Financial Inclusion, Cryptocurrency and the Developing World

Regions of the world with fast-growing economic potential and young populations, such as India and Africa, will become leaders in crypto adoption

four assorted cryptocurrency coins
Photo by Worldspectrum on Pexels.com

Beyond rapidly changing how we create, store and transfer value, cryptocurrencies are accelerating financial inclusion in a way that traditional financial institutions have either been unwilling or unable to. Yet crypto’s possibilities go way beyond banking the unbanked. It allows developing nations and those without access to financial services to avoid the bank completely and transact and grow small businesses using just a mobile phone.

Why financial inclusion is so important

Even today, almost 2 billion people around the world have no access to financial services. That’s approximately one-fourth of the global population. Having nowhere to place savings and not being able to get a bank card, obtain credit or avail of basic services such as life insurance is a horribly crippling disadvantage. These people are effectively unable to take part in their local economies — at least, in meaningful ways.

Gaining access to financial services will allow financially excluded people to improve their lives, increase their earnings, raise their household income and even stash away some savings for troubled times such as the ones we’re living in currently. Entrepreneurs can gain access to credit to start a business and families can acquire land and livestock and ensure that the roofs over their heads are safe. Quality of life can be improved for all.

Further still, impoverished parents can begin to send their children to school, offer them improved living conditions and access healthcare services. Financial inclusion can even lead to the creation of jobs as small businesses expand and need to take on additional personnel. We’re talking about a massive section of the global population that could substantially motor the economy through financial inclusion.

Developing countries are home to a young, tech-savvy population

The vast majority of financially excluded individuals live in developing regions. Yet this also coincides with a young, largely tech-savvy population. In parts of Africa, for example, mobile phones are more common than access to electricity. They have long been used as a primary tool for daily life exchanges and, more recently, for cryptocurrency use.

Across Africa, some 200 million people are between the ages of 15 and 24. This makes them generally well-versed in technology and a naturally captive audience for cryptocurrency adoption. This is mirrored by the population in many developing countries including IndonesiaTurkey and India. A tech-savvy population with a high mobile phone penetration rate — and a pressing need for financial services: This creates the perfect conditions to accelerate the adoption of cryptocurrencies.

As many people can’t access the traditional banking system, being able to earn, save and transact in cryptocurrencies directly from a telephone is hugely beneficial.

Ripe for cryptocurrency adoption

India is currently one of the most promising markets for cryptocurrency adoption and financial inclusion right now. With the regulatory framework improving this year with the Supreme Court of India overturning the Reserve Bank of India’s ban on cryptocurrency, adoption in the world’s second-most populated country could really take off.

India’s national currency, the rupee, has steadily declined in value against the United States dollar over the last decade. And with the COVID-19 pandemic causing increased money printing in India just as in other parts of the world, the rupee is being devalued further. Declining confidence in the national fiat currency as well as the government could be a large catalyst for cryptocurrency adoption in India and in many parts of the world.

Along with Africa and Indonesia, India’s population is young and very familiar with technology. In fact, around 8% of India’s gross domestic product comes from its well-developed IT outsourcing industry. The country has the skills and technical talent to make crypto startups flourish here. And with the largest remittance market in the world, crypto is the perfect use case for unshackling people from the high fees and lengthy delays involved in sending money home.

Onboarding the next wave to crypto

Of course, the right conditions and the potential don’t make crypto adoption a done deal. There is still much work to be done. The scene is being set for more and more crypto startups, remittance companies, exchanges and applications to appear across the developing region. At OKEx, we see the giant potential for crypto adoption in these parts of the world, and we want to be at the forefront of it. This is why our partnership with Paxful, the leading peer-to-peer Bitcoin (BTC) marketplace, is all the more significant.

Paxful has an extensive payment method infrastructure that allows local people to select how they pay for their Bitcoin from more than 300 different ways. This could be gift cards, store points, cash on delivery — or indeed any local method deemed acceptable by the seller. This kind of flexibility allows it to onboard people into cryptocurrency more easily.

They can then send and receive Bitcoin for goods and services and, through OKEx, earn interest on their BTC savings through high-interest accounts as well as make their money work for them accessing advanced trading tools.

As regulation becomes more favorable and the people’s needs are still repeatedly ignored by traditional finance, a young population with high mobile penetration will help financial inclusion to finally become a reality. The next wave will soon be onboarded to crypto, and it’s the developing world that will be leading the charge.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cryptopayplus LTD

Survey Respondents Are Split 50/50 Between Bitcoin & Big Banks

round silver and gold coins
Photo by David McBee on Pexels.com

The proportion of people who trust big banks has fallen drastically since 2017, while the support for Bitcoin has exploded — millennials lead the way.

The survey results are in — there is almost an equal split on the issue of trust: Bitcoin (BTC) or big banks. There has also been an incredible change in attitudes over the past three years on the issue.

Who trusts in Bitcoin?

The Tokenist surveyed 4,852 respondents in 17 countries about their attitudes towards Bitcoin. It also compared its findings with the responses from previous similar surveys. This allowed it to observe how these attitudes changed over time.

