Eh, probably, but so can mobile banking solutions[1] that are popular in Africa. Unlike in, for example, Europe where mobile payments requires a (relatively fancy) phone, M-Pesa works even on basic phones, which you can't say about cryptocurrencies in general. This is not to dismiss them, of course, but "conventional" currency already has a solution for this, so unless you're advocating for decentralisation (which is a different issue altogether), I don't think that cryptocurrency can serve the unbanked without radical changes that will also benefit conventional banking.
P.S. If you instead measure unbanked/underbanked by percentages (and exclude mobile banks like M-Pesa), you can see Japan and Korea on top 25[2], which isn't to say that they're poor (which also includes China which was mentioned in the article), but because of cultural differences. If you include the likes of M-Pesa, the graph slides slightly so that it shows that Asians (in general) tend to be the underbanked, which is technically true but doesn't automatically mean that they're poor.
(I don't feel I'm expressing myself well here, but bear with me:)
Something that tends to be underappreciated is the risk associated with contemporary mobile payments solutions. Both the individual and the local economy become incredibly reliant on a small number of private companies.
For more well-off individuals who can spread their risk ad easily switch providers, this is much less of a practical risk and therefore are likely to shrug off. They also tend to have access to providers with human support and better platforms.
Consider also that for multi-national providers, they become affected in new ways to foreign domestic and international policies and politics.
These are just some ways in which people become serfs, at real mercy of the whims and fate of politics and businesses.
Last week, thousands of people who had Coinbase accounts in Japan are now forced to close them due to them now only being available for Japanese citizens (as opposed to residents).
This is probably not more than an annoyance for most of those affected, but transfer that to migrant populations and mobile banking in Africa and things get dark pretty quickly.
Cryptocurrencies (when done in a way that liberates the user as opposed to being wrapped in centralized fintech) break this dynamic completely.
> Cryptocurrencies (when done in a way that liberates the user as opposed to being wrapped in centralized fintech) break this dynamic completely.
Now, tell me how to do this exactly? (At least a general sketch?) Because I really think that this is really not a problem that can be seen with cryptocurrency, but rather with how societies work, which is hard to solve.
I don't want to favour one or the other, but societal problems are something that require all of the cogs are working. Even if I assume that people are willing to use cryptocurrencies, oppressive governments can seize digital gadgets out of their hands, much as they can block transactions. I also don't have a solution to this unfortunately, and I feel that this is unsolvable.
With crypto, if I can remember 12 words I can freely transport my life savings anywhere in the world and no government can seize my wealth without torturing me into giving up my passphrase. Can you share a similar strategy for refugees using fiat, gold, real estate, stocks or bonds?
This is only true to the extent that you can exchange those tokens for the things you need. Just as with all other asset classes, once a government makes an effort those options dry up — and the public nature makes it worse because the system is designed to help the government auditors trace your transactions and punish everyone who’s helped you launder funds, which will be priced into the costs which are already higher than the unbanked can afford.
Think of Bitcoin as your personal reserve currency rather than a directly transactional currency at least today. You use Bitcoin as your store of wealth to transfer your life savings safely across borders. Then once safely in a refugee camp or other safer place you could use the local black market to exchange some Bitcoin for the local currency so you can spend it.
Yes, I’m familiar with the pivot after failing at its stated goals. That has the same problem: you need to conduct illegal transactions on both ends which will be expensive even if it doesn’t lead to getting caught, and the volatility is potentially ruinous if you can’t wait for favorable exchange rates with a stable currency.
This is feasible if you have something for long-term savings. At the same time though, this doesn't solve the day-to-day problems though (like transactions), especially in context of Africa.
I feel like your response embodies crypto critics quite well. Someone asks a question, someone answers how crypto helps and then someone else moves the goalposts.
I am focusing on the article itself, which is if cryptocurrency is feasible to the unbanked, usually in Africa, and if cryptocurrency can solve it. I have explained in another comment why Africans usually can't use banks in genral, and why in my opinion cryptocurrency can't fully solve the problem (https://news.ycombinator.com/item?id=28736411).
I personally want to understand from people who understands how they do function if they do have ideas to actually do it in a practical way. While the idea presented by the GP is indeed good in the long run, it still doesn't solve the problem that most unbanked people in those areas have only either a basic phone (i.e. purely calls and text) or even none, which precludes the habitual use of cryptocurrencies. I also acknowledged that for long-term storage away from often-opressive regimes, there are solutions available.
However, unless you can give everyone in Africa a smartphone and build the infrastructure necessary to have a reliable internet connection, I cannot say that, as of what I've read, have a realistic solution to everyday use of cryptocurrencies hold well.
Unfortunately, you've just stated something that is frankly unhelpful. I've read the article, I've read the comments and be very careful since that these types of discussions tends to catch fire quickly. I've just pointed out that for realistic use in this case, it is currently simply impossible in inner reaches of Africa. Even 3np acknowedges that costs on dedicated wallets should decrease (https://news.ycombinator.com/item?id=28736599) if Africans will use it. As of now, it's not simply feasible.
