Could Bitcoin Provide a Solution for the World’s Unbanked?

Aug 06, 2015

Bitcoin is a rather new concept. Well, not too new but there is a large number of people out there who haven’t even heard about the digital currency yet. Apparently, this could change in the next few years if advocates of the currency get their wish.

As Bitcoin struggles to gain mass appeal, lovers of the currency have started thinking of ways to make it even more popular. And what better way to do that than to take it to the world’s unbanked?

More than 2 billion adults don’t have bank accounts or other sources of finance such as credit cards to save and borrow funds from. A majority of these people live in rural areas earning below $5 a day. Proponents of Bitcoin are keen on taking the advantage and introducing these people to the digital currency.

“Bitcoin can be a real option for the unbanked,” says Michael Fraser who works with the Chartered Accountants of Australia and New Zealand (CAAZ). The benefits could be on multiple levels; technological, economic, political, etc.

Bitcoin would instantly provide the masses with an alternative way of sending and receiving money, Fraser said. As more and more people adopt smartphones, Bitcoin could easily take up the positions currently occupied by Money Gram and Western Union – as a cheaper and faster way to transfer and remit money. At just 1%, it has lower fees compared to the standard 5% fee charged by Western Union, for example. Moreover, it is fast and flexible unlike fixed processing times encountered when dealing with traditional options such as Western Union.

However, price volatility remains a major issue. If Bitcoin is to become a success, then something will have to be done about the rates at which the value of the digital currency fluctuates. Just one year ago, Bitcoin was equivalent to $665. Today, one Bitcoin is trading at $267. Since the world’s unbanked are largely people who don’t have so much money to put in the bank, they are also very keen not to lose their money unnecessarily. As such, the constantly fluctuating Bitcoin exchange rates could be an instant turn-off for these people.

Hopefully, a solution can be found soon. There are already suggestions that the threat of volatility can be muted in money transfers. Another great idea is for merchants to use Bitcoin merchant accounts such as those offered by eMerchantBroker.com to protect businesses against such volatility.

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