Ever thought how anyone without a bank account or payment cards (aka Underbanked or Unbanked) can gain access to cryptocurrency? Cryptocurrency is often touted as a more democratic form of financial system without the controlling, centralized intermediaries. Most of the well-known wallets in the market (Metamask, Coinbase, Binance to name a few) require the customer to have a debit or credit card or a bank account to fund the wallet.
Per Federal Reserve, 22% of U.S. population is either underbanked or unbanked. This population often uses expensive options like check cashing stores or prepaid cards for financial transactions. This same population is also overlooked while the cryptocurrency infrastructure is being created.
If you think that crypto is only for people who can stomach the volatility, a stablecoin based wallet can open up banking services to unbanked population. Majority of this unbanked segment has established identity (driver's license or other govt. issued identity) and access to mobile phone. Meaning, they can access a crypto wallet via mobile phone and can pass the identity requirements for financial transactions. Wallets like Coinbase require the wallet holder to load a govt. issued id anyway, which would not be a problem for this segment.
Before crypto wallets became multi-million dollar business, people were buying Bitcoin by sending money via Western Union in some cases. In the early days of Bitcoin, the options were usually mailing a check, using money transfer services like Western Union or Dwolla. No one was accepting card. As cryptocurrency started being monetized, non-bank funding mechanisms were discarded.
Today, one option to fund a crypto wallet via cash is converting cash to prepaid card but those are often fee laden. Crypto ATMs have sprung up in various places but those fees are also higher than using one’s bank account and not all tokens are available on those ATMs. Western Union and MoneyGram are accepted by some networks but not all. Both these services also have fees for transfer.
In summary, the blockchain based currency system is mimicking the pricing structure and inclusion principle of the existing off chain financial system. Anyone with a bank account and enough liquidity can move money for free or almost free, can buy crypto currency easily. Anyone without access to banking has to jump through hoops to invest in crypto, will pay more in fees than their wealthier counterpart, will have fewer options and will have to do more research to find a solution they can use.
I encourage all the mavericks and free thinkers in Web3 to create an infrastructure that is accessible to all, easily and at low cost. There are various ways to solve this. Crypto ATM network is not a scalable solution for less dense location or countries with unstable internet.
Universal service providers like mobile network operators have retail presence and have already verified a person’s identity. Shamelessly borrowing from M-Pesa, one can buy extra minute which can be then pushed to a crypto wallet for equivalent cash. $10 paid to a mobile network provider = 200 minutes (e.g., for prepaid service providers) = converted to $10 in a crypto wallet. This can open up crypto to a larger swath of the population.
We must reimagine the future.