If you wanted to understand how crypto can help, you should've asked a question - not declared something about crypto that was both incorrect and tangential to the point being made.
close to 50% of sub-sharan africa owns a cell-phone and internet quality is of little consequence to crypto as any short frame of connection can facilitate much of what was being described in your parents context (which is infrequent "savings account" type transactions)
crypto doesn't have to be the only system of currency and probably shouldn't be until things like cell phones are ubiquitous - this isn't a criticism against crypto it's simply a lack of infrastructure needed to aid crypto in solving every currency need.
Paper money suits people without internet much better than crypto for daily trading - that doesn't mean there is no place for crypto in securing peoples savings. If you want to start saving wealth, you'll probably not want to do that in a society where everyone has cash on hand (which promotes theft) but instead you'll want to make infrequent visits to someone with internet and purchase a cheap device to facilitate savings account types of transactions that you know you can secure easily even in the event your cheap device fails. This property is one of many properties that is extremely valuable for money. Something fiat achieves with large expensive bank infrastructure that even though the concept has existed for at least thousands of years, yet is too expensive to serve people in many many places as this article outlines.
The problem is that mobile banks have existed in Africa long before mobile cryptocurrency transactions have been possible. Is the problem is indeed with the banks specifically and not because they literally don't have anything to save? Because I don't think it's solvable with cryptocurrencies in this situation, mainly beacuse banks there have lowered the deposit requirements to the point that you can open an account easily. Surely if they can't do it despite these efforts, is there even a chance that cryptocurrency, specifically in those conditions, can survive?
if you want to save and don't have a bank within a reasonable traveling distance - what are your alternatives? Almost everywhere in africa will have at least spotty internet within walking distance - the same can't be said of access to a bank. Now if you have identification maybe you can open an internet bank account (although I suspect that's very difficult for countries/areas that are under-served) or you could buy crypto from any vendor and know that it's secure the second you send it to your wallet.
It's also likely to be expensive to send paper money to your internet bank account as you'll be purchasing wire services or similar, whereas crypto vendors could be nothing more than a contact you have buys crypto and sells in exchange for paper currency.
I don't know enough about these peoples situations to know what will end up serving them best, but I do know having options will always be to their benefit and at the very least crypto will be competition on competing forms of currency.
Maybe not “exactly” but for key management roughly something like the Ledger Nano X (has to come down 10x in price obv): Small separate device that can be used to sign transactions with. Can be used with smartphone wirelessly. This device should also work seamlessly for general 2FA and auth/identification, preferably usable with government services.
Apart from being sold directly to consumers, it could be issued by providers of banking services (lending or payments for example) to clients.
You would also have service providers offering key recovery services (could be shamired)
Okay, I will assume that the government is either caring, doesn't care or incompetent (meaning not actively suppressing this). You forgot the mining side, so how do you solve that? Because, for example, the 50%+1 problem is still there, right, so if you really want a decentralised system, you also need to solve this.
Also, your solution doesn't work against oppressive governments. (Again, I don't have a solution to that, just pointing out that they do exist.)
See my point above. If you can memorize 12 words crypto makes this possible. No other store of value can make the same claim. No hardware wallet is required.
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” - Satoshi Nakamoto, The Bitcoin Whitepaper.
What if I told you that the root cause of inflation is not the price increases, those are a side-effect. The real cause is that the value (aka purchasing power) of your money is being diluted by means of central banks printing money and stealing value from the populace over time.
70% of the US dollars that were ever created were created since the invention of Bitcoin. It is only natural that the real value of those dollars has fallen.
Inflation is theft by central bankers to pay for politician’s desires without openly increasing taxes on the people.
Bitcoin fixes this because no politician, central bank or corporation can ever inflate the supply over 21 million, nomatter what they do.
The article says "cryptocurrency", not bitcoin. There are 10,000+ cryptocurrencies - and both the trading markets and the payment markets are agnostic as to which token they use, as long as traders can make money and payments go through.
Anyone can make their own crypto, and they do - so cryptocurrency as a whole is hyperinflationary.
Bitcoin maximalists say, but bitcoin is first and unique in many ways. Certainly - but not in ways that the trading or payment markets appear to care about. The "banking the unbanked" proposal is much closer to the payments market - nothing about it seems to depend on bitcoin's special characteristics.
I note that you're proposing a bitcoin version of Austrian economics there, with the word "bitcoin" substituted for "gold" - but Austrian economics proponents have long noted this cut'n'paste cryptocurrency problem with the bitcoin proposition.
Then you would expect the value of cryptocurrencies to drop like a stone and never recover, but it hasn't worked out that way. Maybe markets aren't quite as agnostic as you think.
