According to the World Bank, nearly 1.4 billion people on the planet do not have bank accounts, with significant unbanked populations concentrated in Sub-Saharan Africa and Latin America.
The road to financial inclusion includes a variety of barriers for people in many developing countries. Inflation, unstable monetary policy, and a lack of accessible banking infrastructure are common hurdles. For many, simply opening a bank account can be overwhelming, compounded by high fees, low trust in financial institutions, and a limited network of bank branches in rural areas. Financial inclusion with crypto offers some compelling alternatives.
The unbanked often rely on cash, informal savings systems, or family networks, leaving them vulnerable to theft, financial mismanagement, and a lack of credit-building opportunities. They also miss out on wealth-building investment opportunities enjoyed by many citizens in the Global North. Traditional banking solutions, which typically cater to wealthier urban populations, don’t always suit the needs of people with low incomes.
At the same time, the question “What is financial inclusion?” can mean different things to different people. For many unbanked citizens, the idea of inclusion into “traditional finance” isn’t the ultimate goal. Instead, they seek ways to safeguard their money, access low-cost payment methods, and protect their assets from inflation and currency devaluation.
Here, cryptocurrency offers a new approach—one that bypasses traditional financial gatekeepers and puts financial control back in the hands of individuals.
While this post presents a pro-crypto view, crypto investors know better than most that there are still some problems with cryptocurrency. Not everyone thinks crypto is the ideal solution for financial inclusion. Respected sources such as the Brookings Institution and the Center for American Progress have published articles against cryptocurrency that challenge the assumption that crypto is the ideal solution for financial inclusion.
The best advice for people interested in this topic is, as crypto Twitter often advises, DYOR.
Cryptocurrencies as an Alternative to Traditional Finance
Cryptocurrencies like Bitcoin and stablecoins offer an alternative pathway for financial inclusion. However, their adoption has taken two different forms. In developed markets like the U.S., crypto is often viewed primarily as an investment asset—much like stocks or gold. Many people buy Bitcoin, for instance, as a store of value or as a hedge against inflation. However, in developing countries, cryptocurrency plays a more significant role as an actual currency used in daily transactions.
Crypto, particularly stablecoins, has become a lifeline for everyday financial activities like paying employees or making cross-border transactions in countries with volatile currencies or unstable banking systems.
Cryptocurrency as a Tool for Financial Inclusion
How Crypto is Helping Small Business Owners
In regions where traditional financial infrastructure is lacking, cryptocurrencies offer tangible benefits for small business owners. Consider the case of African entrepreneurs. In countries like Nigeria and Kenya, remittance fees from family members working abroad often eat up significant portions of the money sent home.
Traditional remittance services, such as Western Union, charge exorbitant fees for cross-border payments, sometimes upwards of 10%. This fee makes it difficult for families to receive the total value of the funds sent to them.
Cryptocurrencies are solving this problem. Small business owners in these regions can now receive crypto payments, significantly lowering transaction fees and speeding up the process.
A Nigerian small business, for example, can accept payments from international clients via Bitcoin or stablecoins, then quickly convert it into local currency or reinvest it directly in cryptocurrency. This process bypasses the need for expensive, time-consuming bank transfers, providing them with an efficient way to manage their finances.
In Latin America, where currency devaluation has become a constant concern in some countries, small businesses use stablecoins to preserve their earnings’ value. Argentina, for instance, has one of the highest inflation rates in the world. Local business owners have begun using stablecoins like USDC (USD Coin), pegged to the US dollar, to stabilize their revenue streams and avoid the risk of holding funds in rapidly depreciating pesos.
Crypto’s appeal in these economies goes beyond its potential for financial gain—it provides financial independence. Governments that mismanage funds or impose heavy capital controls have driven citizens to adopt decentralized currencies. People can now store their money in cryptocurrencies, avoiding the risks associated with corrupt or incompetent financial governance.
A study from Afrobarometer showed that in several African countries, including Nigeria and Kenya, only about 40% of the population trusts their government to handle public funds responsibly. This mistrust carries over to their approach to financial services. It reveals that a significant portion of the population in Sub-Saharan Africa has little to no confidence in their government’s handling of public funds.
In many countries, this mistrust extends to their tax systems, where many people avoid financial institutions to steer clear of state interference or financial mismanagement. In these cases, crypto is not just a tool for inclusion but for autonomy, offering an escape from traditional systems many don’t trust.
Why Not All Unbanked Populations Want Traditional Financial Inclusion
While cryptocurrencies offer potential solutions to financial services exclusion, it’s essential to recognize that not all unbanked populations are eager to integrate into traditional financial systems. In many developing countries, a deep-seated mistrust of government and financial institutions can be a significant barrier. This skepticism often stems from years of mismanagement, corruption, and a lack of transparency around public funds. Financial inclusion within these traditional frameworks is unappealing for many, as they associate it with bureaucratic inefficiencies and potential government overreach.
This preference for decentralized financial systems highlights a key aspect of financial inclusion: it’s not just about providing access to financial services but about offering systems that align with people’s values and concerns. Many unbanked people aren’t seeking inclusion in traditional banking structures—they want alternatives that empower them without subjecting them to the oversight of institutions they do not trust.
El Salvador’s experiment with Bitcoin adoption provides a concrete example of how access to innovative financial services and tools doesn’t guarantee widespread acceptance. In 2021, El Salvador became the first country to make Bitcoin legal tender, sparking global interest in how cryptocurrencies could drive financial inclusion. However, the initiative has faced significant hurdles. Despite the government’s push to integrate Bitcoin into daily transactions, adoption rates have remained low.
One of the critical reasons for this is that many Salvadorans already rely on the U.S. dollar as their primary currency. The dollar’s relative stability makes Bitcoin’s volatility unattractive for day-to-day transactions.
According to a 2022 survey by the National Bureau of Economic Research (NBER), less than 20% of businesses in El Salvador accept Bitcoin, even though all firms are legally required to do so. A startling 90% of the population doesn’t use online banking at all. For the average consumer, especially in an economy where they can already access a stable reference currency, there’s little incentive to embrace a highly volatile alternative.
This case highlights a critical point: while crypto can be a powerful tool for financial inclusion in countries with unstable currencies, it’s less attractive in regions where people already have access to a stable currency like the U.S. dollar. The success of crypto adoption often hinges on the local economic context. When traditional currency systems provide stability, the need for a decentralized alternative becomes less urgent.
The Future of Crypto and Financial Inclusion
As cryptocurrency evolves, its role in driving financial inclusion will likely expand. However, the path forward is challenging. In all countries, most people still wonder, “What actually is cryptocurrency?”
And finally, cryptocurrency accessibility is often limited by regulatory uncertainty and the digital divide in technology and internet connectivity. As the crypto landscape evolves, its success in promoting financial inclusion will depend on addressing local needs, improving accessibility, and building trust in the technology.
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This material has been prepared for informational purposes only and should not be interpreted as professional advice. Please seek independent legal, financial, tax, or other advice specific to your particular situation.
