How Cardano could fast-track financial inclusion in emerging economies

How Cardano could fast-track financial inclusion in emerging economies

(Written by @ElliotHill of the Cardano Foundation)

As blockchain technology supporters, we often get excited about the potential for financial and social disruption through decentralization. From democratizing access to identity solutions, to providing access to capital through decentralized finance (DeFi), we regularly look for ways that blockchain can transform our daily lives.

But against the backdrop of a wider rapidly-moving technology industry, it can be difficult to see where the impact of decentralization will be felt most significantly. It’s crucial to identify who needs the benefits of decentralized infrastructure here and now—as these markets could come to define blockchain adoption in the 2020s.

Here, we are going to explore how blockchain and Cardano can fast-track financial inclusion in emerging economies. But first, let’s discover how blockchain has the potential to lay entirely new foundations for financial infrastructure, rather than simply disrupting the old.

Laying the foundations for inclusion before disruption

For those of us in countries with well-established economies, it’s easy to forget the importance of the traditional financial infrastructure we have. While we seek to disrupt existing solutions through blockchain, access to basic banking services is actually in high-demand and low-supply in other underserved areas of our global community.

In emerging economies, access to financial services—such as banking and finance—is scarce. For an estimated 1.7 billion people worldwide, banking infrastructure is non-existent. This makes it difficult for users to onboard and utilize financial products, ones that we may take for granted on a daily basis.

For example, in Sub-Saharan Africa, the World Bank found that just 5% of adults per year were able to access mortgages from a formal bank if they wanted to explore this method of financing a home. This may limit an individuals’ ability to purchase their own home if they choose to take the route of a traditional mortgage.

Likewise, it can also result in individuals exploring less-secure credit options, such as borrowing from informal lenders. Although many African’s have good access to alternatives that work in place of a traditional mortgage, it opens up new opportunities for individuals looking to move into highly sought-after areas where house prices or building costs may be higher than others.

Similarly, entrepreneurs and businesses in emerging economies, especially those based in industries such as agriculture or small-scale production, find it incredibly difficult to access business financing arrangements. This limits new enterprise, causes cash flow issues, and halts businesses’ ability to expand. These issues form part of the impetus behind the Cardano Foundation’s involvement in the South African National Blockchain Alliance (SANBA), and have also helped shape IOHK’s initiatives with coffee growers in Ethiopia.

But occasionally, radical and innovative technology emerges. Such technology allows those in emerging economies to rapidly move beyond existing legacy systems and incumbent financial providers. Referred to as ‘leapfrogging’, there are already numerous examples of technology helping to fast-track the development of social and financial infrastructure in the least served geographies.

Across Africa, for instance, the rapid rise of inexpensive mobile phone technology has provided ample opportunities for financial inclusion, despite limited access to traditional banking infrastructure.

The deployment of new technology doesn’t always have to disrupt existing infrastructure as it would in developed economies. Often, the infrastructure does not exist to be disrupted in the first place. Instead, new technology can serve as a foundational layer for a fundamentally different range of services—filling previously unserved market gaps.

Blockchain technology, and specifically a decentralized solution such as Cardano, could provide the next major leapfrog scenario for the world’s emerging economies. By providing tools for financial inclusion with low barriers to entry, blockchain could become a foundational technology for providing cost-effective financial infrastructure to emerging economies.

Let’s examine some of the most impactful short- to mid-term uses of blockchain in these areas.

Digital assets as a medium of exchange and store of wealth

In economies with poor infrastructure, instability, or highly inflationary fiat currencies, some participants have turned to blockchain-based digital assets as a medium of exchange or store of wealth.

Such is the demand for reliable mediums of exchange in emerging economies, that participants will often explore bleeding-edge technologies in order to gain access to greater financial independence.

This has been evidenced most reliably by M-Pesa, a mobile-based money transfer service that expanded exponentially across Africa and eventually into other underserved jurisdictions, such as in southern Asia and eastern Europe.

M-Pesa essentially allowed millions of unbanked individuals to access basic banking products on their phones, which in some cases included access to microfinance. Many of these individuals would likely have never used traditional banking services before or would have struggled to gain access to them.

Similarly, in Venezuela—where the bolivar has suffered inflation rates as high as 344,500% from 2018 onwards—many turned to Bitcoin as a daily means of exchange for basic goods and services. This is despite the volatile nature of Bitcoin itself, which is evidence that new disruptive financial technologies are in the highest demand in unserved areas.

