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Eh, probably, but so can mobile banking solutions[1] that are popular in Africa. Unlike in, for example, Europe where mobile payments requires a (relatively fan

Eh, probably, but so can mobile banking solutions[1] that are popular in Africa. Unlike in, for example, Europe where mobile payments requires a (relatively fancy) phone, M-Pesa works even on basic phones, which you can't say about cryptocurrencies in general. This is not to dismiss them, of course, but "conventional" currency already has a solution for this, so unless you're advocating for decentralisation (which is a different issue altogether), I don't think that cryptocurrency can serve the unbanked without radical changes that will also benefit conventional banking. P.S. If you instead measure unbanked/underbanked by percentages (and exclude mobile banks like M-Pesa), you can see Japan and Korea on top 25[2], which isn't to say that they're poor (which also includes China which was mentioned in the article), but because of cultural differences. If you include the likes of M-Pesa, the graph slides slightly so that it shows that Asians (in general) tend to be the underbanked, which is technically true but doesn't automatically mean that they're poor. [1] For example, M-Pesa (https://en.wikipedia.org/wiki/M-Pesa https://en.wikipedia.org/wiki/M-Pesa) [2] Last data I read about this is on 2017, so this might have changed? But my point still stands out.

AussieWog93 5y ago
I thought the same thing when reading the article. Crypto for this particular problem seems like the proverbial sledgehammer to crack open the walnut.
- usrusr 5y ago
  More like using a flotilla of Kuka industrial robotic arms to open a walnut. If financial literacy is hard, what's crypto-financial literacy?
- EdwardDiego 5y ago
  Cryptocurrency really feels like a solution desperately in need of a problem.
  - masklinn 5y ago
    > a solution desperately in need of a problem. Or a pyramid scheme in need of an excuse / justification.
    - BrianOnHN 5y ago
      Or a massively multiplayer online game of hot potato.
    - shadowprofile76 5y ago
      Please do define how Bitcoin or Ethereum (among others) are "pyramid schemes". Cryptocurrencies have indeed been used for pyramid schemes by specific actors, but then again so has normal money, and many other things. Numerous people on this site who presumably have the intellectual faculties to know better toss that little qualification out from their mouths almost reflexively out of emotional crypto-hate, but have apparently never even read a basic encyclopedia definition of pyramid scheme structure.
      - imtringued 5y ago
        It doesn't matter if it is a crypto scheme or pyramid scheme. The token itself is not a product, the central distributor sells you tokens in a presale and then you have to recruit new members through marketing the token and sell them your tokens. The point is that there is no end goal. The last person to buy the token didn't get chocolate coins that he can eat.
      - EdwardDiego 5y ago
        The current crypto bubbles seem to be working on the "greater fool" theory, same principle can be argued to underpin MLMs - your downline are your "greater fools", and you only make money so long as you (or your existing fools can) can recruit more fools.
      - deleted 5y ago
        [deleted]
  - chii 5y ago
_ink_ 5y ago
The Critisism section of that Wikipedia article paints a rather grim picture of M-Pesa in Kenya. To me it looks like the people could benefit from a decentralized finance system that is run by enthusiasts rather than by turbo capitalists.
- zinekeller 5y ago
  I'm not saying that M-Pesa is perfect but 1) I mentioned M-Pesa because it is the largest one in Africa. There are also smaller players there. 2) While there are problems that is specific to M-Pesa or even conventional currency, looking at the landscape of cryptocurrencies some problems, which in my opinion is inherent in how do you define value, are problems that even cryptocurrency has fallen trap into.
n0mad01 5y ago
Then how come that 57% of Africa's population lacking any form of bank account.
- louwrentius 5y ago
  Because of non-technical reasons: like economical and political reasons. Cryptocoins won't solve those issues, nor can they bypass them.
- zinekeller 5y ago
  ... mainly things that aren't even fixable by cryptocurrency? - Wars. Most people in warzones don't want to hold a bank account because it is very unreliable. Cryptocurrency won't solve that problem, in fact it will exacerbate the problem because of your phone or computer is damaged it's game over[1]. Also, how do you even transact when you don't have any form of communication? - Actually don't have anything to bank on. Their money is just enough to survive, so they can't even bank, regardless of its form. Giving cryptocurrency is often a proposed solution, while forgetting that regular currency works fine too in these situations. - Cultural differences. Most, to be honest, don't want to depart their money to someone they don't know. They were introduced to money just a generation or two ago, so they are relatively new here. Good luck convincing that cryptocurrency is trustworthy in a way that can be easily understand. [1] I mean you could write them on paper, but that's really stretching it, mainly because you need a computer to execute transactions.
3np 5y ago