Seems to me we're actually heading for the competing private currencies advocated by Hayek, who thought the result would be long-term price stability without the need for top-down control.
Crypto prices aren't showing anything like stability - I don't see at all how you could claim that.
Denationalisation of Money was arguably disproven by the ICO boom - it turned out that actual users just treated the shitcoins as proxies for BTC and ETH, and BTC and ETH as proxies for dollars.
I said we're heading for that, not that we're there now. The demand for transactions is increasing at a rapid pace. I don't think it's reasonable to expect price stability with so much change in demand.
It's as, or more, volatile now than it's ever been. You're basing this prediction on no evidence and a theory you don't outline. How will more demand for transactions stabilise the trading price?
Not more demand but stable demand. Transaction demand growth is still vigorous, as any look at gas prices can verify. I'm just saying Hayek might be right, if the underlying GDP is reasonably stable as he assumed.
But fine, I'll admit I have little to go on. Are you willing to admit the same? Because you're even further from the actual data so far.
as in, demand for using crypto as a transactional currency, rather than as a speculative asset right?
The demand that is unstable is because it is driven primarily by speculation. There's very few commodities being exchanged via crypto.
So to reach stable demand, crypto must be a currency that is used for non-speculative transactions (such as buying groceries, or buying oil from countries). I don't see that happening any time soon tbh, except for may be countries that are trying to escape USA sanctions.
Correct. It certainly won't happen before the next step in scaling. I will mention that transactions on Ethereum are not primarily speculations on the currency itself.
...So apparently you will not admit that there's little evidence to support your hyperinflation theory.
“Central banks debase currencies to discourage people from hoarding cash and using it as a store of value instead of investing it into productive assets.
So they claim. Could it also be that debasing the currency is far easier than taxation as a form of wealth appropriation since the effect is subtle and indirect?
Central banks debase currencies to discourage people from hoarding cash and using it as a store of value instead of investing it into productive assets. They are not perfect but they don't pretend to be something they are not.
Bitcoin claims it's a "currency" but almost everyone uses it like a store of value (HODL) because its value keeps increasing.
>Inflation is theft by central bankers to pay for politician’s desires without openly increasing taxes on the people.
This is weird. Inflation can happen without any central bank activity. Regular banks can lend out money. People can spend their money faster. All of that creates inflation without benefiting the government at all.
Central banks set the interest rates that regular banks base their rates at. I don't know how you would de-couple those relationships.
Inflation like what we had under the gold standard is bad, it leads to currency hoarding. Deflation is bad, as it leads to all sorts of bad effects. And minimal inflation can also be bad, as it leads to higher asset prices if the velocity is dropping.
I've been working through a thought experiment where we have a cryptocurrency that ensures that velocity stays constant. It does so by enforcing a tax on transactions, where you lock in a transaction to occur at a certain time in the future, but you can pay for it to occur sooner. The more we are taxing, the more we can ensure that the economy is doing well, the more the money supply is allowed to expand.
I'm also thinking that PoW is an extremely bad model, and I would prefer to work with their proof-of-weather, where weather is determined by a combination of many different weather trackers that we can prove occurred but are unable to predict much ahead of time.
It seems to be a good model, but there's still a lot to think about.
It (centrally controlled money) is a problem if you want to fleece people for their retirement money in tech support scams or ransomware and avoid having your bank account being seized when the authorities catch up with you.
That's true for Bitcoin, which its blockchain by design is open to everyone. Unfortunately, Monero seems to be the preferred cryptocurrency in this space, and tracking Monero is purposely hard.
Isn't bitcoin centrally controlled though? Bitcoin's monetary policy is programmed into the bitcoin software. This means whoever writes (or wrote) the software controls the policy.
>This means whoever writes (or wrote) the software controls the policy.
1. there are multiple competing implementations
2. it's ultimately up to the users/merchants/miners what software they run. A commit making into the bitcoin core repo doesn't mean it's going to be adopted by the network.
Bitcoin mining has also been centralised since about 2014 - three entities are known to control >50% of all mining, and there's no way of knowing how many of the other mining entities they have effective control over.
Please do define how Bitcoin or Ethereum (among others) are "pyramid schemes". Cryptocurrencies have indeed been used for pyramid schemes by specific actors, but then again so has normal money, and many other things. Numerous people on this site who presumably have the intellectual faculties to know better toss that little qualification out from their mouths almost reflexively out of emotional crypto-hate, but have apparently never even read a basic encyclopedia definition of pyramid scheme structure.
It doesn't matter if it is a crypto scheme or pyramid scheme. The token itself is not a product, the central distributor sells you tokens in a presale and then you have to recruit new members through marketing the token and sell them your tokens. The point is that there is no end goal. The last person to buy the token didn't get chocolate coins that he can eat.
The current crypto bubbles seem to be working on the "greater fool" theory, same principle can be argued to underpin MLMs - your downline are your "greater fools", and you only make money so long as you (or your existing fools can) can recruit more fools.
