The term “financial inclusion” is a new buzzword in the fintech space. With the rise of services like Abra and MPesa , we are convinced that bitcoin is the solution to the problems of the unbanked. With bitcoin, we say, the house cleaner in Dubai can get her money home and the refugee can get his money over the border into a safer place.
I’m even known to wax poetic about the topic . That’s fine. Optimism is a wonderful tonic for the soul. But we have entered an bubble made of cryptocurrency buzzwords and it’s important to assess what is going to happen over the next few years. In short, right now the bitcoin infrastructure is insufficient to support the unbanked. This must and will change.
Before we begin, a bit of disclosure: I’ve been researching this for my on project, Freemit , and I’ve been talking talking to startups in this space. There are many differing views and I absolutely want the unbanked to receive the help they deserve. But it’s up to the entire industry to shift its practices to help the neediest.
First, let’s discuss the unbanked the the US. Mehrsa Baradaran’s excellent book, How The Other Half Banks , tells of the fall of the rural bank and the growth of predatory and pernicious banking. During the early years of the banking industry, when the US was an agrarian society, each small town or community had its own bank. These multiple mini-banks served the community directly and were often the only place a farmer could get a loan before next year’s harvest. These mini-banks are what we think of when we imagine the nefarious landowner and banker in small town America – their whims could make or break a farm. The truth was that these small banks […]
