One of the key benefits of DeFi is its potential to empower the unbanked population. The unbanked population refers to individuals who do not have access to traditional financial services, such as bank accounts, loans, and credit cards. According to a report by the World Bank, there are approximately 1.7 billion unbanked adults worldwide, which represents 31% of the global population.
One of the reasons why so many people are unbanked is because traditional financial institutions are often inaccessible or too expensive for low-income individuals. In many cases, unbanked individuals live in remote areas or in countries with poor infrastructure, making it difficult or expensive to access financial services. Additionally, many unbanked individuals do not have the required documentation or credit history to open a bank account or qualify for a loan.
DeFi can help to overcome these barriers by providing financial services that are accessible to anyone with an internet connection. Because DeFi operates on the blockchain, it can provide financial services to anyone, regardless of their location, income, or credit history. This means that unbanked individuals can access services such as savings, lending, and insurance, without having to rely on traditional financial institutions.
For example, DeFi lending platforms allow individuals to borrow and lend money directly, without the need for intermediaries. This means that individuals can access loans at lower interest rates than traditional banks, without having to go through a lengthy approval process. Additionally, DeFi savings accounts offer higher interest rates than traditional banks, allowing individuals to save money and earn interest on their savings.
DeFi also offers a higher degree of transparency and security than traditional financial institutions. Because transactions on the blockchain are recorded on a public ledger, they are transparent and can be easily audited. Additionally, because DeFi operates on a decentralized network, there is no central point of failure, making it more secure and resistant to hacks and fraud.
In conclusion, DeFi has the potential to revolutionize the way financial services are provided, especially for the unbanked population. By providing accessible, affordable, and secure financial services, DeFi can help to empower individuals and communities that have been left behind by traditional financial institutions. As more people become aware of the benefits of DeFi, we can expect to see the growth of a more inclusive and equitable financial system.