There's other groups of people who have access to money and tech but lack access to banking: persecuted people, financially ruined people or people with irregular documents.
1) persecuted: For example, a religious cult grew to require power in the government in Turkey, clashed with the official government and even tried a military coup and failed. Following the coup, those with direct involvement to the coup went to jail and anyone known to be associated with the cult lost access everything and even their bank accounts were closed(they had a regular Banking institution that was seized) and other banks often refused to open an account for those who were associated with the cult. As a result, they started using money transfer services that are not banks and keep to money in cash.
2) financially ruined: People who screwed up or got unlucky in something and lost everything. Many would work and do business outside of the official channels and as a result they don't want to keep the money in traditional institutions because the money can be blocked or seized due to their financial situation. Also, they won't be able to get any benefit of a bank, so all they need is a way to keep and transfer money.
3) irregulars: Those are usually immigrants who entered a country trough illegal ways or overstayed their visas. In most places, they wont be able to provide the documents to open a bank account or even get a TV subscription but they will be working and making money for many years until they sort out their situation. They will need ways to get payed and pay bills, rent etc.
Therefore, "unbanked" doesn't really mean too poor, many times it means "unserviceable clients". The "decentralised" aspect can actually mean no one is left out since the usreviceability of those people come from the central government in the region.
You have good points here, and this reminds me of MasterCard getting giddy with pornographic transactions, even in areas where it is fully legal. However, I think that cryptocurrency will only solve 3) in your list.
For 1), they often seize everything, to the point that they seize computers and phones. Even if they are smart to have a backup, I'm pretty sure that they will try to hoover up anything and everything, even regular currency.
For 2), I think that this is a societal problem, really. In France (as an example), you are entitled to a bank account regardless of your status, that even means if you have been convicted of money laundering. On the flipside, and I am assuming to use cryptocurrencies like Monero which makes transaction tracking harder, if you are really wanted you could end up in situation that I described on 1).
The story is bigger than just in-person payments, it's also about remote payments, cross-border transfers, and savings.
Sure "conventional" paper currency is already a good solution for in-person payments, but it doesn't work for remote payments, international transfers or savings.
Cashapp has compelling answers for remote domestic payments and savings in the US, and TransferWise is great for international transfers among wealthy nations.
These three are the use cases we're seeing blossom in El Salvador where Cashapp and TransferWise aren't available.
I suspect this is an Innovator's Dilemma situation, where crytpocurrency solutions are honed and adapted in emerging markets, then eventually compete with established players in rich nations.
Conventional currency can do anything cryptocurrency can do with far less overhead and usually less complexity… if you can trust someone.
The problem is that centralized trust creates moral hazard and over time tends to be abused. Abuse of centralized trust can be incredibly destructive both financially and in humanitarian terms.
To me the key question is which is cheaper?
Is it cheaper to run cryptocurrency with all its overhead or is it cheaper to use faster cheaper simpler centralized systems and “eat” corruption and abuse since those represent the hidden costs of those systems.
The answer differs depending on which society you are evaluating and it’s corruption index. It’s not the unbanked that represent a hidden base of cryptocurrency users. It’s those that reside in kleptocracies and failed states.
... mainly things that aren't even fixable by cryptocurrency?
- Wars. Most people in warzones don't want to hold a bank account because it is very unreliable. Cryptocurrency won't solve that problem, in fact it will exacerbate the problem because of your phone or computer is damaged it's game over[1]. Also, how do you even transact when you don't have any form of communication?
- Actually don't have anything to bank on. Their money is just enough to survive, so they can't even bank, regardless of its form. Giving cryptocurrency is often a proposed solution, while forgetting that regular currency works fine too in these situations.
- Cultural differences. Most, to be honest, don't want to depart their money to someone they don't know. They were introduced to money just a generation or two ago, so they are relatively new here. Good luck convincing that cryptocurrency is trustworthy in a way that can be easily understand.
[1] I mean you could write them on paper, but that's really stretching it, mainly because you need a computer to execute transactions.
The Critisism section of that Wikipedia article paints a rather grim picture of M-Pesa in Kenya. To me it looks like the people could benefit from a decentralized finance system that is run by enthusiasts rather than by turbo capitalists.
1) I mentioned M-Pesa because it is the largest one in Africa. There are also smaller players there.
2) While there are problems that is specific to M-Pesa or even conventional currency, looking at the landscape of cryptocurrencies some problems, which in my opinion is inherent in how do you define value, are problems that even cryptocurrency has fallen trap into.
As usual, here on HN, any time something is posted that relates to cryptocurrencies the discussion gets filled with negativity and even, seemingly unprovoked, outright hostility toward the idea. Overall HN (in my opinion) has a very good quality of discussion and I often read the comments before opening a link or even just for the sake of it. Nevertheless when it comes to cryptocurrencies that assumption goes out the window and I'm bound to see overly negative attitude to the point of irrationality. It's surprising to me how, out of all the places, HN would be the one where that's the case.
