A more inclusive and collaborative future of finance is already a reality thanks to several innovations brought by cryptocurrencies. Discover how this is happening and be part of it.
Technology never stops evolving, and now and then, something revolutionary emerges to shake structures that once appeared solid. The global financial system is experiencing one of these moments with the rapid popularisation of cryptocurrencies, which is changing how people transfer money and hold value, among other aspects of finance.
Free from centralised power, crypto offers effortless ways to send money across borders, reach specific populations, and democratise how people invest, create, and trade assets. Because of its security features, it can also be an ally in making contributions to social causes more straightforward and transparent.
So, not only is cryptocurrency changing global finance, but it is also improving it, offering a more democratic and collaborative future. In this article, we will further explore how it does this and how you can be part of it.
A brief history of cryptocurrency
Cryptocurrencies are digital currencies that operate independently of central banks. They are based on blockchain technology, a decentralised ledger that records all transactions across a network of independent computers. This ensures transparency, security (using high-end cryptography), and immutability, preventing fraud. Each transaction is grouped into a block linked to the previous one, forming a “blockchain”.
The first cryptocurrency was introduced in 2009 by Satoshi Nakamoto. To this day, there is speculation about who this person is (some argue it is a group of people). This pioneering crypto was named Bitcoin, a name you probably recognise, even if you don’t know exactly how it works.
The main goal was to create a decentralised digital currency free from government control. After a while, when people started to recognise the innovative idea, Bitcoin’s price skyrocketed over the years, peaking at nearly $65,000 in 2021.
The cryptocurrency market has since expanded exponentially, with thousands of other cryptocurrencies being created – such as Ethereum, Ripple, and Litecoin – together, all of which make up a market worth trillions of dollars. This growth brought institutional investment and the development of diverse blockchain applications beyond mere currency, drastically changing the global financial system.
Cryptocurrencies offer some key features that help democratise global finance. The most relevant ones are decentralisation, transparency, and security, which collectively foster trust, help reduce fraud, and enable innovative solutions accessible to anyone with an internet connection, free from the bureaucracy of traditional financial systems.
The democratization of finance
The nature of cryptocurrencies makes the global financial system easily accessible to individuals in underbanked regions. They enable them to send, receive, and store value using only a smartphone with an internet connection. This alone is highly revolutionary since it allows these individuals to participate in global commerce and remittances, offering new ways to send, receive, invest, and save money.
Another way it brings a more financially democratic environment is by reducing reliance on centralised banks and enabling peer-to-peer transactions without intermediaries. This also helps to eliminate the high fees often associated with cross-border transfers, offering a more cost-effective alternative.
Altogether, these features provide significant autonomy and inclusiveness to people, overcoming geographical and budget limitations with seamless transactions just a screen away.
This lack of intermediaries also gives users complete control over their funds through private keys and decentralised wallets, empowering them to transfer, invest, and receive money without restrictions.
This autonomy provides them with financial freedom, enabling them to make independent choices, access global markets, and protect their wealth from institutional oversight or mismanagement.
Other uses that can be highlighted include the ability to send affordable remittances, allowing migrant workers to send money home with lower fees and more ease. These advantages also apply to small businesses that can benefit from accepting crypto payments, thus expanding their customer base globally at lower costs and providing savings and loans, fostering entrepreneurship opportunities and financial independence.
Cryptocurrency donations to social causes
All the things discussed above contribute profoundly to revolutionising donations to social causes, which is by default democratizing, as it aims to build a more inclusive and equal society. Enabling transparent, borderless, and low-cost transactions is certainly helpful. Nonprofits benefit from receiving funds directly, without intermediaries and high fees, ensuring more resources to reach their goals. But there is more to it.
Blockchain transparency and the fact that all transactions generate a record accessible to anyone, including donors, make it possible to track how funds are used and whether they are going to the right place. This builds trust, which is vital for donations.
Donors can trace funds in real time, seeing exactly how and where their contributions are used. This eliminates mismanagement, as nonprofits cannot alter records. Smart contracts can also automate fund allocation, ensuring donations are spent as intended, providing accountability and confidence in charitable giving.
Tech-savvy supporters are also eager to help create and share campaigns, expand donor bases, and fund innovative projects like disaster relief, education, and environmental initiatives that gather resources for people and causes in need.
Many organisations and causes now accept cryptocurrency donations. The Red Cross, for example, supports global disaster relief, often in unforeseen situations such as earthquakes, and benefits from the crypto nature of gathering resources rapidly.
Other examples include The Water Project, which funds clean water initiatives; GiveCrypto, which provides financial aid to impoverished people; Rainforest Foundation and Sea Shepherd, both environmental groups; and health-focused nonprofits, such as AIDS foundations.
There are also crowdfunding platforms that gather a wide range of projects, from environmental to social, where you can help by donating with crypto, such as Gitcoin, the Brazilian Dominó do Bem, and The Giving Block.
As we said above, this enables charitable organisations to have the benefits we listed, such as reaching a global donor base, eliminating financial and geographical barriers, and benefiting from transparency and security.
Crypto is democratising financial services by removing several barriers, empowering individuals worldwide, and reducing bureaucracy. Thus, it is creating a more equitable and accessible system while helping to enhance transparency and efficiency in donations. From disaster relief to environmental initiatives, crypto drives innovation in philanthropy and expands global support networks.
As cryptocurrencies evolve, their potential to reshape the global financial system also grows, so this is not the end of the story. Innovations are just around the corner, and we can expect an even more collaborative and inclusive global financial system in the future.
The post The way cryptocurrencies are democratizing the global financial system appeared first on Sherlock Communications.
