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Cryptocurrencies and blockchain technology are often seen as a powerful tool to reduce the global wealth gap. This is because these technologies can provide financial inclusion to billions of people who are outside the traditional financial system. However, despite this potential, it has its own complexities and risks that can hinder the achievement of this goal.

1. The Foundation of Financial Inclusion through Crypto

Cryptocurrencies can specifically target the vulnerable and underserved segments of society, which are often overlooked by the traditional banking system. There are approximately 1.7 billion adults worldwide who do not have a bank account. Most of them are from developing countries. Opening an account with a traditional financial institution is complicated, expensive or impossible for them. All that is required to create a crypto wallet is a smartphone and an internet connection. There are no KYC (Know Your Customer) or minimum balance requirements. As a result, unbanked people can easily access the global financial system. When international workers send money home (remittances), banks or money transfer services charge high fees. Cryptocurrencies allow peer-to-peer (P2P) transactions without intermediaries. The cost, excluding gas fees, is much lower than traditional systems, allowing poor families to have more money in their hands. In developing countries, poor people often lack legal ownership documents (such as land records) for their property, which prevents them from raising loans or capital. Decentralized finance (DeFi) protocols allow for loans using crypto assets as collateral. In addition, access to credit can be facilitated by creating a digital credit history through blockchain-based land registries and Soulbound Tokens (SBTs). In countries experiencing high inflation or political instability, the value of local fiat currencies rapidly depreciates, eroding the savings of poor people. Crypto assets like Bitcoin or USD-pegged stablecoins can protect against depreciation in the value of local currencies, which protects savings.

2. Barriers and risks to bridging the gap between rich and poor

Despite the revolutionary potential of crypto, there are some serious challenges to its effectiveness. The use of cryptocurrencies is dependent on internet access and smartphone technology. The benefits of this technology are difficult to reach in poor regions where digital infrastructure is weak. Managing crypto wallets, storing private keys, and using DeFi protocols are quite complicated for ordinary people. If financial literacy is low, there is a risk of accidentally losing funds or falling victim to scams. High price volatility can make cryptocurrencies a vulnerable asset, especially for people who operate with little savings. Sudden price drops can bring disaster for the poorest users. Although crypto is decentralized, most of the supply of cryptocurrencies is concentrated in the hands of large investors (whales) and early adopters. This can influence the market and further widen the gap between the rich and the poor.

Conclusion

Cryptocurrency technology provides powerful tools and infrastructure to bridge the gap between the rich and the poor around the world. However, to realize this potential, emphasis must be placed on digital literacy, user safety, and the creation of accessible interfaces. Crypto can ensure financial empowerment for the most marginalized in society, not only through technology, but also through proper education and responsible use. Today's discussion concludes here. I hope you've found it interesting. Please share your thoughts on today's topic. Prayers for everyone. May everyone be well. Amen.

Me behind the camera & keyboard

I’ve always loved sharing my passions with you — from crypto and movie reviews to photography, storytelling, and blogging. Now, continuing that creative journey, I’ve stepped into a brand-new world — Gaming ! 🎮 | 🎥 On my YouTube channel Bokhtiar The Survivor — I’m consistently working to bring you the raw thrill of my gaming experiences — the emotions, the excitement, and those unforgettable moments that make every game feel alive.