Through the Byron value layer, Cardano could provide a reliable and low-cost means of exchange through ada (₳), one which is decoupled from the fiat currencies of emerging economies. With a highly scalable transactional capacity and inexpensive transaction fees, Cardano could hold the potential to serve as a financial operating stack for millions of unbanked individuals worldwide. But how do we ensure access for the unbanked?

Equitable access to financial infrastructure through blockchain

Not only do participants of emerging economies have limited access to physical banking locations and services, but they are also more likely to lack the crucial documents that allow people to prove their sovereign financial identity.

This is especially important for vulnerable individuals who are residents of countries at the center of conflict or refugees, where documents are easily lost or destroyed.

Through identity solutions such as Atala PRISM built on Cardano, blockchain-based digital identities could be linked to biometric data for these individuals. This would empower individuals to preserve their identity and financial sovereignty through the blockchain, irrespective of their location or current political status.

Also of great importance is equitable access to financial products. In most established economies, people are afforded access to financial resources based on their career or financial status. By contrast, in some emerging economies, you may be denied access to financial infrastructure simply because of your gender.

A report by the International Finance Corporation found that female micro-entrepreneurs’ access to finance in India was significantly limited due to higher perceived risks. This is despite findings that indicate that female entrepreneurs in India are 30% to 50% less likely to default on loans.

This has led to a finance gap for female entrepreneurs in India of US$116bn—with just 27% of the market demand currently served.

When blockchain-based identity solutions are paired with open, peer-to-peer lending protocols built on the blockchain, it could be possible to access finance while only revealing crucial aspects of your identity—leveling the playing field for all participants.

Similarly, the cross-border and decentralized nature of blockchain could allow female entrepreneurs or other underrepresented groups with limited access to finance to easily seek loans and investment overseas.

In this regard, blockchain can be seen as an equalizer for financial access, a powerful tool for financial inclusion that only requires a connection to the blockchain and a digital wallet.

Can Cardano fast-track financial inclusion?

When all the pieces begin to align, the vision for Cardano and the solutions it empowers in emerging economies becomes clear.

Through a combination of Cardano’s value layer, and the ability to store and process data on-chain through smart contracts, a whole host of interconnected social and financial services could be built on-chain.

This would empower participants in emerging economies and underserved communities to take ownership of their identity without reliance on paper-based services, and use these identities to gain access to financial services through decentralized finance.

By virtue of Cardano’s decentralized nature, participants in any corner of the world could access a global social and financial ecosystem powered by the latest decentralized applications and smart contracts.

If you could build financial tools to empower underserved communities, what would you build first? Let us know in the poll and comments below which issues matter most to you, and where you see the biggest potential for DApps on Cardano in the future.

In your opinion, what is the most important problem for emerging economies that blockchain could solve?
  • Granting equal access to financial products regardless of a person’s background or gender,
  • Ensuring that individuals in emerging economies have access to decentralized identity solutions,
  • Access to decentralized finance products, such as micro-finance loans,
  • Access to digital assets for a store of wealth and medium of exchange,

0 voters

If you are interested in building tools for financial inclusion on Cardano, check out Marlowe Playground. Here, you can write complex financial smart contracts, ready to deploy on Cardano, using visual programming languages.

Read more about financial transformation on Cardano:


I am interested to know how scamming would be protected when establishing one’s identity. What is to stop someone from building a fake identity on Cardano much like they do in other markets? Will there be actual human control measures or software using webcams?


I do not know much about the finance side of things and have basic understanding of blockchain but I am trying to catch up and Cardano caught my interest. My question is why would the banks and central bank or federal reserve bank or finance ministry of any country allow such currencies to run? If the value can be stored in ADA for example and good be bought and sold with ADA instead of the highly volatile local fiat currency (like Venezuela example above) then eventually there would be no need for the fiat currency. Does that benefit the government or do they lose control? Because in the existing scenario where money = power, I dont think a govt would be happy to lose control of their people. Hope you can explain this aspect too about the security against govts, financial institutions and people in power of using ADA in the long run.


And I would like to add another question on top: how does anyone with just a phone and cash fiat currency in Africa swap that for ADA? In the developed Economies we use exchanges for that, who require a KYC procedure, just as do banks. To me that seems like yet another border some people can’t cross, because they lack proof of identity or a bank account (to transfer funds to the exchange) or both? How does this work? How do those that could use it „get access to it“?


