Bitcoin and digital currency are often heralded as “the tool to help the underbanked”. And even though there are several companies focusing their efforts on the underbanked, that term is being used quite loosely these days. But who are these underbanked people, and how could Bitcoin improve their daily lives? Let’s find out.
The Six Categories of Underbanked People
When people are talking about underbanked citizens, there are six major categories to distinguish between. Some of these categories may seem more or less obvious than others, but in truth, they are all valid choices. Underbanked does not necessarily mean they do not have a bank account, it can also indicate these people are using a financial infrastructure that is not providing them with enough options and support when needed.
The first category is perhaps the most obvious one, as far away friends and family are underbanked in their own right. In this day and age of modern technology, sending money around the world is still a tedious and cumbersome job. Not only does it take a while for the money to be cleared by banks, other solutions such as Western Union are extremely costly. Bitcoin is providing a far better – and more viable – alternative in that regard, and does not require a user to have a bank account or provide sensitive personal information when receiving funds.
Financial experts also claim that Bitcoin is something that will exclusively be used by millennials and young adults over the next few years. This statement is often criticized by Bitcoin enthusiasts, and some surveys have even indicated that Millennials aren’t that keen on Bitcoin just yet. That being said, this demographic proves to be one of the most interesting ones to keep an eye on, as young adults have grown up with a suspicion of centralized authorities.
As a result, most people in this demographic have resorted to “other ways of life”, whether that is in the form of content consumption or overall lifestyle. Bitcoin could be on that list as well, depending on how the decentralization revolution plays out in the years to come.
One group of people that is often overlooked – despite many of us being among them – are the people affected by large and unwieldy amounts of debt. Some of these debts may stem from bad decisions, both in someone’s personal and business life, but the financial crisis is also playing a big role. Back in 2008 when the latest financial crisis hit, it affected billions of people around the world. And even though most of the world economies are no longer falling off a cliff, there are still lots of problems plaguing the current financial ecosystem. Especially these people could benefit tremendously from Bitcoin and its decentralized aspect, and more importantly, its transparent nature.
Residentially displaced citizens have seen the world as they know it being torn to shreds in a matter of minutes. Families who have lost their homes and everything they worked for their entire lives are relying on domestic and foreign aid. As we have seen in the past with the Red Cross, that foreign aid does not always reach its intended destination. Bitcoin could play a very important role in the lives of residentially displaced people. By sending a Bitcoin transaction, you are sure that the funds will reach the intended target, rather than trusting a middleman to deliver the funds to those who need it the most.
One of the key focal points of Bitcoin areas should be the emerging and developing economies. From a financial point of view, there is no better place to make a dent in the financial infrastructure than those parts of the world. Most of the population in developing economies is limited to an annual income of under U$13,000. It goes without saying that this amount is not only incredibly low, but it also means these people will have little to no access to any form of financial services. Once again, Bitcoin could be the most powerful to be introduced into the lives of people living in a developing economy.
Last but not last, oppressed nations are trying to get out from under the thumb of regimes and governments. Freedom of speech is a basic human right, but oppressed nations are not so appreciative of whatever opinion you may have. Furthermore, oppressed nations will have limited – or restricted – to no access to any financial means that are not tightly controlled by the government. Unregulated alternatives are usually the only other viable alternative, and Bitcoin should be on the top of that list in this regard. Borderless payments with little to no transaction costs, with no governmental oversight or restrictions, can be a godsend.
What are your thoughts on these six pillars of underbanked people, Let us know in the comments below!
Source: HolyTransaction Infographic
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