Blockchain in Developing Economies: Driving Financial Inclusion and Empowerment

Blockchain technology has the potential to drive financial inclusion and empowerment in developing economies by providing a decentralized and transparent system for financial transactions. Also, blockchain can help to overcome many of the challenges faced by individuals and businesses in these economies let us see the problems and solutions by this technology so-called “blockchain “

Barriers to financial inclusion?

Yes, The barriers are,

– the lack of access to traditional banking services in developing economies. 

– Many people in certain regions do not have a bank account or access to credit, making it difficult for them to save, invest, or access loans.

However, blockchain technology can help address this issue by providing a digital identity and financial infrastructure that is accessible to anyone with a smartphone and internet connection.

With blockchain, individuals can create a digital identity that is secure and transparent which is immutable. 

There are other electronic payment systems like cash, UPI, and online banking /NetCash, but none of them attained the level of widespread adoption that Bitcoin accomplished.

Ripple is one of the examples of a blockchain payment system that has some institutional attention. In this system, currencies are received and converted to the destination currency all within the Ripple network.

So what is Bitcoin?

Bitcoin was the first of many blockchain-based apps that may be created. Bitcoin can be deployed in a distributed fashion in blockchain. This implied that there was no single point of failure and that no single user had power over the electronic money. The most important advantage is that Bitcoin in blockchain has direct transactions between users without the need for a reliable third party to enhance the popularity of Bitcoin, Miners are users who can create new blocks and maintain copies of the ledger. 

Significant impacts of blockchain on financial inclusions 

• Access to Financial Services: Many people in developing economies countries like Morocco with the lowest share of bank account owners less than 30 % as of 2017. Vietnam, Egypt, and the Philippines are other countries with a very high share of unbanked populations that do not have access to traditional banking services due to lack of infrastructure or high costs. Blockchain can provide a decentralized financial system that allows individuals to access and manage their finances without relying on traditional banks. This can enable people to save, make payments, and access credit and insurance services.

• Say no to Intermediaries: The most important role is remittance for purchased goods/loan repayment so this plays a vital role in the economies of developing countries, but the high transactional fees associated with traditional remittance services are a significant barrier. Blockchain-based transaction remittance platforms can reduce costs by eliminating intermediaries, ensuring faster and cheaper cross-border transactions.

For example, if you transfer for digital products/ecommerce products assume the cost of the product in INR and its needs to be exchanged in $ (USD Dollar), and PayPal’s currency conversion fee to US or Canadian dollars is 3.5% but is 4% for other currencies. PayPal also charges a 4.5% fee for conversion services, not only PayPal charges, banks, stripe, and payment gateway providers enable their platform handling fees,  so it’s important to factor this cost in as well to any currency conversion you do. This can increase the amount of money that reaches the recipients, ultimately contributing to poverty reduction.

• Lack of Identity Verification: Many individuals in developing economies lack proper identification documents, making it difficult for them to access financial services or participate in the formal economy. Blockchain-based identity verification systems can provide secure and tamper-proof digital identities, allowing individuals to prove their identity and access financial services, education, healthcare, and other essential services.

• Microfinance and Peer-to-Peer Lending: Unlike traditional lending services, also facilitates microfinance and peer-to-peer lending platforms, enabling individuals and small businesses to access credit without the need for intermediaries. Smart contracts on the blockchain can automate loan agreements, reduce transaction costs, and increase transparency, making lending more accessible and affordable for borrowers with ease of steps rather than document verification time.

• Transparency: Blockchain can enhance supply chain transparency, particularly in sectors like agriculture and manufacturing, where products often go through complex value chains. By recording every transaction and movement of goods on the blockchain, stakeholders can ensure the authenticity, quality, and ethical sourcing of products. This can provide better market access for small-scale producers and empower consumers to make informed choices as well as ROI of products.

• Also, Blockchain can improve the delivery of government services, such as social welfare, voting systems, and land registries, by ensuring transparency, immutability, and accountability. By eliminating intermediaries and reducing corruption opportunities, blockchain can empower citizens and enhance trust in public institutions.

Financial inclusion and empowerment raise a point : How do you collect money from blockchain?

• Login to your Wallet with your application via a desktop computer.

• On the homepage, select US dollars/currencies.

• Click Withdraw.

• Select your linked bank account.

• Enter the amount you’d like to withdraw.

• Click Preview Withdraw.

• Confirm transaction details and initiate withdrawal by clicking Withdraw Now.

How can blockchain contribute to economies?

Blockchain has the concept of Smart Contracts in the crowdfunding and venture capital domain. This has helped every associated entity to get better oversight of individual campaigns and cope with the risk of fraud in the sector. This can be achieved by ICO (INITIAL COIN OFFERING) and IEO (INITIAL EXCHANGE OFFERING) across cryptocurrencies. 

However,  Startups from all across the world were getting active in finding ways to explore the Blockchain sector.  The adoption of ICOs was so huge that the funding industry started drawing conclusions on how ICOs were better than VC funding and who was winning the ICO vs. Crowdfunding in today’s blockchain world. Do you want to improvise your business? Are you in the multiplayer of business?  BSEtec – a leading blockchain development company that creates an environment for you with a start of White Paper development highlighting the purpose of your offering, token economics, and exact benefit that your idea will offer to the investors and masses in general and develops your own crypto coin with blockchain technology to thrive and drive financial inclusion and empowerment in developing economies, reach BSEtec to know the source of cost cut down by implementing blockchain in your business. 

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