(I don't feel I'm expressing myself well here, but bear with me:) Something that tends to be underappreciated is the risk associated with contemporary mobile payments solutions. Both the individual and the local economy become incredibly reliant on a small number of private companies. For more well-off individuals who can spread their risk ad easily switch providers, this is much less of a practical risk and therefore are likely to shrug off. They also tend to have access to providers with human support and better platforms. Consider also that for multi-national providers, they become affected in new ways to foreign domestic and international policies and politics. These are just some ways in which people become serfs, at real mercy of the whims and fate of politics and businesses. Last week, thousands of people who had Coinbase accounts in Japan are now forced to close them due to them now only being available for Japanese citizens (as opposed to residents). This is probably not more than an annoyance for most of those affected, but transfer that to migrant populations and mobile banking in Africa and things get dark pretty quickly. Cryptocurrencies (when done in a way that liberates the user as opposed to being wrapped in centralized fintech) break this dynamic completely.
- zinekeller 5y ago
  > Cryptocurrencies (when done in a way that liberates the user as opposed to being wrapped in centralized fintech) break this dynamic completely. Now, tell me how to do this exactly? (At least a general sketch?) Because I really think that this is really not a problem that can be seen with cryptocurrency, but rather with how societies work, which is hard to solve. I don't want to favour one or the other, but societal problems are something that require all of the cogs are working. Even if I assume that people are willing to use cryptocurrencies, oppressive governments can seize digital gadgets out of their hands, much as they can block transactions. I also don't have a solution to this unfortunately, and I feel that this is unsolvable.
  - lowkey 5y ago
    See Bitcoin’s BIP-39. With crypto, if I can remember 12 words I can freely transport my life savings anywhere in the world and no government can seize my wealth without torturing me into giving up my passphrase. Can you share a similar strategy for refugees using fiat, gold, real estate, stocks or bonds?
mrtksn 5y ago
There's other groups of people who have access to money and tech but lack access to banking: persecuted people, financially ruined people or people with irregular documents. 1) persecuted: For example, a religious cult grew to require power in the government in Turkey, clashed with the official government and even tried a military coup and failed. Following the coup, those with direct involvement to the coup went to jail and anyone known to be associated with the cult lost access everything and even their bank accounts were closed(they had a regular Banking institution that was seized) and other banks often refused to open an account for those who were associated with the cult. As a result, they started using money transfer services that are not banks and keep to money in cash. 2) financially ruined: People who screwed up or got unlucky in something and lost everything. Many would work and do business outside of the official channels and as a result they don't want to keep the money in traditional institutions because the money can be blocked or seized due to their financial situation. Also, they won't be able to get any benefit of a bank, so all they need is a way to keep and transfer money. 3) irregulars: Those are usually immigrants who entered a country trough illegal ways or overstayed their visas. In most places, they wont be able to provide the documents to open a bank account or even get a TV subscription but they will be working and making money for many years until they sort out their situation. They will need ways to get payed and pay bills, rent etc. Therefore, "unbanked" doesn't really mean too poor, many times it means "unserviceable clients". The "decentralised" aspect can actually mean no one is left out since the usreviceability of those people come from the central government in the region.
- zinekeller 5y ago
  You have good points here, and this reminds me of MasterCard getting giddy with pornographic transactions, even in areas where it is fully legal. However, I think that cryptocurrency will only solve 3) in your list. For 1), they often seize everything, to the point that they seize computers and phones. Even if they are smart to have a backup, I'm pretty sure that they will try to hoover up anything and everything, even regular currency. For 2), I think that this is a societal problem, really. In France (as an example), you are entitled to a bank account regardless of your status, that even means if you have been convicted of money laundering. On the flipside, and I am assuming to use cryptocurrencies like Monero which makes transaction tracking harder, if you are really wanted you could end up in situation that I described on 1).
api 5y ago
Conventional currency can do anything cryptocurrency can do with far less overhead and usually less complexity… if you can trust someone. The problem is that centralized trust creates moral hazard and over time tends to be abused. Abuse of centralized trust can be incredibly destructive both financially and in humanitarian terms. To me the key question is which is cheaper? Is it cheaper to run cryptocurrency with all its overhead or is it cheaper to use faster cheaper simpler centralized systems and “eat” corruption and abuse since those represent the hidden costs of those systems. The answer differs depending on which society you are evaluating and it’s corruption index. It’s not the unbanked that represent a hidden base of cryptocurrency users. It’s those that reside in kleptocracies and failed states.
panarky 5y ago
The story is bigger than just in-person payments, it's also about remote payments, cross-border transfers, and savings. Sure "conventional" paper currency is already a good solution for in-person payments, but it doesn't work for remote payments, international transfers or savings. Cashapp has compelling answers for remote domestic payments and savings in the US, and TransferWise is great for international transfers among wealthy nations. These three are the use cases we're seeing blossom in El Salvador where Cashapp and TransferWise aren't available. I suspect this is an Innovator's Dilemma situation, where crytpocurrency solutions are honed and adapted in emerging markets, then eventually compete with established players in rich nations.

