Cryptocurrency series #3: Crypto and Financial Inclusion: Promise, Reality, and the Missing Middle

The claim that “many promoters view crypto as a tool for financial inclusion, enabling access for those underserved by conventional banking” has become one of the most morally persuasive arguments in favor of cryptocurrency. It frames crypto not merely as a financial innovation, but as a social intervention—one that bypasses exclusionary institutions and hands economic agency directly to individuals. While this narrative contains elements of truth, a critical evaluation reveals a more complex and less triumphant reality.

At a conceptual level, the argument for inclusion is compelling. Traditional banking systems exclude millions due to lack of documentation, geographic remoteness, low income, or weak institutional infrastructure. According to data frequently cited by institutions such as the World Bank, a significant portion of the global adult population remains unbanked or underbanked. Crypto appears to solve this neatly: anyone with a smartphone and internet access can create a wallet, hold value, and transact globally without permission. No branch visits, no minimum balances, no gatekeepers.

In this sense, crypto lowers formal barriers to entry.

However, financial inclusion is not merely about access—it is about useful, safe, and sustainable participation in an economic system. When evaluated through this lens, crypto’s inclusion narrative begins to fracture.

Crypto and Financial Inclusion: Promise, Reality, and the Missing Middle

First, crypto replaces institutional exclusion with technological and cognitive exclusion. While opening a wallet is easy, understanding private key management, transaction fees, volatility, scams, and irreversible errors is not. For populations with limited financial literacy or digital sophistication, self-custody introduces risks that traditional banks deliberately absorb on behalf of customers. Losing a private key is not an inconvenience; it is total economic erasure. Inclusion that demands expert-level responsibility from first-time users is fragile inclusion.

Second, volatility fundamentally undermines crypto’s usefulness for the financially vulnerable. For individuals living close to subsistence levels, money is not a speculative asset—it is a stability mechanism. Sudden price swings can wipe out weeks or months of income. While promoters often counter this with stablecoins, the reliance on fiat-pegged instruments quietly concedes the point: price stability, not decentralization, is what inclusion actually requires.

This leads to a deeper contradiction. The most widely used crypto instruments for inclusion—stablecoins—derive their usefulness from traditional monetary systems. They depend on banks, reserves, and legal frameworks, even if indirectly. Inclusion here is not achieved by escaping the existing system, but by digitally extending it through alternative rails. The ideology shifts, but the economic dependency remains.

Third, the infrastructure costs of crypto inclusion are often underestimated. Internet access, smartphones, electricity, and data plans are not trivial expenses in many regions. In contrast, informal financial systems—cash, rotating savings groups, local lenders—persist precisely because they align with local constraints. Crypto may bypass banks, but it does not bypass poverty. Without parallel improvements in income stability and infrastructure, crypto risks becoming an additional layer of complexity rather than a solution.

Fourth, the burden of risk in crypto-based inclusion is asymmetrically distributed. In traditional finance, consumer protection, fraud monitoring, and dispute resolution are institutionalized. In crypto, these safeguards are ideological casualties. While advocates frame this as empowerment, it often functions as risk transfer from institutions to individuals least equipped to bear it. Inclusion without protection can easily become exploitation, especially in environments rife with misinformation and predatory schemes.

There is also a macroeconomic dimension often ignored in inclusion rhetoric. Financial inclusion is valuable because it integrates individuals into a broader productive economy—credit access, savings mobilization, investment, and consumption smoothing. Crypto ecosystems, however, are still largely financially reflexive. Value creation is driven more by trading activity than by direct linkage to real economic production. Without strong ties to jobs, wages, and local commerce, crypto inclusion risks becoming financial participation without economic development.

That said, dismissing crypto’s inclusion potential entirely would be equally flawed. In specific contexts—cross-border remittances, inflationary environments, or politically constrained banking systems—crypto has demonstrated real utility. For migrant workers facing exorbitant remittance fees, or individuals in hyperinflationary economies seeking temporary value preservation, crypto can function as a pragmatic workaround.

The key word is workaround, not solution.

True financial inclusion is slow, institutional, and often unglamorous. It requires legal identity, consumer protection, financial education, and integration with the real economy. Crypto can complement these efforts, but it cannot substitute for them. When promoters portray crypto as a standalone emancipatory tool, they conflate access with empowerment and technology with trust.

A more honest framing would recognize crypto as an inclusion amplifier, not an inclusion engine. It can extend reach where institutions already function imperfectly; it struggles where institutions are absent altogether.

In conclusion, the statement that crypto enables financial inclusion is not false—but it is incomplete. Crypto lowers certain barriers while raising others, shifts risks rather than eliminating them, and often relies on the very systems it critiques. Financial inclusion is ultimately a socio-economic project, not a purely technological one. When crypto aligns with that reality, it can help. When it claims to replace it, it overreaches.

The real measure of inclusion is not whether people can access financial tools—but whether those tools reliably improve their economic lives.