Decentralized Systems can Democratize Financial Services

The Unexplored Potentials of Decentralized Systems

Decentralized systems like Blockchain and cryptocurrency are playing under the spotlight for quite some time now. While these decentralized systems and high-end technologies have dramatically transformed the industry of finance, certain possibilities are unexplored hitherto. One of the terra incognita is the need to democratize financial services. 

A Vision Laid Out by PayPal 

Banking facilities and financial services are meant to be homogenous and ubiquitous. However, a dismal reality is that the honest forms of financial services and banking are majorly confined to elites and the literates. This can be asserted as a violation of banking ethics. Shivananda, in this context, says that there have been numerous multi-faceted innovations with payment systems but the underlying infrastructure remains the same. The cryptocurrency and the decentralized protocol offer us the ability to re-imagine that underlying substrate and make easy access to these payment systems for everyone.

PayPal EVP and Chief Technology Officer Sri Shivananda note that a blockchain-integrated infrastructure in the financial domain will not only support digital currencies but will also be a support to the central bank in the form of digital money.

PayPal accentuates that blockchain and cryptocurrency can prove to be potent in democratizing financial services, thereby principally accelerating inclusivity in the financial domain. Such an initiative can be labeled as a paradigm shift in technology and financial services overall. Predictably, the homogenous infrastructure can include those 1.8 billion people who are not a part of the modernized financial systems of today.

The Primary Objectives of Financial Services Democratization 

Enhancing Security 

PayPal also emphasizes enough on the security of digital assets and currencies. The new infrastructure will be subjected to high security. Bhat notes there is a rise in cases of cybersecurity and phishing with the rise of innovation. Around 1.6 million cases of cyber breaches were recorded in 2020.

Stringent security facilities will give rise to more digital currency investments thus increasing the number of digital currency investors.

Enhancing Inclusivity 

As mentioned earlier, financial services should be ubiquitous through and through. Introducing a system that is democracy-friendly can expand inclusivity, which is a crucial slice of any nation that practices democracy.

Independent Banking Opportunities 

Digital currencies should be democratized in ways that can be perceived by even people with a meek understanding of technology. Following this, PayPal subtly puts forth independent banking opportunities that democratization can entail.

Will India be Competent with the Renewed Infrastructure? 

It is indeed a matter of grave concern whether India is open to such a policy or a renewal of blockchain infrastructure that democratizes digital currency. In 2018, RBI had banned all virtual currency entities regulated by central banks. However, the Supreme Court is gradually moving towards crypto adoption as it is set to form policies on crypto.

Anticipatively, a paradigm shift in the financial services that facilitates democratization of financial activities along with the promise of enhanced security also bears the potential to convince India to adapt to a digital finance culture.