Name Price24H (%)
Bitcoin (BTC)
Ethereum (ETH)
Litecoin (LTC)
DeFi, Featured, Finance

Financial Inclusion Attainable Through Decentralized Finance: Raj Chowdhury

Since the beginning of the millennium, researchers have been devising ways of providing banking and financial services to the unbanked population across the world. HashCash Chief and blockchain pioneer Raj Chowdhury points out the ways in which decentralization is the answer to the bulk of the world’s wealth distribution-related problems and promoting financial inclusion.

“As the first step to alleviate poverty and attain an equitable distribution of wealth, by means of grants and allowances to select communities, it is important to get them an account with a bank. Even if a zero-balance account is made available, it doesn’t come with its share of challenges,” remarked Chowdhury.

With attempts of attaching the rural population to a bank account, ensues a series of roadblocks:

  • The bank being located miles away from a native habitation of the unbanked, 
  • Involvement of documents for validation, 
  • That banks cannot be established in some interior rural locations due to the lack of infrastructure and security issues. 

“Thus, the selected and conventional approaches to tackling poverty and other millennium development goals (MDGs), though useful and necessary, are insufficient in catering to the varied needs of the target communities. They have also historically failed to win their confidence.”

Financial Inclusion by Reversing the Centralized System

Blockchain-powered Decentralized Finance (DeFi)  opposes the centralized banking systems differing in their neural structure. 

The current banking systems and their middleware, each have their own separate systems. Each apex is in total control of where and how its data is recorded, stored, and managed. They decide on the kind of servers to use, their locations, and design how their security protocols function. Being separate, by nature, the entities do not communicate or integrate efficiently. Thus, raising the settlement time and expense of transferring value between these closed, centralized systems while lowering the efficiency. The process does very little in favor of financial inclusion.

On the other hand, blockchain is a structure of data holding transactional records while ensuring security, transparency, immutability. The technology allows transaction management on a distributed platform comprised of a network of computers around the world using open-source software. Any change to have its effect on the software layered on a blockchain must go through a consensus process that no single authority has control over. This system is rendered transparent with the transaction recorded on an online restricted ledger that is available for every permissioned user to see. Moreover, immutability is achieved through a cryptography and hashing process, so the data stored on a blockchain is tamper-resistant. Each block encapsulates the information of transactions within that block and the hash of its previous one.

Related: Decentralized Finance Bridges the Participation Gap Between Open Finance and Broken Finance

Decentralized Operations

Decentralized operations encase financial inclusion at its core.

“In the decentralized approach, a blockchain network enables even geographically separated individuals to pool funds and allow loans to those in need. The process is unregulated and operates without the need for the volumes of documentation which incurs expense at the head of each centralized operation,” added Chowdhury.

Funds are sent and received to designated persons digitally identified and validated through KYC/AML process. Domestic and cross-border fund transfer is possible at a fractional expense compare to their centralized counterpart.

Lowering of Barrier to Entry

Decentralization of assets allows fractional ownership. This, in turn, lowers the unit price of the tokens representing each fragment. This allows investors with average purchasing power to be able to invest in high-return avenues like real estate, NFTs of prized collectibles, art, wine, music, etc. Event Bitcoin is available in their fractions.

Chowdhury continues, “With decentralization, any object of monetary value may be tokenized for sale.”

Tokenized ownership across the globe should enable a Parisian to be able to own property in NY. Similarly, it will enable an Indian to send a loan contract to an African proprietor. 

“In all fairness, financial inclusion may be attained from decentralized financial products if designed right.”


“Decentralized finance and its derivatives reserve the potential to put money to their appropriate uses and without any intervention from authorities.”

This means an individual is at liberty to invest his/her money in the way (s)he feels right even if it exposes the investor to the potential risks that come attached to any enterprise.

“This is when immutability, transparency, traceability, and security features are harnesses within a robust framework,” concludes Chowdhury.

Leave a Comment

Your email address will not be published. Required fields are marked *

Explore The Blockchain World With Us,

Get Blockchain Enterprise Solution From HashCash