’s amend that to say that the rich get richer, and the poor get cryptocurrency.

The main reason that cryptocurrencies are the solution to financial inequality is that they can help strengthen the middle class in two ways: by stabilizing it and by helping those below it achieve it. It does this by helping people hold on to their hard-earned wealth.

The United States is succumbing to a lack of people banking. Believe it or not, it is estimated that more than seven million people in the United States are bankless (meaning they have no bank accounts, for personal reasons or because banks reject one).

These people are forced to finance their pay checks, which costs money; use money orders to pay their bills, which cost money; and you have to get prepaid debit cards, which cost you money. In total, a family or individual who has been refused a bank account is forced to pay about $ 2,400 a year just to be able to use their own money. Doing some quick calculations results in about $ 16.8 billion in non-bank transaction fees during the year.

Cryptocurrencies are much better than banks in this regard. While you may reject your checkout or savings account, cryptocurrencies are actually very comprehensive. All you need is a phone and an internet connection. Or you can buy some at ATM Bitcoin, which is at some convenience stores or grocery stores.

In addition, FIAT cash risks are being devalued thanks to centralized banks. Governments are allowed to print currency at will – as much or as much as they think fit. Printing too much money (and with the COVID-19 pandemic, this has happened), there is a risk that governments will lose their value for money.

However, this cannot happen with, for example, bitcoin. Rules in the bitcoin software limit the number to help economically disadvantaged people.

How? Well, with more and more people around the world accessing a smartphone today (almost 50% now have one), cryptocurrencies can reach new customers much more easily. Remember, you only need to buy and trade bitcoin and smartphone and internet connection.

An attempt to expand into LICs was first made in 2017 with a company called MicroMoney, which developed a cash lending app. It was mainly related to LICs, such as Myanmar, Thailand and the Philippines. Its aim was to help people in these countries build a credit score using blockchain, so that they could be more easily introduced into the world economy. Many of the poor population in these countries – as you may have noticed – are without banks.

Cryptocurrency in Latin America is also making great progress. You’ve probably heard of El Salvador accepting bitcoin as a legal tender and as a national currency. But his success does not end there. The country has partnered with Strike, a digital wallet firm, to help meet the financial infrastructure to meet its September deadline to officially have bitcoin as a national currency. With 70% of El Salvador ‘s population unhindered, those who are financially insecure now have the opportunity to save and spend money freely.

Finally, an anonymous bitcoin millionaire, back in 2017, donated $ 5 million to GiveDirectly, which runs a basic revenue experiment in Kenya. The money helped people access fresh water and helped the financially insecure with food and sending their children to school.

Ultimately, what cryptocurrency does is give people hope: I hope they don’t have to live in poverty for the rest of their lives just because they were born in the wrong socioeconomic class and can integrate themselves into world economy.

Predicting the future is never easy, but we at Unbanked believe that poverty is worth everybody. We believe that wealth should not be for people under financial privilege alone, and cryptocurrency is the way to move us towards a fair world.

Guest post by Ian Kane from Unbanked

Ian Kane is the Co – Founder of Unbanked, a global tech platform built on blockchain. Kane has worked in technology and digital media for over 10 years with a heavy focus on business development, sales and strategy. His diverse professional background enables him to bring unique insights and experiences to every challenge he faces.

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