Changing the Narrative: Crypto is no longer for the select few
2021 has been a year for crypto lovers and enthusiasts. The pandemic has given people time and stimulus to invest in cryptocurrencies. People are seeking alternative investment vehicles, especially in these precarious economic times, and the digital asset has proven quite robust in the face of economic uncertainty and inflation compared to the US dollar. The prices of cryptocurrencies like Bitcoin witnessed an all-time high this Spring. More and more people are taking an interest in cryptocurrencies and investing in them to diversify their investment portfolios. Since cryptocurrency is based on blockchain technology that removes the role of intermediaries and allows you to securely manage your digital currency, it is a great attraction for people who believe in decentralization. No government or centralized authority can interfere with its circulation or dilute its value through inflation.
A recent CNBC/Momentive Invest in You survey found that 1 in 10 people currently invest in cryptocurrencies. Around 65% of those people started investing in digital currency in the last year. These people have different reasons for their assessment, including potential for long-term growth (60%), feasibility in trading (33%), high growth in a short period (44%), and excitement of investing (26%). The survey also revealed that new investors are more optimistic about cryptocurrencies than those who started investing before 2019. Cryptocurrencies are increasingly becoming a part of a well-balanced investment portfolio for Americans. Younger investors are more inclined to use social media and technology to research more about crypto trading. Most of them use mobile phone apps for buying, selling, and exchanging cryptocurrencies. As compared to traditional vehicles of investment, cryptocurrencies seem to be more inclusive. Another study from NORC, University of Chicago, suggests that women and people of color are more likely to invest in cryptocurrencies than traditional trading stocks. Out of those holding Bitcoin in their investment portfolio, 41% are women, and 44% are people of color compared to only 38% women and 35% people of color trading in traditional stocks. By being more accessible, cryptocurrency has attracted new investors who were initially afraid of trading. Therefore, compared with the general vehicles of investments like stocks, cryptocurrencies can reduce the gender, racial, and age disparity amongst investors.
Cryptocurrency and Financial Inclusion
Cryptocurrencies are powerful vehicles to rebel against the traditional status quo and promote financial inclusion. Cryptocurrency is a class of alternative financial infrastructure accessible to all who have an internet connection regardless of ethnicity, nationality, race, class, and gender. Cryptocurrencies offer lower transaction fees, reduced costs, and fewer burdens of bureaucracy which have plagued the traditional financial system for decades. The peer-to-peer nature of cryptocurrency removes the role of intermediaries and thus reduces the chance of corruption. Due to their ability to ensure transparency, they are increasingly adopted by several leading companies like Tesla, which recently invested $1.5 billion in Bitcoin. PayPal, Venmo, and Square also allow customers to buy, sell and exchange cryptocurrency on their platforms. Even the government of El Salvador recognized Bitcoin as legal tender. Adopting Bitcoin will allow the citizens of El Salvador to save $400 million on commissions and remittances. The major push came from the Prime Minister himself, who wanted to make financial services accessible for people with no bank accounts. Now even restaurants, drive-ins, coffee shops will accept payments in Bitcoin.
Several societal and economic barriers like the lack of capital, networks, and knowledge to invest in financial markets have led to the exclusion of certain marginalized communities. These communities were excluded from traditional investing through financial redlining and regulations, due to which they were not able to build wealth, unlike their white counterparts. 58% of Black Americans, 66% of Latin Americans, and 59% of LGBTQ people said they don’t feel welcomed by the traditional financial institutions. The LGBTQ community has historically been less likely to invest in stock markets as they were afraid of social discrimination. Cryptocurrency is a good investment tool for these marginalized communities (Black, Asian, Latinx, and women) who have historically suffered discrimination at the hands of traditional investment vehicles. Since these populations have suffered too much, cryptocurrency provides them an interesting, new, barrier-free way of entering the investing domain. They also trust cryptocurrencies more because the government or any central authority does not back them up. Crypto, even rife with volatility, levels the playing field for these marginalized groups.
Cryptocurrency and Unbanked
Cryptocurrency can be a revolutionary tool for the unbanked population, i.e., people who lack access to a bank account. There are around 1.7 billion unbanked individuals globally, with 7.1 million unbanked households in the US. These people either lack trust in banks or do not open bank accounts to avoid overhead fees. This means that they can also not make online payments, send digital transfers, and get payment cards. The lack of digital services, especially at the time of the pandemic, makes their lives very difficult. Cryptocurrencies can be a useful tool for Unbanked for sending remittances and making international transfers to their families abroad. By providing lower transaction fees and faster transfer speed, cryptocurrencies improve international transfers. Unlike traditional bank accounts, crypto accounts do not require a minimum crypto balance to begin. This means it is easier to use and more accessible to anyone with access to the internet. Unlike the traditional banking system, no one has to approve opening your account, which reduces the risk of racial or gender discrimination. With everything – from opening a crypto account to accessing funds – being done electronically, cryptocurrency provides unprecedented access and control over one’s funds.
At Unbanked, we believe cryptocurrency has the potential to disrupt the traditional system and fight the status quo. Unbanked offers several crypto bank accounts, crypto debit cards, the removal of hidden fees when you buy, sell and send crypto, as well as rewards when you spend your cryptocurrency. We are committed to serving the underserved or unbanked through highly accessible and affordable crypto financial services. To know more, visit our blog.