The Social Impact of Bitcoin
Bitcoin and the decentralised method of transfers without government or institutional control can have a positive social impact on people around the world.
Those without authority and access to connections struggle to access money, whereas the powerful and connected find it inherently easy to create and access money. Bitcoin has the potential to „bank the unbanked“, those who have no access to traditional financial systems who live mainly in the southern hemisphere and in emerging markets, where the informal economy is thriving and people need access to low fees, instant payments and micropayments.
The poor of the world usually do not have access to banking, which puts them at a disadvantage. Bitcoin has it made possible for them to transfer digital money on its decentralised network. It has the potential to give financial independence to millions of people who would otherwise not be able to participate in any financial system.
“Gaining access to basic financial services, such as transaction accounts, credit, savings products and insurance, help the poor increase their income and become more resilient.”
Holding Bitcoin is helpful for the unbanked for a number of reasons. Creating a private wallet with a private key is free and can be accessed using a computer or mobile phone with an internet connection.
In the developing world, there is widespread access to mobile phones, and “growth in digital financial services, agent networks and mobile phone ownership highlight the opportunity to drive faster financial inclusion growth through digital financial services, such as mobile money.”
Women are hardest hit by poverty and exclusion. Only 37% of women in developing countries have a bank account. Access to a Bitcoin wallet offers financial inclusion and a sense of empowerment. Women are active household financial managers and tend to reinvest up to 90% of their earnings in their families, compared to 30-40% of men, so mobile money can also be a route to female empowerment and have a positive social impact in communities.
Bitcoin can be accessed by anyone. There are no conditions and no minimum amounts that regulate access. Further, the majority of young people who are digital natives are more likely to use non-traditional financial services.
Bitcoin has long ceased to only find acceptance in the non-mainstream population groups. For some time now, institutional investors have been using Bitcoin as part of their portfolio.
Inflation expectations are high around the world. The long lockdown periods have had a huge negative impact on economies, the purchasing power of consumers has fallen, consumer debt is on the rise, and it is uncertain how quickly and to what extent economies are going to recover from recent turmoil and what is still to come. And in times of uncertainty and the risk of high inflation, spreading the risk with Bitcoin, which will not be affected the way other currencies will, is a sound investment strategy.
Holding Bitcoins is now seen less risky than not having crypto assets at all. Cryptocurrency is uncorrelated to other asset classes, and institutional investors use it as a diversification tool. Further, blockchain technology is secure, trustless and borderless, and fees are low and transactions fast.
Bitcoin does not only have the potential to offer individuals unregulated financial services, but multinational companies, such as Microsoft, Amazon, Burger King, KFC, Sotheby’s, Overstock, Pizza Hut, BMW, Wikipedia, Shopify, Something Geeky, Norwegian Air, PayPal and many more accept Bitcoin as payment for their goods and services. There are predictions that Bitcoin will eventually be transacted more than fiat currency.
“Bitcoin and related digital technologies are the ultimate migration of power to people, once and for all. We reclaim sovereignty in a way that was never before possible before Bitcoin ...”
References
- https://bitcoinmagazine.com/culture/cantillon-effect-2-0-bitcoin-is-the-worlds-first-truly-fair-money
- https://blogs.worldbank.org/voices/expanding-digital-financial-services-can-help-developing-economies-cope-crisis-now-and-boost-growth-later
https://edition.cnn.com/2014/11/06/opinion/banking-the-unbanked-mobile-money/index.html
