# Cryptocurrency and Blockchain offer financial inclusion to the unbanked
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2020-01-28
Category: TECHNOLOGY
Category URL: https://financedigest.com/category/technology
Meta Title: Financial Inclusion Solution: Cryptocurrencies & Blockchain
Meta Description: Learn how cryptocurrencies can provide access to financial services for the 3.5 billion unbanked people worldwide, tackling ease-of-use barriers for wider
URL: https://financedigest.com/cryptocurrency-and-blockchain-offer-financial-inclusion-to-the-unbankedhtml

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By **Mike Rymanov**, CEO at DSX.

1.7 billion People don’t have access to a bank account.

That shocking figure was released by the World Bank in a 2017 report and it gets worse – a further 1.8 billion rely on semi-formal or informal systems for their financial services.

![Mike Rymanov](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/mike-rymanov-450x675-1736838948635-compressed.jpg)

Mike Rymanov

That’s 3.5 billion [people ignored by the big financial institutions because they don’t](https://www.financedigest.com/people-dont-like-to-be-told-no-when-it-comes-to-finance.html "People don’t like to be told no when it comes to finance") earn enough, are in too remote a location or just don’t fit their view of their target customer.

This lack of access to formal banking services has an impact way beyond their ability to save and [manage money](https://www.financedigest.com/fine-tuning-your-money-management-skills-today.html "Fine-tuning your money management skills today"). It prevents them from properly participating in the [modern world – without a bank account it’s impossible to access so many of the services we take for granted every day](https://www.financedigest.com/who-is-the-modern-day-cfo.html "WHO IS THE MODERN DAY CFO?").

But, there is a solution at hand – if the world is brave enough to embrace the opportunity offered by [distributed ledger technologies](https://www.financedigest.com/how-distributed-ledger-technologies-are-transforming-esg-reporting-for-financial-intermediaries.html "How Distributed Ledger Technologies are transforming ESG reporting for Financial Intermediaries") and the systems they enable – specifically cryptocurrencies.

**Creating an alternative**

Don’t just take our word for it – no less a commentator than Deloitte believes blockchain can be “an accelerator for financial inclusion”.

When you pause to think about it – it makes perfect sense. The blockchain reduces the time and expense of financial transactions and it can be paired with biometrics and other security systems to combat fraud.  It also eliminates the need to rely on a single third-party authority to underpin trust in any system’s veracity.

That’s all great – but it still needs a way for people without access to [bank accounts](https://www.financedigest.com/lebanese-bank-closes-over-30-british-held-accounts-after-uk-ruling-depositors-group.html "Lebanese bank closes over 30 British-held accounts after UK ruling-depositors’ group") to get involved. That’s where cryptocurrencies come in.

Economic and social systems researcher Jan Ohnesorge identified cryptocurrencies as a suitable replacement for what we think of as [traditional bank account – provided](https://www.financedigest.com/digital-banking-traditional-banks-vs-fintech-providers.html "Digital banking: Traditional banks vs. fintech providers") it was universally accepted and based on secure foundations.

He outlined three main reasons for this belief –

- The ability of cryptocurrencies to enable users to make payments
- the possibility to safely store, [manage and move](https://www.financedigest.com/managing-your-expenses-during-a-move.html "Managing your expenses during a move!!!") money,
- A gateway [system to provide access](https://www.financedigest.com/telehealth-monitoring-to-rule-the-the-transseptal-access-systems-market.html "Telehealth monitoring to rule the The Transseptal Access Systems Market") to a more varied range of financial services.

Crucially, this would not necessarily have to be powered by blockchain to work, although using the blockchain as a [basis for this would address Jan’s point](https://www.financedigest.com/traders-ramp-up-bets-on-75-basis-point-ecb-sept-hike-bond-yields-jump.html "Traders ramp up bets on 75 basis-point ECB Sept hike, bond yields jump") that secure foundations are essential to making the concept a reality.

But if cryptocurrency is to become a real option for the unbanked there are still significant areas where the [industry needs](https://www.financedigest.com/scams-have-eroded-digital-trust-banks-need-to-do-more-to-combat-the-industrial-scale-of-scams-in-the-uk.html "Scams have eroded Digital Trust – Banks need to do more to combat the industrial scale of scams in the UK.") to improve – particularly around ease of use.

**The proof is in the pudding**

It’s only by focusing on addressing ease of use that the benefits of cryptocurrency can be [made easily accessible to the billions across the world](https://www.financedigest.com/in-a-stadium-of-their-own-migrant-workers-say-their-sweat-made-world-cup-happen.html "In a stadium of their own, migrant workers say their sweat made World Cup happen") who deserve access to proper financial systems.

