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At around 1.3 billion, the number of credit card holders aren’t even close to 20% of world population. An alternative is required to saturate the remaining 80% with Lines of Credit (LoC), global market connect and liquidity. However, the poor and aspiring folks find it particularly hard to get banking finance for their undertakings, owing to clandestine racial, political and administrative prejudices.
Stable cryptocurrencies can go a long way for cementing that gap. These cryptocurrencies can hedge a deprived entrepreneur’s engagements against value fluctuations, accounting & legal aspects, arranging collaterals for securing credit, etc. It would greatly help to bring the unbanked into mainstream economy as it’s the SMEs that majorly help in uplifting the deprived populace and drive the global economy in general.
The banks' surcharges, cess, threats of data breach, etc. are effectively avoided in the seamless and decentralised transactions in cryptocurrency. Non-speculative cryptocurrencies have huge potential of large returns in a short time span; hence, the financing agents can extend soft ‘crypto-loans’ to the unbanked users. The blockchain technology would provide a hassle free credit acquisition for borrowers and a failsafe mechanism for lenders against payment defaulting. An innovative step can be the ‘crypto-tagging’ and ‘geo-tagging’ of immovable assets which could be used for providing paper-free and default-free collaterals.
For example, a farmer can secure a quick and impediment free insurance claim for his damaged crops. His claims can be cross checked by locking on his land’s geo-tag using satellite imagery and his payments can be reimbursed using his unique crypto-tag. Also, cryptos would protect the borrowers from the interest rates' volatility seen in fiat-market.
Current electronic transactions utilise the buffer technology between fiat payment and cryptocurrencies. Even so, transaction limit fees, fraudulent account siphoning, etc. harm customers’ interests. Services like PayPal charge around 2.9% transaction fees for buyers which stresses users’ finances. Cryptos can provide safe and nearly free transactional facilities to customers as the cryptos don’t contribute even 0.5% (far away from saturation) of world’s transactions; therefore the investors can earn from their investment’s fast multiplication over time rather than hedge on transaction fees. The cryptos would shield the customers from forex and cross border political dynamics.
“Crypto-credits” can help bridge the PPP gap for cross-border consumerism. Russia’s leaps into crypto-world mirrors attempts towards real globalisation and societal equality. Various goods and services can be crypto-tagged and a person defaulting on his crypto-credit in a particular country can payback by engaging in a different country where his skills/goods are in strong demands. For e.g., the service of babysitting can be crypto-tagged and a sub-Sahara African national, defaulting on her crypto-loan for studies, can boost her crypto-credit rating by engaging in babysitting in European countries where people have better per capita incomes.
Freelancers can also benefit from cryptocurrencies. Freelancing sites like Fiverr and Upwork siphon off 20% of the upfront payment. Transaction gateways take 2.9% of the remaining amount. Crypto payment would not only provide a barge against these monopolies but also facilitate easier inter-country transactions and ease of movement for full-time freelancers. They would no longer be required to be tied to a particular place, would be able to explore their creativities and the impressive returns promised by stable cryptos would help them hedge their future against ‘no-work’ scenarios. The cryptocurrencies would help them avoid the legal and administrative paperwork for transacting their services (if they involve taxation).
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Disclaimer: The written article is for a general knowledge and entertainment only. This is not a financial advice or any other professional advice of any kind. Anything you may choose to do or not to do based on the written above is at your very own responsibility .