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Zumo: Moving Beyond the Glitz – What Really Matters in Crypto

Cryptocurrencies have had an eventful year to say the least. From Bitcoin hitting an all-time high, then having a huge crash, to cryptocurrencies across the world seeing percentage gains well into the thousands, to Bitcoin being legalised as legal tender in El Salvador, with out countries looking to follow suit – it has definitely been eventful. However, for many people, the latter of these achievements is not as recognised as people are still seeing crypto as an investment opportunity to turn a small amount of money into a larger sum, not the financial stability and equality it could bring if used properly.

Amelie Arras is the Marketing Director at Zumo, a wallet and payment platform that makes people’s money and cryptocurrency work in a seamless and safe manner. Arras argues that there is much more to crypto than a simple investment opportunity, and that with the right education (which is not taking place in schools, but rather on social media) the next generation could utilise crypto to its full extent:

Amelie Arras, Marketing Director, Zumo
Amelie Arras, Marketing Director, Zumo

When we think about cryptocurrencies, we tend to think only of the trading side. Fed by a host of online stories, people are drawn to the glamour of rising prices and dream of the sky-high returns they could enjoy.

It’s understandable. This year, the price of a bitcoin reached unprecedented highs, topping $60,000, whilst a number of smaller cryptocurrencies have loudly announced themselves by rising at an even faster rate, with some making percentage gains well into the thousands.

Price, price, price. It’s all we seem to hear. But we need to move beyond this shallow perspective and focus on what really matters in crypto – financial inclusion.

Driving financial inclusion in developing economies

The concept of cryptocurrencies underpinning financial inclusion has been dramatically thrust into the spotlight by the Taliban seizing control of Afghanistan.

As they rolled across the country at a fearful speed, Afghans were hit by a nationwide cash shortage, a plummeting currency, and a significant hike in the cost of basic goods. Hundreds of banks were forced to close after running out of cash. I’m sure we’ve all seen the images of desperate crowds queuing outside the banks in the vain hope of drawing out what remains of their money.

As highlighted by CNBC, these conditions provide a perfect test case for the role that bitcoin and other cryptocurrencies can play in democratised finance. People throughout the beleaguered country are turning to crypto in an effort to safeguard their wealth against the economic instability.

Whilst this may seem an extreme, or cynical, example, it’s typical of what’s happening in developing countries throughout the world. The Global Crypto Adoption Index, compiled by blockchain data firm Chainalysis, shows that cryptocurrency adoption is up 881% this year, and most of the top 20 countries are emerging economies, including Afghanistan, Togo, and Colombia.

El Salvador has now officially adopted bitcoin as legal tender, and draft legislation may see Panama follow. And look at Africa. There’s been a huge spike in crypto adoption which is giving people access to financial products that would have been otherwise unattainable. It’s also boosting trade across the continent. When you have access to, and can accept, digital payments at a global level, you can trade anywhere.

I’m not saying that it’s always easy to simply liquidate your crypto and use it to buy eggs at the corner shop, but you can access a community that trades in cryptocurrency, visit the stores that do now accept it, and use the growing number of ATMs that exchange crypto for cash. It’s bringing choice to the markets that need it the most.

In economies that are struggling, cryptocurrencies offer an opportunity and an edge. In Venezuela, for example, savvy businesses are swapping their bolivars for bitcoin to beat the hyperinflation that’s devalued the local fiat currency. Now the Venezuelan people, who have been investing in bricks because they hold more value than the national currency, need to be empowered to also access the potential of cryptocurrencies.

Feeding that much-needed side hustle

It’s not just in emerging markets where crypto can drive financial inclusion.

In many developed economies, including the UK, inflation has been growing faster than either wage increases or the interest rate on offer in savings accounts. This isn’t sustainable. My generation is poorer than the last two generations, and we’ve noticed.

We often have massive debts, and I’m seeing more young people feeling the need to turn to a side hustle to grow their money and make ends meet. This is fuelling the rise of DeFi, or decentralised finance, where people are embracing a variety of financial applications in cryptocurrency or blockchain geared toward disrupting financial intermediaries.

The sophistication of crypto products is growing. There’s been a rise in ‘staking’ and ‘yielding’ in lieu of what’s on offer from traditional savings accounts. Staking involves holding funds in a crypto wallet to support the security and operations of the affiliated blockchain network. You hold some money in there and are then rewarded for doing so. With yielding, you’re lending your crypto to earn interest.

I spoke with a customer recently who started staking after realising the income from his job was insufficient to save for a deposit to buy a house. Thanks to having a viable alternative, he’s now on the property ladder.

Meeting the pressing need for education

But whilst people are embracing the alternatives on offer, they don’t always understand them. The Financial Conduct Authority (FCA) conducted crypto asset consumer research earlier this year which revealed that whilst cryptocurrencies are becoming more normalised, the level of understanding is declining.

There’s power in education, but financial education is lacking in the current school system. There should be an option for children to take financial wellness courses, and this learning should continue into further education and the workplace.

In its absence, there’s been a rise in young influencers on platforms such as TikTok and Clubhouse. People like Selina Flavius, founder of Black Girl Finance, and YouTuber Poku Banks are doing a fantastic job of helping the next generation to be financially fitter. Imagine the impact if this was reflected in the mainstream curriculum as well.

Education and empowerment are the forces that can shift the dial on crypto, switching the focus from glamorous extravagance to financial staple for the world’s financially underserved.

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