Crypto Tackles Poverty Like No Other Financial System
What does the crypto world mean to society?
Apart from the discussions concerning energy consumption, Bitcoin and altcoins are vital to the change we’ll see in the global wealth distribution.
The pandemic has increased wealth inequality and it will take years to recover from it, but it has also brought renewed hope to escape poverty thanks to the decentralized financial system developing in front of our eyes.
It might not solve inequality, but it can be a life-changer to people that are cut out from society just because of their bad financial situation.
So how can cryptocurrencies level the playfield and pull people out of poverty?
The old enemy, inflation
We all know that holding cash is a game you’ll likely lose. Our money’s worth decreases with time due to inflation and there’s nothing we can do unless we put it to good use.
If we’re unable to keep it moving, it will devalue. More so in poor countries. Last year, countries with the highest inflation had more than 10% (Pakistan) in the lower range, up to a staggering 6,500% (Venezuela). Your money there is just worthless.
The rich can abandon the local currency, invest in foreign companies, have multiple income sources, and of course protect their assets in cryptocurrencies.
The poor have no such luxury.
All their hope is in the local currency. Their salaries, payments, and storage (the little they can save, that is).
What if they could have access to something other than fiat money?
Everyone is welcomed to the crypto world
Bitcoin and altcoins are inclusive.
You only need access to a phone or a computer with an internet connection to be able to purchase crypto coins.
It’s more difficult to buy stocks or open a bank account than acquire any digital currency.
You won’t have the problem of inflation due to increased supply, as you have with government-issued money. Only last year, the Federal Reserve printed 20% of all dollars currently in circulation. No support in gold I suppose for that extra money, right?
It literally came out of thin air.
In the case of Bitcoin, no one can “print” more coins. Their overall amount is set in code, and no one can change that. The supply is fixed at 21 million, so people can store their wealth in Bitcoin without the risk of being devalued due to an increase in supply.
Anyone could convert their money into cryptocurrency and store it with a better interest rate than any savings account. For instance, if you trade in Kraken, a centralized cryptoexchange platform, you can earn up to 12% for staking a token like Polkadot.
Where can you get a similar rate at any bank?
Now if you go to a decentralized cryptoexchange platform, things get more lucrative, but much riskier too. If you’re new to this world, you might want to stick to the best-ranked centralized systems, just to be able to sleep better.
Crypto is easy to transport
Think of people fleeing from their country due to an oppressive regime. How can they transport their life savings?
Cash would be risky. Gold and silver are too heavy and spacious, and also risky. Authorities and thieves will easily get hold of them. So how else can you take your money with you?
People could have a digital wallet with their cryptocurrencies and no one would know or be able to confiscate it.
However you see it, crypto is more manageable than any other currency in existence.
A better solution than what banks offer
Poor people can’t get credit to start a business or if they do get an offer, the interest is so high it’s frankly unpayable. They’ve basically been ostracized from life-changing societal opportunities unlike you and me.
Poor people can’t even have a bank account —
According to a recent survey by the National Survey of Unbanked and Underbanked Households, over 14 million people in the US don’t have access to a bank in any capacity: no insurance, no pensions, nor any other type of professional money-related services that goes through a bank.
People get their money from checks or they’re paid in cash.
What if they could use the DeFi system and receive and send money with a minimum cost in transactions? They could save all those costs and end each month with much more than they usually do.
I know what you’ll say. Cryptocurrencies tend to have huge volatility so it’s a risky investment.
That’s true to young and unregulated markets. However, the oldest coin, Bitcoin, has become less volatile over time and adoption. When demand broadens, like all these recent companies buying positions in bitcoin, the coin experiences less severe dips in price.
In fact, compared to 2017, Bitcoin has decreased tremendously in volatility.
This volatility has a trade-off as well: Being an amazing hedge against inflation. A dollar saved in 1970 would buy you only 14,65% of what it could buy you back then.
The dollar is eroding rapidly. It’s time to get off the sinking ship. If poor people have access to gambling (e.g. lottery) why can’t they have access to cryptos, a less risky endeavor?