AussieWog93 5y ago

I thought the same thing when reading the article. Crypto for this particular problem seems like the proverbial sledgehammer to crack open the walnut.

usrusr 5y ago
More like using a flotilla of Kuka industrial robotic arms to open a walnut. If financial literacy is hard, what's crypto-financial literacy?
EdwardDiego 5y ago
Cryptocurrency really feels like a solution desperately in need of a problem.
- masklinn 5y ago
  > a solution desperately in need of a problem. Or a pyramid scheme in need of an excuse / justification.
  - BrianOnHN 5y ago
    Or a massively multiplayer online game of hot potato.
  - shadowprofile76 5y ago
    Please do define how Bitcoin or Ethereum (among others) are "pyramid schemes". Cryptocurrencies have indeed been used for pyramid schemes by specific actors, but then again so has normal money, and many other things. Numerous people on this site who presumably have the intellectual faculties to know better toss that little qualification out from their mouths almost reflexively out of emotional crypto-hate, but have apparently never even read a basic encyclopedia definition of pyramid scheme structure.
    - imtringued 5y ago
      It doesn't matter if it is a crypto scheme or pyramid scheme. The token itself is not a product, the central distributor sells you tokens in a presale and then you have to recruit new members through marketing the token and sell them your tokens. The point is that there is no end goal. The last person to buy the token didn't get chocolate coins that he can eat.
    - EdwardDiego 5y ago
      The current crypto bubbles seem to be working on the "greater fool" theory, same principle can be argued to underpin MLMs - your downline are your "greater fools", and you only make money so long as you (or your existing fools can) can recruit more fools.
    - deleted 5y ago
      [deleted]
- chii 5y ago

_ink_ 5y ago

The Critisism section of that Wikipedia article paints a rather grim picture of M-Pesa in Kenya. To me it looks like the people could benefit from a decentralized finance system that is run by enthusiasts rather than by turbo capitalists.

zinekeller 5y ago
I'm not saying that M-Pesa is perfect but 1) I mentioned M-Pesa because it is the largest one in Africa. There are also smaller players there. 2) While there are problems that is specific to M-Pesa or even conventional currency, looking at the landscape of cryptocurrencies some problems, which in my opinion is inherent in how do you define value, are problems that even cryptocurrency has fallen trap into.

n0mad01 5y ago

Then how come that 57% of Africa's population lacking any form of bank account.

louwrentius 5y ago
Because of non-technical reasons: like economical and political reasons. Cryptocoins won't solve those issues, nor can they bypass them.
zinekeller 5y ago
... mainly things that aren't even fixable by cryptocurrency? - Wars. Most people in warzones don't want to hold a bank account because it is very unreliable. Cryptocurrency won't solve that problem, in fact it will exacerbate the problem because of your phone or computer is damaged it's game over[1]. Also, how do you even transact when you don't have any form of communication? - Actually don't have anything to bank on. Their money is just enough to survive, so they can't even bank, regardless of its form. Giving cryptocurrency is often a proposed solution, while forgetting that regular currency works fine too in these situations. - Cultural differences. Most, to be honest, don't want to depart their money to someone they don't know. They were introduced to money just a generation or two ago, so they are relatively new here. Good luck convincing that cryptocurrency is trustworthy in a way that can be easily understand. [1] I mean you could write them on paper, but that's really stretching it, mainly because you need a computer to execute transactions.