I rate that if stores and retailers accept ada, that’s not the problem. But I will say that as someone residing on the southern part of the continent, it is KAK expensive to buy crypto mainly because of the bank fees, unless you buy large amounts. And things like PayPal are not yet well-integrated into our traditional banking systems and then take into account the fees charged for buying in US dollars then converting to ZAR (rands). And the rand to dollar amount fluctuates constantly. Truly, cryptocurrency from an exchange point of view in poorer economies is difficult to acquire, unless you have the technical skill to be a miner or SPO in the cardano context.


I have lived in Africa and Asia for many years. No matter the fancy tech. If you cannot put fiat in someone hands, to buy at the food market or pay the helper, you have not solved the problem. I am deeply invested in this problem. Taking care of many programs in Cambodia and Africa. It is debitating.


bitcoin atm’s seem to be a good start. Why not ada atm machines, rolled out on a massive scale. Maybe with a good incentivized business model, similar to the stake pool operators, funded through the Cardano Foundation. With millions of atm operators, with anyone being able to become an atm operator. This I’m sure is problematic in heavily regulated countries, but would it not be less red tape in these developing countries?

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Considering that many underserved people across African countries rely on cell-tech to manage what limited financials they do have - can we expect a host Cardano wallet that caters more specifically to cell users? Maybe this already exists. I use Daedalus and actually have very little knowledge of the inner workings of Yoroi.

I don’t think ATM’s are the full story, but they’re a good idea, and that is because I’ve observed Bitcoin ATM’s in 2 or 3 places so far and I NEVER see anyone accessing them… One was in the center of Vienna/Austria… I still think the barrier to entry is very very high for crypto and an ATM may indeed help, but it also assumes that you have a bank account and a credit/debit card to acquire the Crypto. No, I think you need to savor what @ZeeTee wrote… “If you cannot put fiat in someone hands…you have not solved the problem”. How does ADA become as easy and simple to use as fiat? And no… I don’t have the answer. We often think more technology is going to make our lives easier and if you’re savvy it does mostly, but it also has added tremendous complexity to our lives. We need to focus our Dapp and other development on all sorts of personas: from the crypto teenager over the middle aged unemployed via the middle aged savvy all they way to the retired 80+ year olds… how do you bring everyone on board of any tech? The other day a man on TV (80+) had a cell phone without internet and got a text on it “click on this URL to confirm your registration for your vaccination” and he didn’t know what that means “click on this URL” or how to do that… App devs assume everyone gets it, but that’s not always true. The same applies to using ADA… it’s too complicated yet and we have a ways to go.


This would be possible with Yoroi. They are creating a web3 based browser function within their mobile app that will interact with smart contracts on Cardano. Similar to what Metamask offers with Ethereum.


It’s obvious many people voted based on emotions and not based on the understanding of basic finance.

Can you elaborate on this? I’m hear to learn… do you have some basic finance education to share with the community?

Biometrics using smartphones or desktops is a must to avoid identity theft and fraud. Biometrics is already on the cards for Atala Prism per website.

Biometrics with Atala Prism could be massively beneficial to Cardano:

  1. It could be a solution to the current Stake Pool Centralization that we are watching unfold before our eyes. The solution being Digital IDs required for Operators (including biometrics) and a limited number of pools per Operator.

  2. Thin edge of the wedge for developing country adoption. As a South African, I can honestly say the barriers to entry to potential technically sound, smart, zulu/xhosa/etc speaking individuals living in a township becoming an stake pool operator are pretty high. Does anyone honestly believe that they will be able to attract stake as easily as someone in the developed world? Or have the wealth to buy ADA to stake to their pool? Do you think people in developing countries will be comfortable with just about all staked ADA and SPOs being located outside their region? And anonymous to boot?

  3. Business and KYC as alluded to in this article for inclusive finance.

Probably a 100 more benefits that people could think of. Identity is taken for granted in the western world.

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Biometrics were one of the few, easily attainable ways that I could think of securing digital identities that aren’t easily faked, but don’t require a stamp of approval from an outside entity (government). For someone operating a stake pool, it would make sense to me (given the already exorbitant cost of pledge), but I also wonder how accessible smart devices with biometric sensors are for those in developing economies. Granted, I’m a bit stubborn when it comes to technology, but I myself only recently bought a phone with a fingerprint reader. Would the affordability of such devices add a barrier to entry for digital identities?

