- Blockchain Technology is said to provide solutions to challenges that hinder financial inclusion in the world.
- Stellar Lumen has announced several partnerships with renowned financial institutions to revolutionize the global financial system.
The traditional financial system still exists as the go-to bank for most people due to trust and security. However, it has been criticized for failing to address some long-term common challenges including high transaction fees, long settlement times, limited time of operation, and difficulties in accessing funds.
According to the World Bank, there are 1.4 billion unbanked adults in the world. Experts believe that this situation could be addressed by a digitizing government and the introduction of other payment methods. In the past couple of years, blockchain technology has been largely utilized by institutions and governments worldwide to increase access to financial services in the world.
In a recent article by PricewaterhouseCoopers International Limited (PwC), the role of blockchain in advancing global financial inclusion was highlighted. One interesting observation is that blockchain can be seamlessly integrated into the traditional financial system to expand the global financial economy.
According to researchers, affordability has been one of the main challenges of financial inclusion, and this can be addressed by blockchain. The article established that 12 blockchain-powered payment solutions sampled across the globe were found to charge 0-1 transaction fees for cross-border transactions. Comparatively, traditional financial institutions charge 2.7-3.5 percent on transactions.
Another way blockchain technology revolutionizes the global financial system is through speed since it reduces the number of intermediaries. Stellar blockchain, for instance, settles transactions in just 3-5 seconds.
Other Benefits of Blockchain in Global Finance
In addition to providing interoperable solutions for businesses and individuals, blockchain enables innovative solutions that meet the needs of the locals.
Financial services should be tailored to the local context to address specific barriers to financial inclusion. Blockchain technology can offer new opportunities for innovative solutions. For example, stablecoin-based wallets in Argentina are providing savers with a digital asset that hedges against inflation.
Financial inclusion is also said to have been affected by privacy concerns and inconsistent security. Interestingly, public blockchains guarantee privacy and security as it is nearly impossible for hackers to tamper with the network data.
Stellar Lumen, which is one of the most efficient blockchains is currently in partnership with the likes of Coinbase, Circle, MoneyGram, etc. to accelerate this movement.
Stellar ecosystem wya? 🙋♀️🙋#Meridian2023 pic.twitter.com/TJ6X3TlLP8
— Stellar (@StellarOrg) September 25, 2023
Denelle Dixon, Stellar Development Foundation CEO and Executive Director, commented on how blockchain is redefining cross-border payments and the impact of its MoneyGram partnership.
Blockchain and digital assets are changing the cross-border payments process, enabling people to almost instantly and cost-effectively send money internationally. We believe that we can improve access to the financial system for all participants, and we’re proud to work with MoneyGram and Techstars to empower the next generation of innovators to build a more inclusive and accessible cross-border payments system that takes full advantage of 21st-century technology.
Despite this impact on global finance, Stellar Lumen (XLM) has a bearish market sentiment and is currently trading at $0.112142. XLM is currently trading at $0.112145 after falling by 5 percent in the last seven days.
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