3np 5y ago

(I don't feel I'm expressing myself well here, but bear with me:) Something that tends to be underappreciated is the risk associated with contemporary mobile payments solutions. Both the individual and the local economy become incredibly reliant on a small number of private companies. For more well-off individuals who can spread their risk ad easily switch providers, this is much less of a practical risk and therefore are likely to shrug off. They also tend to have access to providers with human support and better platforms. Consider also that for multi-national providers, they become affected in new ways to foreign domestic and international policies and politics. These are just some ways in which people become serfs, at real mercy of the whims and fate of politics and businesses. Last week, thousands of people who had Coinbase accounts in Japan are now forced to close them due to them now only being available for Japanese citizens (as opposed to residents). This is probably not more than an annoyance for most of those affected, but transfer that to migrant populations and mobile banking in Africa and things get dark pretty quickly. Cryptocurrencies (when done in a way that liberates the user as opposed to being wrapped in centralized fintech) break this dynamic completely.

zinekeller 5y ago
> Cryptocurrencies (when done in a way that liberates the user as opposed to being wrapped in centralized fintech) break this dynamic completely. Now, tell me how to do this exactly? (At least a general sketch?) Because I really think that this is really not a problem that can be seen with cryptocurrency, but rather with how societies work, which is hard to solve. I don't want to favour one or the other, but societal problems are something that require all of the cogs are working. Even if I assume that people are willing to use cryptocurrencies, oppressive governments can seize digital gadgets out of their hands, much as they can block transactions. I also don't have a solution to this unfortunately, and I feel that this is unsolvable.
- lowkey 5y ago
  See Bitcoin’s BIP-39. With crypto, if I can remember 12 words I can freely transport my life savings anywhere in the world and no government can seize my wealth without torturing me into giving up my passphrase. Can you share a similar strategy for refugees using fiat, gold, real estate, stocks or bonds?

mrtksn 5y ago

There's other groups of people who have access to money and tech but lack access to banking: persecuted people, financially ruined people or people with irregular documents. 1) persecuted: For example, a religious cult grew to require power in the government in Turkey, clashed with the official government and even tried a military coup and failed. Following the coup, those with direct involvement to the coup went to jail and anyone known to be associated with the cult lost access everything and even their bank accounts were closed(they had a regular Banking institution that was seized) and other banks often refused to open an account for those who were associated with the cult. As a result, they started using money transfer services that are not banks and keep to money in cash. 2) financially ruined: People who screwed up or got unlucky in something and lost everything. Many would work and do business outside of the official channels and as a result they don't want to keep the money in traditional institutions because the money can be blocked or seized due to their financial situation. Also, they won't be able to get any benefit of a bank, so all they need is a way to keep and transfer money. 3) irregulars: Those are usually immigrants who entered a country trough illegal ways or overstayed their visas. In most places, they wont be able to provide the documents to open a bank account or even get a TV subscription but they will be working and making money for many years until they sort out their situation. They will need ways to get payed and pay bills, rent etc. Therefore, "unbanked" doesn't really mean too poor, many times it means "unserviceable clients". The "decentralised" aspect can actually mean no one is left out since the usreviceability of those people come from the central government in the region.

zinekeller 5y ago
You have good points here, and this reminds me of MasterCard getting giddy with pornographic transactions, even in areas where it is fully legal. However, I think that cryptocurrency will only solve 3) in your list. For 1), they often seize everything, to the point that they seize computers and phones. Even if they are smart to have a backup, I'm pretty sure that they will try to hoover up anything and everything, even regular currency. For 2), I think that this is a societal problem, really. In France (as an example), you are entitled to a bank account regardless of your status, that even means if you have been convicted of money laundering. On the flipside, and I am assuming to use cryptocurrencies like Monero which makes transaction tracking harder, if you are really wanted you could end up in situation that I described on 1).

api 5y ago

Conventional currency can do anything cryptocurrency can do with far less overhead and usually less complexity… if you can trust someone. The problem is that centralized trust creates moral hazard and over time tends to be abused. Abuse of centralized trust can be incredibly destructive both financially and in humanitarian terms. To me the key question is which is cheaper? Is it cheaper to run cryptocurrency with all its overhead or is it cheaper to use faster cheaper simpler centralized systems and “eat” corruption and abuse since those represent the hidden costs of those systems. The answer differs depending on which society you are evaluating and it’s corruption index. It’s not the unbanked that represent a hidden base of cryptocurrency users. It’s those that reside in kleptocracies and failed states.

panarky 5y ago

The story is bigger than just in-person payments, it's also about remote payments, cross-border transfers, and savings. Sure "conventional" paper currency is already a good solution for in-person payments, but it doesn't work for remote payments, international transfers or savings. Cashapp has compelling answers for remote domestic payments and savings in the US, and TransferWise is great for international transfers among wealthy nations. These three are the use cases we're seeing blossom in El Salvador where Cashapp and TransferWise aren't available. I suspect this is an Innovator's Dilemma situation, where crytpocurrency solutions are honed and adapted in emerging markets, then eventually compete with established players in rich nations.