In 2021, over 1.5 million adults don’t have an account with any banking institution – this is approximately 1/3 of the entire world’s adult population. The globe’s current financial system is antiquated and inefficient, largely because of its overwhelming focus on fiat currency.
Yet, there is hope on the horizon: the rapid rise of cryptocurrency seems to be paving the way for a more equitable and open payment system – one that can be accessed from any region of the world. And the CEO of PayPal, Dan Schulman, agrees:
“Both cryptocurrency and central bank-issued digital currencies can play a critical role in shaping a more inclusive recovery and a more equitable financial system.” – Dan Schulman, PayPal Investor Update: Quarter 1, 2021.
How is this possible? How are digital coins responsible for the democratization of our banking system? Today, we’ll examine how cryptoassets are transforming the global financial landscape.
A Quick Look: How Is Cryptocurrency Different From Regular Currency?
Traditional (fiat) money is government-backed and declared as legal tender. It can be in the form of physical money, or it may be represented by bank credit. The government controls its supply, and it is issued by the central bank. Conversely, cryptocurrency is a digitally encrypted, decentralized currency – meaning that it can only be digitally transferred and is not linked to a government.
Regular currency has an unlimited supply; the central bank can always print more. However, the majority of cryptoassets have a supply limit. This means that only a limited amount can ever be mined, thus limiting inflation.
What Does Cryptocurrency Bring to the Table?
Cryptocurrencies are no longer just an investment opportunity. Nowadays, they can be used for peer-to-peer lending, immediate low-cost remittance, and even in high-interest savings accounts! Crypto banking enables system transparency, speedier service, and lower fees; this is all made possible via blockchain technologies.
What’s more, cryptocurrency’s peer-to-peer nature significantly lowers financial corruption, as transactions never go through intermediaries. This feature, in particular, is why cryptoassets have become such a popular financial solution. Residents of countries with rampant systemic corruption are more often turning to cryptocurrency for financial transactions.
Cryptocurrency is also erasing international borders: with blockchain technology, it’s possible to transfer money across countries in just a few moments as opposed to days – and for significantly cheaper than traditional bank transfers. And, what’s more, neither the sender nor the recipient will need an actual bank account, just crypto wallets.
The list of benefits is lengthy, and, after years of bumps, cryptocurrency has finally obtained a serious position in the finance industry. This is largely due to PayPal’s adoption of digital assets. In Q1 of 2020, PayPal added 14.5 million accounts to its user base and exceeded revenue predictions by 2%.
PayPal also experienced great results with their Venmo app, which has also recently introduced crypto capabilities. In the 2020 Venmo Customer Behavior Study, it was found that approximately 30% of customers were already buying cryptoassets.
Just a few years ago, the usage of cryptocurrency in everyday life was uncommon – but nowadays, people and businesses alike have high interest and trust in them. Cryptoassets’ open and global development community are continuously creating new functions – and with them, new tools are created. For instance, with Grapherex, users can securely send crypto to peers within a highly secure messenger.
We look forward to seeing how cryptoassets continue to transform the financial landscape.