I wonder if anyone has any theories on why that is? I dare to assume that it's not just my ignorance of some fundamental, unrecoverable flaw in the concept itself that motivates some to speak against it with such certainty. It might be partly a lack of understanding of the multitude of available options (and even those not yet conceived) and how different - "cryptos" can be from each other but I don't understand how that would translate to people writing unprovoked, unsubstantiated claims or even just unrelated but unhelpful, overly negative remarks. Is it some negative experience someone had that traumatized them? Why HN has this problem?
I think there's a certain trap that many software engineer & technical types fall into with crypto. Crypto & blockchain are often portrayed as technically superior solutions to many problems, especially by non-technical people. Many of these problems, upon technical scrutiny, are actually not better with crypto: for most crypto use-cases, one could build a more efficient, simpler & "technically superior" solution using centralized services like, I don't know - a Postgres database and a REST API. In this way, a lot of technical people see crypto as a solution in search of a problem.
But the interesting thing about crypto is - in my opinion - not technical: it's social, and economical. Due to the decentralization, it changes the kinds of systems & solutions that are socially and economically viable. When I say "economical", I don't mean that the solutions are necessarily cheaper in the dollar sense, but in the sense that it changes which parties can participate in and profit from those systems. DeFi, for example, lets individuals participate in, and benefit from, transactions that used to only be provided by traditional banks.
So while there are many technical types that do see this side of crypto, there are many for whom their deeper technical understanding is a bit of a liability on the topic.
I agree with you about the importance of the social and economic ramifications - after all, that's the main idea behind a lot of cryptocurrencies, conceptually. I guess you might be right though that this isn't obvious or some perhaps not think of it as an important objective.
I'm not sure about the trap though - or maybe I think of it differently - because what you're describing I associate only with some form of business bastardization of the idea where people are led to believe false things without ever actually grasping the underlying concepts. In which case, sure, there's your postgres or your web panel or whatever. But if you know any better you'll realize that if you *can* build something without requiring blockchain or other such systems then you're simply doing something else entirely and it might be completely unrelated. The whole point is that you can't just host an application with Postgres backend or create anything that is more efficient or "technically superior" (not easily, anyway) without compromising the uncompromisable which is some crucial property of the system, eg. decentralization, permisionlessness. I can easily conjure up "better" solutions to an infinite pool of problems if I can simply reject the requirements.
The cryptocurrency space has been almost entirely overtaken by people whose sole interest is to get rich from coins increasing in value. These people don’t actually care about the technical aspects or real-world use outside of how it creates buzz that makes the price go up.
The field is basically fuel for the worst elements of the wider financial world - pure speculation, hype, volatility and discourse appealing to greed and FOMO, with the actual fundamentals negligible outside of a few niche uses.
Meanwhile HN is filled mostly with engineers and tech-minded people (“geeks” if you will - I include myself in that group), and it is no surprise that there would be distaste for a formerly technologically promising field that has turned into a playground for trend-following marketers.
I don't find it surprising that this space is being crowded with opportunists, marketers, scammers or people motivated by greed because that's the most obvious thing that would happen when you mix vast amounts of money with new technology that offers such possibilities. Their existence doesn't invalidate any actual premises.
Ignore those people then. There are communities dedicated to their projects and care about the underlying tech and long-term vision. Every industry, especially those involving money, will have unsavory elements. It's human nature.
I would say that depends on what you're trying to achieve. If you're trying to get an overview of the space then probably one of the best ways of going about it to locate key figures that are involved in different projects (e.g. Vitalik Buterin, Charles Hoskinson) and listen to some podcasts with them or read stuff that they wrote. If you're trying to get a fairly good understanding of some specific technology or aspect of it then you must do your own research and that should be enough to be able to identify and ignore "those people" + as a bonus you might gain insights about the shortcomings or trade-offs of that thing.
But then if you're looking for investment opportunities then you should definitely have a very good understanding of what you're getting into, any why - especially if you're being purely speculative and not doing stuff like arbitrage or some form of DeFi farming, etc.
HN doesn't(as a rule) have economic philosophers in its userbase. What it does have are people who have built their livelihood within the familiar framework and set of rules abided by nations. The system has worked for them, and if it works for you, you're going to be deeply attached to it, in the "attachment theory" sense. When you are attached to an idea, you defend it like it's your kid while also denying that you are doing something exceptional and possibly risky to yourself in defending it. Right from the beginning, Bitcoin made its stance clear that it was going to attack the top-down framework of money. At first this seemed mostly hypothetical, even though the implementation worked. It could be easily dismissed and called dead. Now it's a whole industry with broad, complex impacts. It is winning the war.
