For several decades, the wealth gap across the globe is increasing significantly. The reality is half the top is gaining abundant wealth, while the bottom half is pushed towards the bottom of the poverty line. According to a survey in 2020, the top 10% of Americans hold 70% of the US wealth. It means 90% of the country holds 30% of US wealth.
Many citizens hardly have any bank account and even if their access to high-class financial services is limited to well-off investors. Can cryptocurrency offer users without a bank system a way to store, send, receive, earn, and trade? Will it help to resolve the wealth or income inequality gap?
How crypto can resolve the wealth gap?
Users receive access to an affordable financial tool for money remittance. Many people are working abroad and sending funds to their countries. It helps their family with living expenses. Money remittance is reported to be around 20% to 38% of GDP in countries like Tonga, Haiti, and El Salvador.
Stablecoins pegged with the US dollar like USDT [Tether] and USDC [Coins] ensure that recipients across the border get more transferred funds without third-party [e.g. banks] taking cuts against transfer fees. The online transfer fee ranges from $25 – $45 while sending money from a USDC wallet costs $3 – $5. The savings are significant and make a huge difference for recipients across the border residing in developing countries or having low income. For example in Venezuela, the monthly average salary is approximately $25.
So, the savings can help family members get a better living. It even encourages family members working in a foreign country to send money more frequently because of quick transactions and low fees.
Freelancers use PayPal to receive payments but have linked their bank accounts for withdrawal. Another withdrawal option is a PayPal debit card. However, it is not a simple payment option for online freelancers without a bank account. They can offer online services by offering their crypto wallet address.
Cryptocurrencies just need an internet connection and a wallet to transact. It is a great opportunity for developing country citizens because they don’t need to hide their money in cupboards or mattresses but store it in a wallet.
Cryptocurrency is inflation resistant
Fiat currency is regulated by the government and financial institutions. Central banks are government regulated and they control financial transactions. It even influences money circulation and supply. Nevertheless, the global inequality crisis has been triggered due to trusting a single entity with public wealth.
Cryptocurrency is decentralized, which means no one regulates or influences it. Its supply relies exclusively on underlying protocols, so it is resistant-free from any kind of manipulation. A fiat currency’s spending power is reduced with inflation but cryptocurrency is deflationary. It means a reduction in supply and an increase in rate and spending power. Lately, everything is getting more and more costly.
The cost of petrol, food, education, housing, etc. is escalating. Disposable income is a thing of the past because the cost of living has gone higher. There is a sign of reducing in inflation but users can hold on to stablecoins to avoid the volatility associated with fiat currencies. USDC and USDT are good alternatives as they are linked to US dollars. For more stablecoin and how to open a wallet process visit the ZenGo X blog.