How to Overcome Global Income Inequality With Cryptocurrency
Do you know that only 10% of people hold 70% of the wealth in the US? It means that 90% of Americans only take 30% of the wealth. South Africa is another place where you can find inequality in wealth distribution. This country has 10% of the population taking 65% of the wealth.
The concept of global income inequality is nothing new. It has been there for decades but has now come to the limelight. However, there’s a way to reduce global income inequality with cryptocurrency and offer users a means to manage their money. Let’s see how.
How Cryptocurrency Helps in Overcoming Income Inequality?
Crypto helps users overcome global income inequality by allowing them access to financial tools and providing an affordable way of monetary settlement.
People staying abroad usually send money to their families living in developing nations to help with their expenses. In that case, these settlements account for 20-38.5% of the gross domestic product, especially for countries like Haiti, Tong and El Salvador. But, by using stablecoins like USDT (Tether) and USDC (USD Coin), it is possible for recipients to receive the transferred money without many deductions from intermediaries.
Ben Caselin, head of research and strategy at AAX, says “Bitcoin, but also stablecoins, generally provides more accessibility than traditional banks, especially in emerging markets where large populations often find themselves unbanked either due to lack of infrastructure or documentation or exclusion on the basis of social standing, gender, religion or political viewpoints.”
He adds “A shift toward Bitcoin and stablecoin payments can also be driven by sanctions or tight capital controls that make it virtually impossible for ordinary citizens and businesses to participate in the global economy either through trade, commerce or otherwise.”
How Crypto Enables Easy Access to Payment Systems?
Currently, PayPal is popular when it comes to money payments for freelancers. Here, users often have their bank accounts linked to cash-out payments. Another way to spend money is through a PayPal debit card. This makes it difficult for people who don’t have bank accounts.
On the contrary, blockchain tech enables users to receive payments without an intermediary. The only thing they need is a crypto wallet where they can directly receive money from another user.
How Crypto Enables Easy Access to Financial Tools?
Crypto also provides access to financial tools which is an effective way of reducing the wealth gap. However, centralized financial tools, such as bonds, indexes and stocks need users to sign up to respective platforms and offer legal documents along with bank details and proof of income.
Conversely, DeFi or Decentralized Finance allows users to engage with financial protocols like lending, borrowing, staking and yield farming with the help of their wallet. It makes it easy for people living in developing countries or the ones with low income to lend or borrow money and earn interest on their money holdings.
Switching to cryptocurrency or any digital assets isn’t just about the efficiency and accessibility of money transfer and overcoming global income inequality. It is also about self-custody when it comes to holding funds from a bank and building an even matured and safe financial culture.
Samita Nayak is a content writer working at Anteriad. She writes about business, technology, HR, marketing, cryptocurrency, and sales. When not writing, she can usually be found reading a book, watching movies, or spending far too much time with her Golden Retriever.