The less toy-like crypto becomes, the more you see people freak out about it and try to push it back in the Pandora's box it came from. It's the same kind of thing that happens when people get deeply involved in politics and see an "us and them" and their side loses. They ghash their teeth and spread falsities to keep it from haunting them. And that is most cryptocurrency threads among crypto haters: deep down, they really want the state to enforce the market, because that is "how the world should be".
Not everyone registered is posting on every topic. Not everyone having an opinion is posting in the topic they read.
Making unsubstantiated claims is easier than laying down concrete arguments.
You quickly run out of pearls to throw before the swine.
“Venting” is more socially acceptable than “preaching”.
And there is a matter of customs and culture: people see that badmouthing happens more often than singing praises, and so the cycle continues. HN is evidently the place where you don’t often see positive discussions of the merits on the front page, so that’s exactly what you see, and even if you have something to say you’d rather keep your mouth shut. But you see slandering comments in every topic so if you want to leave another then by all means, feel right at home.
All of this does not even take into account whether there are any technical merits worthy of continued discussion and fervent defense, or everything on this particular topic has been said already and perceived as general knowledge among the literate.
> the discussion gets filled with negativity and even, seemingly unprovoked, outright hostility toward the idea
"the discussion gets filled with negativity and even, seemingly unprovoked, outright hostility toward the IMPLEMENTATION" - here, I fixed it for you :)
If you will read any longer comments about crypto here, then most of them will approve THE IDEA of crypto, and half will admit that they were early supporters of it. But not now.
So you generally find commenters here to be smart and knowledgeable about tech topics, but you feel that crypto is the exception...
Is it also possible that you're just wrong about crypto?
Most of the people I know who are very enthusiastic about it also deeply misunderstand the technology and also some basic economics (e.g. deflationary vs. inflationary assets).
I think HN users get angry because the crypto space is a neverending parade of people getting tricked by pump-and-dump, wealthy elites, etc.
Recently, a friend was gushing about Dfinity and telling me I'm basically stupid for not seeing the promise of it... and now we find out it was a scam and the technology is just tokenized, centralized AWS.
When this happens often enough, it can be upsetting. It feels like being a doctor having to talk to antivaxxers over and over again.
I usually discern rational approach by the merit of the argument not because "someone wrote it on HN". If there is no argument but instead just blanket statements and negative remarks then I can somewhat safely assume that some thought process must've failed that person at some point - or at least I can gain no direct insight from it.
I'm not really a crypto evangelist nor anyone involved in it technically (at the moment) but I do know enough to at least somewhat understand the scope of the Idea - which is enough to never dismiss the whole thing based on some perceived flaw of some implementation.
It's slightly possible though, that HN commenters aren't approaching the topic of crypto significantly differently than other ones - but instead I just notice irrational comments more in relation to this subject - perhaps even because I know enough to recognize them easily. But it's very unlikely, even if true, that this would explain the whole thing away.
Just because your friend misunderstood and jumped on a bandwagon doesn't mean that they're wrong. They have the right idea. Even non-technical people understand that cryptocurrency can solve real problems. However, not all implementations will be executed properly. Any new technology will have more failures than successes, and nobody can say which ones will come out on top until after hindsight. It's risky, it's business.
Towards the end, the author claims that the benefit of crypto will be to teach people financial literacy. Not only is that a little bit like teaching people responsible drinking by bringing them to the Oktoberfest, I'm also not sure all the people who do not have bank accounts are really going to use their late-model iPads to watch CryptoBroTube to learn about stablecoins and NFTs...
Nominating this post for the "hand-waving argument of the year" awards.
Which is a ridiculous claim, both because 1) crypto is not more accessible, and 2) being able to access more financial services doesn't make you less financially illiterate.
How is it not more accessible? To open a bank account in the United States, you have to provide an absurd amount of identification and contact information. This usually includes:
>Your name & date-of-birth
>Your social security number
>Your driver's license and/or passport
>A video selfie for some online banks
>Your street address
>Your email address
>Your phone number
Some of those items can be difficult acquire and maintain, especially if you're starting from nothing. Additionally, many banks require a deposit, and most if not all online banks won't accept it in cash. Most online banks now also require a closed-source app that will, on Android, most likely also require Google SafetyNet, excluding many custom rom users. The street address requirement is a burden on those who live nomadic lifestyles, as you cannot (legally, iirc) use a virtual mailbox, and you have to depend on friends or family to receive any mail they send you.
I attempted to open an account at Ally last month and they denied me because they couldn't verify my identity, even though I'd accurately provided everything they asked me for. I assume it's because I'm not in the ChexSystems database or have no credit history. On the other hand, I can get an open-source bitcoin wallet on my PinePhone and just use it.
Sometimes the bottom of the comments stack on HN has the most profound comment in the entire conversation. I think this is a good example. By the way, congrats sub7, you invented the phrase “ultra banked.” I hope the investment banks credit you when it lands in an analyst report.
Not yet. The on and off-ramps are still way too complicated.
