What is an Unbanked Population?
An unbanked population is a group of people who do not have access to traditional financial institutions such as banks or credit unions, and rely solely on alternative means for storing and transferring money. This could include informal networks of relatives, friends, and merchants; prepaid cards; or digital currencies like Bitcoin. As these individuals lack access to the same banking infrastructure as their more financially privileged counterparts, they are often referred to as the “unbanked” population.
The Challenges Faced by Unbanked Populations
Due to the lack of access to formal banking systems, unbanked populations often face numerous challenges when it comes to managing their finances. With no bank accounts available in which savings can be stored securely, many are left with few options other than keeping cash at home- leaving them vulnerable to theft or damage from natural disasters. Additionally, due to the prohibitive costs associated with sending remittances (money sent internationally) through traditional channels like wire transfer services (which charge high fees), many members of this population struggle with sending funds back home in a timely fashion without incurring significant losses. Finally, those living in rural areas may experience difficulty obtaining government benefits that require proof of identity documents only available from formal financial institutions – further limiting their socioeconomic mobility prospects.
The Benefits Provided by Cryptocurrency for Unbanked Populations
Fortunately, new forms of technology such as cryptocurrencies offer potential solutions for unbanked populations struggling with these issues. Since cryptocurrency transactions don’t involve any third parties – meaning there are no costly processing fees – users can transfer money quickly and cheaply between countries regardless of location or economic status. Furthermore, since cryptocurrencies exist entirely online and require no physical presence at a bank branch , they provide an excellent platform for those lacking governmental identification papers needed for opening bank accounts elsewhere . Additionally , because cryptocurrency transactions are anonymous , users do not need worry about disclosing sensitive personal information each time they transact . Considering all these factors , it’s clear how beneficial cryptocurrencies can be for unbanked populations around the world .