Banking The Unbanked With Bitcoin
More than 2 billion adults lack access to financial services and according to the World Bank, the majority reside in rural areas with a daily income less than $5 a day. A case in point would be Philippines, where Facebook accounts vastly outnumber bank accounts among the population.
BitCoin, a popular form of digital currency, offers benefit to these people as a valuable remittance and transfer medium. With the explosion in the acquisition of smartphones and cheap tariffs for mobile internet, BitCoin becomes a solution to the “unbanked” masses who however are connected via the Internet.
A typical transfer fee for a BitCoin transaction is 1% whereas the minimum transaction value that a traditional finance company would charge would be to the tune of 5%. In addition, a BitCoin can offer more than just the means for effecting a funds transfer. Economies with weak currencies can benefit from BitCoins.
In Argentina for example, an artificial exchange rate mandated by the government is forcing people to eschew the peso.
If you receive dollars in Argentina, the Central Bank give you less pesos (30 to 35 percent less) for each dollar than what the real market price is. But if you buy BitCoins abroad and send them to someone in Argentina, the Argentinian will be able to sell them at a real exchange rate and get 100 percent of the money, excluding a small broker fee.
Storing BitCoins in the medium to long-term can be an attractive alternative to a volatile currency. Russia, another country suffering from a currency crisis, saw transaction volumes between the rouble and BitCoin increase nearly 250 percent in December, as the former crumbled on the back of weaker oil prices.
However, the adoption of Bitcoins has still to come a long way in developing countries. Most of the unbanked [in India] are uneducated and don’t know how to read or write, and getting them to trust bitcoins will be an arduous task. There are only about 15-20,000 present active users in the country’s 1.2 billion population.
Nonetheless, the future does seem to be digital as uncertain economies, hostile governments and advances in technology push us to the new frontier - the digital frontier.
[The author is Co-founder & CEO, SearchTrade.com]
[Disclaimer: The views expressed in this article are solely those of the authors and do not necessarily represent or reflect the views of Trivone Media Network's or that of CXOToday's.]
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