The Unbanked, Explained

6.

Cryptocurrencies, such as Bitcoin or Ethereum, may offer good opportunities to improve the financial inclusion in unbanked and underbanked regions.

Cryptocurrencies offer a simple way of transferring value. They can be sent anywhere at very low costs. You don’t need an ID or banking infrastructure to use them: all you need is a smartphone with internet access to send money across the continent and the world.

Even more promising than the cryptocurrencies themselves are the various projects built on top of them. While cryptocurrencies themselves are useful, they have some disadvantages, such as high price volatility, sometimes unintuitive user interfaces and lack of focus on the specific needs of unbanked communities, such as the lack of paper IDs and underdeveloped physical infrastructure. All these can be addressed by creating targeted solutions based on the technologies of Blockchain and cryptocurrencies.

A good example of one such solution is Humaniq, a decentralized Blockchain bank currently in development by an international team based in Europe, Africa and Asia. It seeks to create a comprehensive bank-like environment inside a user’s smartphone, with money transfers, loans and insurance powered by the app’s own digital crypto-token, HMQ.

Understanding the issues of an unbanked customer, the developers have put features in place which ensure that the product remains accessible to the people in the growing economies of the developing world. A simple facial and voice identification system gives a method of authorization for people with no paper IDs. Also, an egalitarian system of token emission, that is not based on expensive hardware, allows for the inclusion of low-income households.

It is companies like that, focusing on the particular needs of the unbanked communities and offering solutions to their specific problems, which may have the most potential in these emerging markets.

Let's block ads! (Why?)

Read More Open link http://ift.tt/2n6oZVE