If you had to choose, which of the following is more trustworthy? Source: The Tokenist

The winds of change

Not only is there almost an equal split, but when it comes to the millennials, they also tend to put more trust into Bitcoin. What is even more interesting is how this has changed since 2017. Back then, only 18% picked Bitcoin versus 82%, who chose big banks. Even in the millennial group, the split was highly unfavorable — 27/73.

2017 Results Versus 2020 Results. Source: The Tokenist.

It should be noted that one would expect the respondents to The Tokenist survey to be skewed towards Bitcoin. However, the same was true for the baseline surveys.

It may be fair to speculate that this change in the zeitgeist will translate into growth within the crypto industry.

Chinese Bank Issues Commercial Paper Worth $16.9 Billion on Blockchain

brown and gold temple under white clouds
Photo by BERK OZDEMIR on Pexels.com

A Chinese commercial bank issued China’s first asset-backed commercial paper worth $16.93 billion on a blockchain.

China Zhe­shang Bank, a national commercial bank, used blockchain technology to issue an asset-backed commercial paper, or ABCP. It was issued as a part of the Na­tional As­so­ci­a­tion of Fi­nan­cial Mar­ket In­sti­tu­tional In­vestors’s (NAFMII) pilot project for ABCPs.

An asset-backed commercial paper is a short-term investment issued by financial institutions to help companies meet short-term goals.

Dubbed “Lianxin 2020 Lian­jie First Phase As­set-backed Com­mer­cial Pa­per,” the period of the Lianxin ABCP is six months and the span of the next issuance is yet to be specified.

An official of the NAFMII noted that the use of blockchain technology would provide enterprises a “direct channel to markets, help­ing to greatly in­crease the ac­ces­si­bil­ity of busi­ness fi­nanc­ing.”

Helping small and micro enterprises

Small, medium, and micro-enterprises usually face difficulties with bond issuance as they do not have any connection with open markets.

The launch of Lianxin ABCP will ensure that SMEs can seek easy financial support. The ABCP “increases the ac­ces­si­bil­ity of fi­nanc­ing for SMEs that have dif­fi­culty with fi­nanc­ing via di­rect debt is­suance,” an official stated.

It will also integrate supply chain finance with small, medium, and micro-enterprises to support them with their production.

China, banks, and blockchain

The central bank of China along with other major banks is spearheading blockchain innovation in traditional finance. On May 13, the People’s Bank of China’s deputy governor Fan Yifei urged that China needed to accelerate its blockchain adoption strategy. Only a day after that, Cointelegraph reported that the PBoC proposed a blockchain-based trade finance platform for the Guangdong-Hong Kong-Macao Greater Bay Area.

Earlier, in April, the Industrial and Commercial Bank of China released a white paper proposing the applications of blockchain technology in finance.

Blockchain Could ‘Speed up the Economy,’ Says Nigerian Presidential Candidate

The presidential candidate of Nigeria’s leading opposition party has promised to support blockchain and cryptocurrency, local news outlet the DailyPost article reported Nov. 24.

The Nigerian news outlet reportedly analyzed the Peoples Democratic Party (PDP) candidate Atiku Abubakar’s “Get Nigeria Working Again” policy that he reportedly promised to enact if he is elected president February 16, 2019.

DailyPost reports that in the document, the politician declared that “he aims to speed up the economy positively through blockchain and cryptocurrency.”

According to DailyPost, Abubakar stated that to unlock “the potentials of the new economy” PDP “shall promote the production of a comprehensive policy on blockchain technology and cryptocurrencies.”

DailyPost also quoted Abubakar platform as stating “regulation will provide clarity” in this “industry that consists of 1,800 currency types.” The terms of the mandate are also promised to be “managed in a way that provides job opportunities as well as income for the government and people of Nigeria.”

As Cointelegraph reported in mid-October, the Nigerian government has been partnering with local startups to develop blockchain in the country. In March, Nigerian regulator Nigeria Deposit Insurance Corporation (NDIC) warned against the use of cryptocurrencies because transactions are not insured.

IMF Vows to Continue ‘Devoting Attention’ to Blockchain, Cryptocurrency in Fintech Drive

The International Monetary Fund (IMF) said it plans to use its ongoing research and experimentation with blockchain as an “anchor” for its future policy on the technology in comments Nov. 12.

Speaking on a panel with Ripple CEO Brad Garlinghouse during the Singapore Fintech Festival 2018, IMF Deputy General Counsel Ross Leckow highlighted three areas the organization has been “active” in regarding blockchain, cryptocurrency and more.

“The IMF is devoting a lot of attention to fintech and in particular to blockchain,” he told the audience, continuing:

“But we think that it’s difficult to talk about blockchain without considering it in light of the other new technologies that are forming part of the fintech debate.”

For Leckow, these include artificial intelligence (AI), so-called distributed ledger technology (DLT), cryptoassets and several others.

He further underscored the continued research efforts underway at the the IMF regarding cryptocurrency and blockchain, referring to the various documents published in recent years.

Member banks and governments, he added, were demonstrating considerable interest in guidance on how to handle and regulate the emerging sector.

“Given the demand for advice in this area, at our annual meeting in Bali last month, we and the World Bank jointly launched an initiative called the Bali Fintech Agenda, which we think is the first comprehensive framework of issues that countries need to think about when designing policy around fintech,” Leckow said.

“This will be an anchor for much of our work going forward.”