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How Bitcoin can benefit the unbanked

By Guardian Nigeria
02 November 2021   |   11:19 am
Bitcoin is, for most people, the first opportunity to securely conduct financial transactions without institutional influence. Digital currency serves as a payment method and store of value, accepted in many parts of the world today. Economists say Bitcoin would be the ultimate solution to the financial puzzles affecting over 1.7 billion unbanked populations. The following…

PHOTO: AFP

Bitcoin is, for most people, the first opportunity to securely conduct financial transactions without institutional influence. Digital currency serves as a payment method and store of value, accepted in many parts of the world today. Economists say Bitcoin would be the ultimate solution to the financial puzzles affecting over 1.7 billion unbanked populations. The following article explores how Bitcoin can benefit the unbanked. 

Eliminates the Bureaucracies of Traditional Financial Systems 
The traditional financial systems comprise regular banks, other financial service providers, and regulators. While those systems have been instrumental in the past decades, they are subject to various restrictions imposed by governments, politicians, and a few elite members of society. The institutions only serve those influencers, making it difficult for the majority to access banking services. 

Unlike the conventional financial infrastructures, Bitcoin is a decentralized digital currency. That means this virtual currency is not subject to government, political, or any other institutional influence. No central authority regulates how Bitcoin works, eliminating all the bureaucracies of the traditional financial systems. Bitcoin users do not answer to anyone, thereby allowing the unbanked to transact at their convenience. 

No Need to Open a Bank Account or File Paperwork
More than 1.7 billion people worldwide lack access to banking services. The few financial service providers available to those populations require them to open bank accounts and file paperwork to transact. Even then, those institutions can still close those accounts or regulate how the account holders transact. 

Using Bitcoin does not require one to open a bank account or file paperwork. Instead, users only need a smartphone or computer and internet access to transact. You can download a Bitcoin wallet for free or at a small fee online. Besides, businesses and individual could also store their Bitcoin on trusted crypto exchange platforms such as Pattern Trader

All Bitcoin transactions occur virtually on the blockchain, which validates and encrypts the data on a shared ledger. That enables users to track all their transactions in one place, ensuring greater security and convenience. 

Lower Transaction Costs 
The unbanked often use online payment service providers to send and receive money. However, even those providers still operate within the regulatory guidelines. For example, they still use intermediaries to execute cross-border money transfers, making the entire process very costly. The sad part is that they transfer all those costs to the customers, who are already financially burdened. 

Bitcoin enables users to transfer and receive money across international borders at relatively lower costs than regular bank transfers, credit cards, and online payment methods. That is because the transactions do not involve third parties. Besides, Bitcoin money transfers are not subject to the numerous deductions and fees levied on fiat currencies. 

Faster and Secure Payment Processing 
Although online payment systems usually process transactions quickly than traditional banks, they remain subject to government regulations. That means the regulatory authorities limit the number of transactions they process daily. They cannot process payments after reaching the stipulated limits, making it more difficult for the unbanked to transact. Besides, those service providers also use intermediaries to execute cross-border payments, taking days or weeks and exposing customers to several risks. 

Bitcoin’s blockchain technology offers improved scalability, processing payments in minutes, regardless of the amount transacted. It also validates all transactional records on an irreversible digital ledger, making it almost impossible for anyone to compromise transactions. The log is accessible to all Bitcoin users online, preventing fraudulent financial transactions. 

Bitcoin offers numerous benefits that would allow the unbanked to access capital and transact without institutional interference. It guarantees cheaper, faster, and secure cross-border money remittances. Bitcoin also enables users to send and receive cash in their preferred fiat currencies without going through any bank.