According to the World Economic Forum, cryptocurrencies like Bitcoin show promise regarding uplifting those living in poverty, because they provide an alternative to traditional banking services.
Cryptocurrencies are becoming more widespread and are being used for an increasing number of purposes these days. You can use Bitcoin to book a hotel, gamble at a legitimate Bitcoin casino that you can find on BitFortune, and various other purchases, not to mention the possibility to use it as a storage for value.
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Are Banking Services That Important?
In a cash-based society, it may not seem all that important to have a bank account. But dealing only with cash can be quite limiting. What if you want to sell something to someone a few hundred miles away, or even on the other side of the world?
You would have to work on a cash on delivery system, or your buyer would have to find some way to pay you upfront in person. Cash on delivery is not a bad system, but it does mean funding production, postage, admin, etc. upfront.
This could be a serious barrier to entry for someone who is basically just earning enough to sustain herself. Getting the cash upfront is also not the ideal solution. How would someone in the United States, for example, get cash across to someone in the DRC?
If, on the other hand, the buyer can just transfer the money electronically, both problems are solved.
Bank accounts also give people the means of saving money. Even if they are not able to save a lot every month, they could save enough over time to help either improve own situation or that of their children.
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Why Cryptos Instead of Traditional Banking?
The advantage that cryptocurrencies have over traditional banking is that you don’t need much infrastructural support to access them. All you need is access to the internet. With traditional banking, however, you need to have access to branches, ATMs, regulations, trained personnel, etc.
The infrastructural costs for traditional banks often make it unviable for them to set up in less developed areas. Banks are limited to major centers rather than outlying areas.
So, finding (and founding) a bank in areas where there is little infrastructure might be a challenge.
Cryptos Are Less Expensive
Because of the lower infrastructural needs for cryptos, the cost of transacting within the network is significantly lower as well. This again makes cryptos the more accessible option.
Basically, therefore, cryptos could potentially alleviate poverty by providing banking solutions for those in less developed countries, even though this is only a potential possibility at present. The alternative digital currencies need to sort a few technical problems before becoming a real solution for areas where banking is unavailable.