The distribution of wealth across the globe has historically favored a small group, known now as “the one percent”. As an example, the top one percent of Americans have about 16 times more wealth than the bottom 50%, showing a huge wealth gap and large disparity by almost every standard.
The traditional financial landscape hasn’t been helpful to low-income and middle-class individuals, especially throughout the recent pandemic and other historical events. For most, there are extremely limited opportunities to expand wealth, with banks and government assets giving little to no return in interest and offering unappetizing financial vehicles to truly build their portfolios.
The democratization of wealth denotes the opportunity for regular individuals to be able to create wealth and save just like the rich, creating a fairer system that provides greater financial access and tools to all. So what needs to be done to solve this issue and create a more balanced society from a financial perspective?
With blockchain technology and cryptocurrencies, there’s now a huge glimmer of hope for people across the globe, ranging from low to high net worth individuals, to claim financial freedom and power.
The Underlying Problem
Based on a report written by the World Bank in 2017, around 1.7 billion people are “unbanked” across the globe, meaning around a quarter of the world’s population doesn’t use a bank. These numbers are staggering and quite hard to believe given the available technology in today’s day and age, not to mention how many people have access to the internet or a smartphone to access financial applications.
But why is this the case? One reason is that the majority of people come from extremely poor households and simply don’t have substantial income levels to justify opening an account. In many countries, banks require users to pay fees in order to keep their accounts open, which many aren’t able to afford.
Then there lies the issue of trust - populations around the world are quickly beginning to lose faith in the traditional banking system. They also don’t have a way to safely store and protect their money, leaving them with very few options to turn to. In addition, they’re not exposed to tools and services to help grow their wealth, as these are typically provided to individuals with a high net worth and a plethora of investable assets.
All of these dilemmas have snowballed into a global population that is still substantially underserved from a financial access perspective, mainly in regards to opportunity and general exposure.
Therefore, it can be argued that in many ways, the traditional financial system has failed to create an inclusive ecosystem where everyone benefits. In fact, it’s proven that it favors and concentrates wealth within the rich and upper-class members of society, resulting in a large imbalance and power shift.
Cryptocurrencies Ignite a Paradigm Shift
The blockchain itself is a decentralized and immutable ledger of transactions - cryptocurrencies are digital assets that run on the blockchain and act as a medium of exchange in order to facilitate these transactions.
Bitcoin was created in 2009 as the very first peer-to-peer decentralized payment system - a cryptocurrency token that could be exchanged across borders in a permissionless fashion at a low cost. This meant that anyone could instantly transact on their own, essentially becoming their own bank and achieving a sense of financial freedom.
Since then, other blockchain projects such as Ethereum have not only expanded upon this idea of digital money but also enabled access to other lucrative financial services through DeFi (decentralized finance). DeFi takes the original concept of cryptocurrencies a step further by allowing for much broader financial applications for its users, such as digital credit-based systems, high yield generation, and seamless token swaps.
People can now browse through a wide array of options to earn interest on their money, instantly lend and borrow funds, quickly send money globally, and more without the limitations of the traditional financial system.
Cryptocurrencies are also the highest appreciating asset class in history, with numerous examples of tokens appreciating thousands of percent within just a few years. And since the market is considered to be extremely volatile, stablecoins (digital 1:1 fiat-pegged assets) offer protection against price fluctuations while still providing access to financial benefits.
In terms of asset protection, digital tokens can now be stored in web or hardware wallets where users have full access to their private keys, giving them full ownership of their funds in a secure manner without requiring trust in a bank or intermediary to hold them.
The main point is that thanks to cryptocurrencies and blockchain, individuals from anywhere in the world now have access to powerful financial services and opportunities, kickstarting a revolution of greater financial inclusion for all. Over 300 million people worldwide already use cryptocurrencies, in addition to over 18,000 businesses, signifying that the space is rapidly picking up steam.
Therefore, cryptocurrencies are democratizing access to wealth on a global scale, the likes of which the world has never seen before.
The Coinchange Approach
Here at Coinchange, we strive to provide users with the very best experience and accessibility to the maximum amount of benefits possible in crypto. Our approach and motto are based on inclusivity for those who seek opportunity.
That’s why we’ve made it simple and straightforward to use our platform, while also giving our customers access to some of the highest yields available on the market. Over time, we plan to continue onboarding more users to allow them to reap the benefits of not only the ease of access to purchasing tokens but also earning substantial passive income on their holdings.
We’re sharing a piece of the pie when it comes to democratizing access to wealth for our customers and beyond.