Banking the unbanked with cryptocurrencies

Having 2 billion people around the world unable to access a bank account – referred to as unbanked – is a shocking statistic. For us, banks are a daily part of life. Instead of using cash, we tend to use our debit or credit cards more and more. One of the early suggested use cases for cryptocurrencies was to help these people around the world.

Surprisingly, for me anyway, one of the key reasons that such a high proportion of the population remain unbanked is that they cannot even afford to open their own bank account. Therefore, many unbanked people still interact solely with cash. By converting these people to cryptocurrencies, you can gain an extremely vast audience.

The price of Bitcoin may make people raise their eyebrows at such a claim. However, Bitcoin is divisible to 8 decimal places. Rather than having to spend over $3k for a whole Bitcoin, they can buy a small fraction for a much smaller price.

There are still issues with this, though. Bitcoin is not at the stage where it can scale to such a wide user base for this many transactions. This was evident in the bull run of 2017, which was epitomised by the scaling wars.

Including these 2 billion people in the financial system will help reduce poverty and create new businesses according to the World Bank. However, there is little evidence it would help with the inequality in such countries where this remains an issue.

Emerging countries such as India still have around 21% of the world’s unbanked population. Could this be why these countries seem so averse to new cryptocurrencies? If I was a bank, I’d realise these new potential customers could provide an enormous windfall. I would want to provide them with a bank account before cryptocurrencies get there first.

Roger Ver gets a lot of criticism, from me included. However, his evangelism of hoping to provide unbanked people with the resources to help them should be applauded. If cryptocurrencies can scale for mass adoption, the unbanked could prove to be the tipping point to take it mainstream.