Encryption is the next step towards a cashless society

From QR code payments to mobile banking applications, consumers worldwide are increasingly relying on digital payment solutions, especially as mobile technology becomes more common.Government-led efforts to promote a cashless economy are a key factor, such as Singapore or Philippines Seeing their central bank promote the adoption of contactless payments at the height of the COVID-19 pandemic.Therefore, the utilization rate of digital payment platforms recording Promising growth is as high as 5,000% in the Philippines alone.

related: Digital Europe: the transition to a cashless world

With the increase in the number of crypto users worldwide, this unprecedented growth in cashless payments has also paved the way for wider adoption of crypto hit About 106 million in January.Although this fraction An impressive 15% month-on-month growth, when it is still just a drop in the ocean Comparison of 4.7 billion people have access to the Internet.

But as encryption continues to make headlines, what is needed for mass adoption?

New model of financial accessibility

Today, billions of people in the world cannot Right to use Even if they provide the most basic financial services through traditional methods, they cannot safely save or manage their funds. In a period of economic destruction, such as the global economy fluctuating due to the impact of COVID-19 last year, the huge gap between the rich and the poor has become very obvious. The global pandemic will only make the lack of inclusive financial infrastructure persist for a long time. Lead About one-third of the world’s population does not have a financial safety net to rely on.

However, with a crypto wallet, as long as there is an internet connection, anyone can transfer their cryptocurrency internationally without having to maintain a minimum balance in their account. Since encrypted applications are built on a decentralized blockchain, transactions are conducted on a peer-to-peer basis without traditional intermediaries such as bankers or brokerage companies.This greatly saves transaction costs, because traditional small cross-border remittance fees can be as high as 7% After considering the intermediary fees of the sender and receiver.At the same time, the same fee for cryptocurrency is usually less Less than 1%-regardless of the transaction amount.

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In addition, the highly decentralized platform is permissionless, which means that anyone with an encrypted wallet and internet connection can lend, remit or trade their encryption without verification by a central authority or intermediary. On the contrary, transactions are executed by smart contracts, and as long as the precoding conditions are met, the transaction will be executed automatically. In addition to saving costs, consider saving time. Remittance transactions may take several days to process, and cryptocurrency can be transferred within minutes.

However, most encryption platforms still require some form of formal identification as part of their identity verification and Know Your Customer (KYC) process. This can range from a phone number to a photo ID to proof of address. Some platforms adopt a multi-layered approach, and the more information users provide, the more services they can access. Although it is necessary for KYC and anti-money laundering compliance, it constitutes an obstacle for users who do not have any formal identification documents.

Having said that, some decentralized exchanges or DEX still follow the principles of anonymity and distrust, and do not enforce KYC on users. Eliminating account verification and waiting for approval time has attracted many people to use these types of DEX-such as PancakeSwap, Uniswap and DeFiChain DEX-and make everyone truly accessible and inclusive of finance.

In addition to simple transactions, the latest innovations in the encryption field also promise to establish a fairer financial system, so that people without bank accounts and those without bank accounts can have more means to accumulate wealth. Although DeFi products, such as token holding and DEX mortgage, may be a bit too advanced for this group of users at present, but over time, simplified centralized decentralized finance (CeDeFi) services and improved financial literacy will Help open the door to these inclusive wealth creation opportunities.

Education is the key to large-scale cryptocurrency adoption

The widespread adoption of digital payment technologies such as QR codes and biometrics is undoubtedly a promising sign that consumers are more proficient in digital technology than ever before.In the Asia-Pacific region, more than 90% of respondents said they would consider There will be at least one new payment method next year.

In addition to new payment technologies, the surge in retail investment has also led to a paradigm shift in the investment landscape, and transaction activities double in the past year. User-friendly platforms such as Robinhood and their well-known cryptocurrency counterparts (such as Coinbase) make it easier for non-institutional investors to invest.

related: Mass adoption of blockchain technology is possible, education is the key

The historical growth of cashless payments and retail investment has given the public more exposure to different asset types.However, in the United States, an amazing 84% Of adults are either not interested in cryptocurrency or have never heard of it. Although this may be due to the seemingly daunting technical details involved, we are now in a good place to gradually transition to a more encrypted society.

At present, there is still a lot of work to be done to help mainstream consumers better understand cryptocurrencies. For example, it is better for encryption projects to invest more resources to create educational content to bridge the knowledge gap—whether through guides or detailed explanations. At the same time, adopting a more transparent approach to eliminate misunderstandings and ensure that users are aware of the risks associated with encryption will enable these users to enter the field more easily and confidently.

Encryption is the MVP in cashless drives

As the discussion about cryptocurrency continues to evolve, governments around the world are taking note of this.Although cash will not be eliminated in the short term, as many as 86% of central banks worldwide Watching Enter the central bank’s digital currency to achieve cashlessness.The world’s first central bank digital currency (CBDC)-the Saudi dollar-is Announce It was launched by the Central Bank of the Bahamas as early as 2018 and officially launched in October last year. The technical team behind the project was led by U-Zyn Chua, who later co-founded DeFiChain.

related: Will CBDC affect the crypto sector in 2020, and what is the next step in 2021?Expert answers

Although CBDC will be regulated by a central authority, their adoption will send market participants a profound message about the legality of digital currencies. Therefore, the introduction of CBDC is an urgently needed springboard to catalyze the adoption of large-scale encryption.

In the short term, encryption will not replace the existing financial system, but will open up its own ecosystem to accommodate the new generation of digital-first, financial-savvy users. Although consumers need some time to adapt to cryptocurrency, this emerging technology will prove its value in due course by providing cheaper, safer and more inclusive financial services for all.

This article does not contain investment advice or recommendations. Every investment and trading action involves risks, and readers should research on their own when making a decision.

The views, thoughts, and opinions expressed here are only those of the author, and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Julian Hospital He is the CEO and co-founder of Cake DeFi, a platform dedicated to providing access to decentralized financial services and applications. He is also the chairman of DeFiChain, a DeFi platform built on the Bitcoin network. Julian is an active spokesperson for the Washington Speakers’ Bureau and an advisor to the EU Blockchain Organization. Julian graduated from Innsbruck Medical University with a doctorate in human medicine.