For those of us living in developed countries like the United States, access to a bank account is commonplace. In developing countries, such as Egypt, that access is limited. In Egypt, only 2.4% of the population has access to a transaction account.
There are multiple reasons why the unbanked population has reached such high levels. In developing nations, there is often a lack of bank branches. Branch locations are sometimes hundreds of miles away, making it inaccessible to a large percentage of the population with no form of transportation to get there. If they have access, citizens might lack the necessary documentation to sign up for a bank account. Banks can also turn down people simply because they do not believe these people will produce necessary returns for the bank’s bottom line. These factors have led to an estimated 1.7 billion people who do not have access to financial inclusion.
With the rise of technology and smartphones, it’s becoming increasingly easy to connect people around the globe financially. One of the ways this is being done is through cryptocurrencies and digital wallets.
So, what is cryptocurrency?
Blockchain vs. Cryptocurrency
A blockchain is a shared, distributed ledger that records all transactions made across a network. It is a linked set of blocks where each block describes a set of transactions. According to IBM, blockchain for business has four requirements:
- Shared Ledger: An append-only distributed record of all asset transfers.
- Smart Contract: A contract with business terms embedded in the blockchain and executed within the transaction.
- Privacy: While the ledger is shared, the participants are given confidentiality between participants. There is an identity linked to a transaction and participants need to be given permission to enter the blockchain.
- Trust: Participants endorse transactions which cannot be modified, inserted or deleted.
Cryptocurrency is digital money used for secure and instant transfer of value. This medium of exchange is stored electronically on the blockchain. It is used to simplify and increase the speed of transactions between nations. All transactions are still seen on the ledger, but they are assigned to anonymous accounts. Cryptocurrency reduces the need for third-party intervention, decreasing transfer costs while still providing trust and privacy.
Cryptocurrency gives the unbanked population the opportunity to be connected to the global economy. They can finally receive and save money for the future. Emerging markets now have the ability to invest and take out loans. All that is needed is internet access.
To efficiently pay Premise Contributors in over 50 countries around the world, we turned to Coinbase as a key digital currency exchange for our growing global network. Coinbase is available in 103 countries, allowing Contributors to access their secure payments directly from their phones and in their own currencies.
Since the adoption of Coinbase in 2014, Premise has helped countless Contributors through cryptocurrency.
My proudest moment working for Premise was when a Contributor called me to say that he was on the verge of dropping out of university due to his inability to pay school fees, then he discovered Premise! He has since graduated from the university thanks to money he made while working as a part-time Contributor for Premise. Adeniyi Fadipe Jordan, Country Support Specialist for Nigeria
Today, all Contributors from Venezuela, Palestine, Lebanon and Ukraine are paid with cryptocurrency. We also have adoption in Yemen and Colombia. These countries have high levels of inflation and corruption. For example, in Venezuela, inflation is at 4,000,000%. Coinbase allows our Contributors to make everyday transactions with companies in Venezuela who have started to exclusively accept payments in Bitcoin because it is safer and easier than local currency.
We have seen first hand how cryptocurrency helps developing countries in the global financial economy. While there is a long road ahead, cryptocurrency is speeding up the journey to full financial inclusion.