Getting an account with one of the established banks (a.k.a exchanges) is painful.
AML/KYC takes weeks, the user interface is a mess, every turn costs you "fees", trading is dominated by whales when they move their money around to pump some shit-err... alt-coin, and finally getting back into fiat so you can actually use all of the "in-game" currency is slow and expensive again.
While I work on a crypto solution through my startup, the current state of affairs has still a lot of room to grow.
It’s weird how unusable my experience is. I recently tried to open a basic account with an exchange, Gemini, and after a few rounds of onboarding (all confusing and disjointed) I was kicked out of the process. My nascent account was closed with a confusing message.
After emailing I was told that they decided not to open my account for reasons they won’t state and there’s no appeal.
This was weird because I was a new customer with no transactions and all I had done was send a photo of my passport and enter KYC info.
All a bad experience and just shows it’s ridiculous compared to banks.
Banks have problems, but they do have regulators at least.
Yes, and in most cases you need a bank account or at least a debit card to buy crypto to begin with.
I'm long crypto but i think the argument of banking the unbanked is a bit contrived, much like the store of wealth narrative in the face of regular -20% "corrections".
It should be seen as a speculative investment and not really a currency. Perhaps stablecoins can serve that market eventually.
Quick update on this. While getting fiat into crypto is easy. I failed now for 2 weeks in a row to do the reverse.
Binance should be avoided at all cost.
On and off ramps are predicated on the necessity to transfer fiat into and out of crypto. This (some would argue) is just an intermediary state before _everything_ is crypto. In El Salvador, there is no need to off-ramp fiat into BTC...
> In El Salvador, there is no need to off-ramp fiat into BTC...
This is a functionally incorrect description of how the system is working there, or doesn't. In practice, the bitcoin systems there are tremendously unreliable, and the populace hates everything about it. I wrote this about how it's going: https://archive.is/mJY30
You could argue that none of what went wrong with it is "bitcoin" per se - but then, the "bitcoin" system that El Salvador actually has doesn't resemble what Nakamoto proposed in any way.
This sentence alone tells me everything I need to know about your position: "the populace" (implying everyone) and "everything" -- riiight... I think you need to tone down the superlatives a bit and maybe try researching both sides for your next article. A 1000 people marched against bitcoin -- this is hardly "the populace"...
There is no arguing that it (Chivo) got off to a shaky start... but we already know that Chivo has more users than the banks have fiat accounts in El Salvador.[1]
As to "bitcoin systems" -- it's just regular bitcoin and the lightning network and these are _global_ systems, not systems that are only "there"...
Finally, you just need logic to know that if something is sold in BTC, and you have a BTC wallet, you can buy something in BTC, using your BTC wallet, without needing fiat. Hence, fiat on/off ramps are obviously not needed to be able to be paid, and live, and save, and purchase stuff there.
> we already know that Chivo has more users than the banks have fiat accounts in El Salvador.[1]
We know no such thing. 2.7m users is flatly implausible. That is, in fact, the number of downloads.
Chivo has refused to release the number of actually signed-up users. The customer service call centres are ghost towns. The government small business advisory service is telling businesses to install one of the other wallets (Bitcoin Beach or Muun) so they can be technically in compliance with Art. 7 of the Bitcoin Law, to charge the unsubsidised fees to the customer and not hand over the goods until the transaction has gone through.
Local newspapers (Elsalvador.com, El Faro) have detailed at length public complaints about the failures and unreliability of the Chivo network. I urge you to talk to some non-coiner Salvadorans and keep track of local coverage of how it's gone. I've been following this story closely since June and have been doing so.
If you don't want to trust my opinions, read Marc Falzon, @marcfalzon on Twitter - an ardent libertarian bitcoiner who went to El Salvador to see how all of this was actually working out, and discovered an absolute shitshow.
edit: and Bukele just claimed 65,000 transactions in the air in the system every second. If each transaction takes "several seconds" as he says, that's still a claim that Chivo does more business than the entire worldwide Visa network. Someone's feeding him numbers that sound good to him, even though they fall apart under the slightest examination. https://twitter.com/nayibbukele/status/1442624279028408321
I went to a shopping earlier earlier this week in El Salvador, and spoke to one of the cashiers about their experience with BTC while shopping.
"We have two Bitcoin payment processors, one from a private bank and another is the state owned wallet. We have had only two clients attempting to pay with bitcoin and both transactions failed. The state owned one has been down for most of the week, and the private bank app can't receive payments from the state owned one".
Why hasn't that happened? I can answer it very easily. Freicoin is a Bitcoin fork that has a holding fee to avoid speculation. Nobody used it. Nobody will use Bitcoin.
Despite benefiting tremendously from crpyto, I don’t believe this narrative.
The article mentions the core problem: being your own bank is a HUGE risk. I can accept that risk and deal with complex security mechanisms I have to maintain to both protect my own bank and keep it accessible. But a good security guide for crypto is 20-30 pages and requires serious cryptographic understanding. Currently, I can’t expect that from average users.