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Super accessible and affordable. The Xiaomi Redmi smart phone, as an example, has fingerprint biometrics and goes for about $250. I’ve had several of them in South Africa over the years. Best selling phone in India and was good enough for my South African bank, which respectfully, has world class security. It’s a lot more accessible than the recommended minimum pledge!

While biometrics would be a great way to produce a digital identity without requiring some other authority, we should also consider what would happen if a person has some terrible accident. Let’s say that your identity is tied to three fingerprint scans on your device. Maybe you were a little foolish and used the same hand for all three. What happens if you lose your hand? Or both hands, for some terrible reason? And if you can still recover the identity with a passphrase and tie it to new biometrics, couldn’t people just fake new identities all the time?

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That’s a good point! This is an outlier type scenario though, in my opinion. Not ideal but, perhaps a local node facial scan against a Government ID, as a backup to biometrics could work? I noted that the webcam in my laptop was used to scan my face against my passport when I recently opened a Kraken account.

A quick Google right now indicates that Samsung phones include iris scans

I would agree that it’s an outlier, but if we want to make a system that’s able to be used by anyone, it’s an important note. I hadn’t really considered iris scanning as an option, but that’s good to see. I suppose that the same issue could apply to that, as far as recovery of the identity goes, but it’s definitely an outlying situation as well.

I’d be uncomfortable with an identity issuing body being required to backup something like that, personally. I think that there would need to be a way to recover the identity on your own, but in a way that makes it prohibitively difficult for bad actors to do it on any large scale. I say ‘on a large scale’ because even the average user could have several identities tied to different fingerprints. Or even toeprints, I suppose. Iris scanning would be much harder to get around, but there would also be fewer fallback methods if it failed. For example, if you use biometrics and have a set of three prints, one on each hand and one on a toe, you’d probably be pretty safe, whereas a nasty accident to the face could damage both eyes.

Definitely a conundrum. There’s also the question of how unique biometrics could really make a person. For example, a fingerprint scanner doesn’t require an exact match; it just tests to see if it’s close to the point where impersonation has an arbitrartily low likelihood. This seems fine, but there would be several security issues. While it’s fine for verifying a single user (you’d have to have super similar prints to them, highly unlikely) on a single device, it becomes cumbersome on a wide scale on blockchain (I think?).

My thought on the process would be thus:

  1. Scans are initially tied to an identity
  2. A user ttempt to verify themself
  3. The metadata containing initial scan values are read from the chain
  4. The local device tests the user against the data, and verifies the user.

You could also go about it by searching the chain for data that was arbitrarily close to the user’s input, but it would be EXPENSIVE on blockchain. In either case, the issue of relying on the local device is an issue. Even in if the verification algorithm was kept on-chain, you’d have to be able to verify that the biometrics hardware wasn’t being emulated. I think. I’m not an expert here, just putting my thoughts in.

EDIT: I think a more poignant issue here is that unless you’re comparing against the entire list of biometrics stored on-chain (which, again, I think would be too expensive), a user could just make an arbitrary number of independent identities with the same biometrics.

I suppose that if we wanted to be able to trust users for certain roles (say, pool ownership) we could make a contract keeping track of verified users’ biometric data. In this case at least, we could look over a much shorter list and refuse to verify if the biometrics matched ones already listed. Anyone could still own a pool, but we could look at the contract and know which ones we wanted to use.


All great points and thank you for engaging! I like the ideas of both hands and a toe! Initially amusing to be honest (picturing myself scanning my feet!) but on reflection, very practical in the case of accidents - it would definitely push out the outlier case to the realms of statistically, extremely unlikely.

In Africa, fraudulent identity documents are actually pretty rife, and while there are security issues with device capturing, what you’ve proposed is probably more secure than what is generally used ‘on the ground’ in the developing world.

No idea from my side as to how cumbersome this would be on blockchain, but ultimately, it comes down to how scaleable Cardano actually is (I’m no expert on this by any means!) - My expectation is that digital ID with some sort of biometrics could be stored on the blockchain.

The process that you’ve laid out is exactly what I had in mind conceptually. I actually had in mind a comparison against an entire list, but agreed it might be a challenge for populations in the millions - it would be interesting to hear one of the IOHK boffins opine on this. The use case for pool ownership would, in my opinion, be a great way to test the use case on a smaller, willing, test population for refinement before broader rollout to other use cases e.g. University credentials, etc. where problems wouldn’t necessarily be easily forgiven.

Welcome to the forum and that you for sharing your experiences.

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