Right now, the relative un-user friendliness of cryptocurrencies and distributed ledger [technologies is the biggest barrier to wider](https://www.financedigest.com/adverty-wins-third-us-patent-for-brainimpression-bringing-ad-viewability-technology-to-gaming-on-mobile-tv-screens-and-the-wider-metaverse.html "Adverty wins third US patent for BrainImpression™, bringing ad viewability technology to gaming on mobile, TV screens and the wider metaverse") uptake. Convoluted language, antiquated design and a lack of easily digestible documentation all mean people bounce off alternatives to [traditional banks](https://www.financedigest.com/how-partnerships-between-fintech-start-ups-and-traditional-banks-herald-a-brave-new-world-of-opportunity.html "How partnerships between FinTech start-ups and traditional banks herald a brave new world of opportunity"). This doesn’t just apply to cryptocurrency and blockchain efforts – other efforts to help the unbanked, such as M-Pesa, suffer from many of the same barriers to entry.

The easiest way of doing this is through tools designed from the ground-up to be mobile-first, such as the digital wallet Abra, which enables peer-to-peer [transfers in a variety of fiat and crypto](https://www.financedigest.com/natwest-limits-customers-crypto-transfers-citing-scam-concerns.html "NatWest limits customers’ crypto transfers, citing scam concerns") currencies.

All users need to get started is a smartphone and the app. While the transactions are cryptocurrency based, the [user doesn’t need a working](https://www.financedigest.com/brics-aerial-work-platforms-market-competitive-growth-strategies-based-on-type-applications-end-user-and-region.html "BRICS Aerial Work Platforms Market Competitive Growth Strategies Based on Type, Applications, End User and Region") knowledge of the field to get started– and might not even realise that cryptocurrencies are being used at all.

It just works, and means anyone with access to a [mobile and the app](https://www.financedigest.com/the-growth-of-mobile-fintech-and-the-impact-for-mobile-app-marketers.html "The growth of mobile fintech and the impact for mobile app marketers") has an entry point to the global financial system.

For the unbanked, the best thing about using an app like Abra is that using it gives them a chance to create a financial footprint, giving them a proof of existence and financial capability they couldn’t have dreamt of a few [years](https://www.financedigest.com/is-2022-the-year-green-finance-incorporates-climate-risk.html "Is 2022 the year green finance incorporates climate risk?") ago. This proof can pave the way to the creation of a [credit record](https://www.financedigest.com/credit-suisse-shares-hit-record-low-after-report-bank-is-looking-to-raise-cash.html "Credit Suisse shares hit record low after report bank is looking to raise cash") and access to the services this enables, setting that individual up for a lifetime of financial inclusion.

**Making theory a reality**

Of course, this theory is all well and good, but it’s meaningless if there’s no way of proving its [potential in the real](https://www.financedigest.com/the-real-potential-of-web-3-0-and-blockchain-for-business.html "The Real Potential of Web 3.0 and Blockchain for Business") world.

And while it’s early days – we’re starting to see that this is more than just talk. The Philippines, a country where estimates suggest 70% of the population could be unbanked is showcasing the potential of blockchain and cryptocurrency based efforts.

A partnership between UnionBank, ConsenSys and a number of other banks and tech [companies is implementing an Ethereum-based payment](https://www.financedigest.com/why-are-companies-implementing-crypto-payments.html "Why are companies implementing crypto payments?") platform for rural banks across the country.

The project uses cutting edge technology to solve an [age old](https://www.financedigest.com/film-and-tv-digital-marketplaces-a-revolutionary-take-on-an-age-old-industry.html "Film and TV digital marketplaces: a revolutionary take on an age old industry") problem – how to link people across rural areas with the wider community. While its initial focus was to tackle issues around domestic payments, the project has expanded to cover the infrastructure [needed to connect rural banks](https://www.financedigest.com/embedded-finance-is-the-new-norm-in-banking-but-what-is-needed-to-unleash-its-full-potential.html "Embedded finance is the new ‘norm’ in banking, but what is needed to unleash its full potential? ") with the international financial system.

While projects like this are an amazing start, the challenge for everyone with an interest in this space is separating the hype from the reality. There’s been too many false starts and overblown claims for the [tech world](https://www.financedigest.com/financial-tech-what-will-stick-in-a-post-covid-world.html "Financial tech: what will stick in a post-COVID world?") to accept that the blockchain and cryptocurrency really can bring the unbanked into the global community without any proof.

The challenge for everyone who believes it can is to prove that this isn’t just hype. This can only be achieved by pulling together as a community – promoting the [projects with potential](https://www.financedigest.com/future-market-insightss-detailed-report-on-cat-litter-market-offers-projections-of-potential-impact-of-corona-virus-outbreak.html "Future Market Insights’s Detailed Report on Cat Litter Market Offers Projections of Potential Impact of Corona Virus Outbreak") and denouncing the blowhards who just want to make a quick buck. As an [industry we have the potential](https://www.financedigest.com/case-handling-machines-market-global-size-growth-opportunities-industry-potential-segmentation-overview-trends-and-forecast-studies-2028.html "Case Handling Machines Market Global Size, Growth Opportunities, Industry Potential, Segmentation Overview, Trends And Forecast Studies 2028") to change millions of lives for the better – it’s our responsibility to make that happen.


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