Everything can be solved over time. Social recovery wallets and user-friendly hardware might become mainstream. But I don’t see that happening in the next 5-6 years, and I fully expect CBDCs to be far along in that time. Then, countries will be a lot less motivated to promote crypto for the unbanked.
None of this works unless the world already runs on crypto. And not even El Salvador actually does that, because the populace hate the bitcoin system, the official payment network is completely unreliable, and the unofficial wallets don't have the fees subsidised.
The most common issue with "banking the unbanked" is a lack of sufficient documentation. This is not a problem in El Salvador, because they have a national ID card, and you can get a basic bank account with that.
And yet, only 30% in El Salvador have a bank account. What does crypto do about that? What need does crypto fill that the existing basic accounts are failing to?
I wrote a book chapter about this crypto marketing buzzphrase. It's been a common buzzphrase in bitcoin and other cryptos since 2013 - and zero of these people have ever given a joined-up account of how this is supposed to work in practice. Not even Facebook, when they put banking the unbanked as a key advantage of their proposed Libra cryptocurrency. https://davidgerard.co.uk/blockchain/2021/02/12/libra-shrugg...
"Banking the unbanked" is a complex problem, and crypto addresses none of the hard bits.
100% Agree. Frankly, I think this article doesn't belong on HN in any shape or form.
It's just people shilling left and right to pretend that cryptocurrencies will be a thing. They aren't and the will never be, because they can't.
Cryptocurrencies will make few people rich, but most people, the ones too ashamed to admit it, will lose it all and then some.
Ask yourself: where does the money come from?
Answer: that lambo is paid with other people's money.
For every 'lambo driver', there are a thousand suckers who lost. And had to lose to pay for that lambo.
I write all of this because I think cryptocurrencies are asinine in every possible way. They play on every weakness humans may have and they undermine our environment and our societies, without anything in return.
And let's be totally honest about this: it was never about banking the unbanked. It was always about one thing, and one thing only: getting rich, no matter the consequences (for others).
> Crypto doesn't care who you are and where you live. Anyone can start with crypto. The only thing you need is a mobile phone and an internet connection that doesn't even have to be especially good. Most people today have both. Even though centralized exchanges such as Binance or Coinbase require you to provide identification documents, crypto wallets require no such thing. Crypto is a solution for anyone who needs to receive or send money anonymously.
I think it’s more accurate to say: Crypto is a solution for anyone who needs to receive or send money “privately” (rather than) “anonymously”. The idea that you don’t need documents or to provide additional self identifying information (like name and address) doesn’t necessarily mean anonymity, or (imo) should anonymity be a top priority even (not that that’s not important), but being able to spend and transfer money to places where tradition banking doesn’t operate or without being charged extra is.
Whatever mess a system’s/government’s economical plan might lead to, people’s money won’t be tied to it and wouldn’t be affected.
Also, you don’t really need a smart phone, any old laptop that can run Linux would do.(which are usually cheaper, more available and function better than a phone)
I think saying crypto is better than no bank [for the poor] is a bit like saying loan sharks are better than no loans.
In a literal sense that’s definitely true: having more options must be uniformly good, and sometimes you want these options for sure.
And yet no one says “yay loan sharks bring financial freedom”, more like “let’s fix poverty and lack of banking”.
On balance I think that if you cannot have a bank account then a crypto economy may well be better (but omg the transaction fees), but that shouldn’t be a blueprint for financial advancement.
> Consequently, knowledge is the most vital asset to be able to use the financial opportunities that crypto offers. Knowledge about how to use the technology and, more importantly, about cyber security. How can I keep my money safe? Which dapps are good to exchange, loan, and lend money, and how do I recognize scams?
I think increasing knowledge is one of mankind's highest aspirations. If after doing research, you find it isn't for you, so much the better. At least you've increased your knowledge.
People who knee-jerk react and downvote without having knowledge of the space seems to be the norm here.
Crypto isn't something that can be learned in an afternoon, or be taught with a few comments. It is an overlap of technological and social space that is evolving constantly.
It was published in 2017, but lists all the false arguments the author of this article makes. Even M-Pesa, mentioned in a lot of replies of the commenters, is mentioned.
P.S. If you instead measure unbanked/underbanked by percentages (and exclude mobile banks like M-Pesa), you can see Japan and Korea on top 25[2], which isn't to say that they're poor (which also includes China which was mentioned in the article), but because of cultural differences. If you include the likes of M-Pesa, the graph slides slightly so that it shows that Asians (in general) tend to be the underbanked, which is technically true but doesn't automatically mean that they're poor.
[1] For example, M-Pesa (https://en.wikipedia.org/wiki/M-Pesa)
[2] Last data I read about this is on 2017, so this might have changed? But my point still stands out.