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No Crypto for the Underbanked: Why Financial Inclusion Is Still Elusive

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Many crypto proponents believe that the abundance of mobile devices will allow underbanked people to skip banks altogether and use crypto instead. They argue that traditional financial institutions slothlike service cant compete with cryptocurrency technology.

But new crypto technologies are far from helping underserved communities escape their financial isolation. The companies behind crypto, including but not limited to decentralized finance (DeFi), have failed to provide user friendly apps, educational resources and other tools.

Indeed, even as public awareness about crypto mushrooms, and some of the worlds largest institutional investors launch their first projects to address demand for the asset, crypto has yet to approach parity with traditional currencies. Even in the United States, with its massive wealth and hubs of innovation, people rarely use crypto to pay rent, taxes or other common expenses. Relatively few retailers accept it.

What can crypto provide if the controls are hard to use and those who might use it dont have enough willing partners to make the system work? They might as well be given fighter jets to fly.

To be sure, I remain a believer in cryptos potential. I see bitcoin, and perhaps several altcoins one day becoming common forms of exchange. I view blockchain technology as a way to improve entrenched, centralized systems in financial services and perhaps every other industry. I believe that crypto can change lives because it serves the individual consumers needs.

But I would like to suggest an alternative approach to crypto, an intermediary step while we wait for the right conditions for widespread adoption to occur that makes more sense than trying to convert people unready for conversion.

Financial services organizations and policy makers would do better focusing on widening access to the services that the underbanked need to conduct transactions, even if those are not related to crypto. Underserved communities need help now, and whether this assistance is rooted in fiat currency and central banking systems should not hamstring the process.

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  • Many people believe that crypto will increase access to financial services for underbanked communities.
  • The proponents say that the abundance of mobile devices will allow people to skip banks altogether and to use crypto instead.
  • They add that traditional financial institutions’ slothlike service can’t compete with cryptocurrency technology.
  • But new crypto technologies are far from helping underserved communities escape their financial isolation.
  • The companies behind crypto, including but not limited to decentralized finance (DeFi), have failed to provide user friendly apps, educational resources and other tools.
  • As a result, bitcoin (BTC) and other cryptos have yet to make substantial inroads as usable currencies.
  • Bitcoin’s volatility is also discouraging.
  • Indeed, even as public awareness about crypto mushrooms, and some of the world’s largest institutional investors launch their first projects to address demand for the asset, crypto has yet to approach parity with traditional currencies.
  • What can crypto provide if the controls are hard to use and those who might use it don’t have enough willing partners to make the system work?
  • Financial services organizations and policy makers would do better focusing on widening access to the services that the underbanked need to conduct transactions, even if those are not related to crypto.

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