Financial inclusion occurs when individuals and businesses have access to affordable and useful financial services and products such as banking, credit, savings, payments, and insurance. According to World Bank data, 1.4 billion people worldwide are still unbanked or awaiting financial inclusion. 

Traditional financial systems have often failed to provide full financial literacy, equitable access, and tailored financial products due to poor infrastructure, inadequate digital connectivity, and high service costs. Thus, a gap exists for a financial system that is truly digital, sustainable, and tailored to effectively include faith-based communities, resulting in true financial inclusion.

Financial inclusion is essential for alleviating systemic poverty, fostering economic stability, and empowering individuals. While numbers are improving, steep challenges remain before the world population can be included in financial inclusion. However, barriers such as limited digital access in rural areas, gender disparities, high service costs, and the lack of Sharia-compliant financial products have left millions, particularly in the Muslim world, excluded from the financial system.

Crypto, powered by blockchain, is a potential solution to financial inclusion. Bitcoin remains the largest and first-ever cryptocurrency offering peer-to-peer payments. But, Caiz, a new ethical crypto ecosystem, offers a more structured, regulated, and ethical way to empower anyone with a mobile device and internet connection to achieve financial independence.

Let’s figure out the challenges traditional banking and monetary systems face and how cryptocurrencies like Bitcoin and Caiz can solve the financial inclusion crisis. 

Roadblocks in the Road to Financial Inclusion   

Limited Access and Lack of Trust: The biggest challenge is the limitations of traditional banking. Many underdeveloped areas still lack a physical bank branch, and a large number of people in developed countries have lost trust in the banking system. The Consumer Financial Protection Bureau described banking access in the southern US as banking deserts with no access to credit unions or banks. The unbanked population was almost double in rural areas. 

Lack of trust stems from decades of denial and negligence, which bank customers have faced. An FDIC survey found that a lack of trust in banks was the second-most cited main reason for not having an account in 2021. Even developed countries like the US fail to provide fair financial services to all consumers and communities and have ‘a long, disturbing history of discrimination and financial exclusion.’ 

High Cost of Remittances: cross-border remittances in 2023 crossed $860 million worldwide, and the average cost of sending a typical remittance can cost over 6% in fees. 

Inflationary pressures: Monetary systems, aka national currencies, suffer from inflationary pressures. This inflation is eating into citizens’ savings and wealth. The unbanked remain the worst impacted by inflation, as they live hand to mouth and have no buffer to withstand economic shocks. Investment is left only for the rich, who generate interest income and engage in wealth-creation activities. 

Religious Beliefs: According to a report from a UK-based digital banking firm, an estimated 800 million Muslims worldwide remain unbanked, with the majority being women. The key reason is the lack of Sharia-compliant financial products, meaning the traditional banking system does not adhere to Islamic principles, such as the prohibition of interest (Riba) in transactions.

Other reasons include consumers suffering discrimination, bias, or price gouging for tasks as basic as opening a bank account, business loan, or securing a mortgage. 

Banking The Unbanked: How Bitcoin And Caiz Solve The Financial Inclusion Challenges 

Blockchain disintermediates financial services by removing middlemen. It also removes the need for any central authority, such as a government body or a financial institution, to look over the transactions. 

Understand blockchain as a vast network of computers on which a globally shared database is put up. Transactions get added to the blockchain as ‘blocks’ after getting approved via a majority consensus. Bitcoin was the first fully decentralized cryptocurrency powered by its own blockchain network. Its blockchain makes Bitcoin one of the most transparent ways to exchange value over the Internet without intermediaries or third-party interference.

Caiz follows a similar decentralized approach, except that it adds a layer of centralized compliance and control, operating on a hybrid DeCe (Decentralized-Centralized) model to uphold Islamic principles of ethical financial services on the blockchain.

Bank On the Go

These properties make coins like Bitcoin and Caiz the forerunners in alternative payments, which are inching towards mainstream adoption. To transact, buy, sell, trade, and perform any other financial activity, you only require a mobile phone with an internet connection. Thus, people having no access to a bank can set up a wallet and start interacting with these networks. 

Inflationary Hedge

Bitcoin has a fixed supply of 21 million tokens, which will be mined according to a schedule until 2140. Bitcoin is one of the most valuable assets today and is in the same league as gold. Fiat, on the other hand, is based on a different monetary system where governments can print money at their own whim.

Bitcoin is also considered as a hedge against inflation. Many third-world countries with volatile currencies see citizens shifting towards Bitcoin and other stablecoins. For instance, 35% of Nigeria's population between the ages of 18 and 60 uses crypto. El Salvador and Argentina are two countries that have incorporated Bitcoin as a legal tender, releasing their countries of huge debts and witnessing spectacular growth. 

Low Cost of Remittances

Billions of dollars are remitted every year, but a large portion never reaches the receiver. This portion constitutes the fees payment networks and banks charge. With Bitcoin, these fees can be reduced to less than a dollar, and the time it takes to complete a cross-border transaction can be reduced from days to minutes. 

Trustless Transactions 

Since blockchain is a public ledger, the transactions are available for public scrutiny. Consensus mechanisms, encryption, and public-private key combinations maintain maximum security. Since Bitcoin is decentralized, the transaction history remains immutable and traceable to its origin forever. Centralized banking servers simply cannot offer the same level of transparency and security. 

Ethical Finance 

Financial motives are also a factor in religious principles and ethics. Muslims, in particular, cannot engage in riba or invest in transactions that involve interest. Many Islamic principles need to be adhered to keep financial interactions Sharia-compliant. Out of the 1.7 billion Muslim population, the majority remain unbanked. Bitcoin and cryptos like Caiz present an opportunity for such people to walk toward prosperity. Some experts call Bitcoin the most Islamic currency due to its properties, while others debate its frequent price fluctuations, which can lead to speculation, a practice prohibited in Islam.

Caiz goes a step ahead and includes a consensus mechanism that’s Fiqh-compliant. Its DeCe governance model ensures that every activity on the Caiz platform aligns with Islamic principles and is completely Jaiz (legitimate/permissible). Caiz is thoughtfully building the world’s first Fiqh-compliant blockchain ecosystem, with its own chain on the horizon and an upcoming exchange listing of its token, along with other Sharia-compliant products, including the Caiz Earn program, Caiz Wallet, Caiz API for businesses, Caiz Chain, and more.

It upholds the values of integrity, trust, justice, safety, and transparency and adheres to global economic norms and regulations. Caiz offers high-speed, low-cost cross-border transactions, and Caiz’s Sharia-compliant DeFi provides ample opportunities for people to invest their money ethically or borrow money at zero interest rates. Caiz Chain can handle thousands of transactions per second.

Bitcoin and Caiz To Unlock Financial Inclusion   

While Bitcoin is fast turning into a store of value due to the increased institutional interest and Bitcoin’s own scarcity, it cannot be considered as a financial inclusion tool today. Other blockchain-based ecosystems, such as Caiz, are building an ethical, robust and compliant financial services ecosystem based on equity, equality, and innovation. 

Cryptocurrencies are opening doors to never-seen-before investment avenues. The need is for financial inclusion that’s sustained, caters to all, and upholds fair and equitable division of income for everyone.