Beyond Money: The Role of Digital Currencies in Financial Inclusion
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Transcript of Beyond Money: The Role of Digital Currencies in Financial Inclusion
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Bitcoin 102Beyond Money: The Role of Digital
Currencies in Financial Inclusion
by Johann Barbie
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Unbanked: Cause or Effect?
Adults with an account at a formal
financial institution (%)
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Goals of Financial Inclusion
● access at a reasonable cost for all households to
a. savings or deposit services
b. payment and transfer services
c. credit and insurance
● sound and safe institutions governed by clear
regulation and industry performance standards
● financial and institutional sustainability, to ensure
continuity and certainty of investment
● competition to ensure choice and affordability for
clients.
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Agenda
1. Definitions
1. Chances for crypto currencies
1. Risks with crypto currencies
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Central
Bank
Retail and
Commercial
Banks
Big Payees
Merchants
Utilities
Hospitals
Big Payers
Government
s
Employers
NGOs
Card Networks
ACH
RTGS
Consumers
Agents
Small
Payees
Merchants
Schools
Clinics
MFS Service Provider
(Bank, MNO, 3rd party)
Account Opening Service
Consumer and
Agent Account
Management
Merchant
Account
Management
National Utility DFS
Service Provider
Interoperability
Services for
Transfers
Fraud and
Risk
Management
Service
Retail and
Commercial
Banks
Big Payees
Merchants
Utilities
Hospitals
Big Payers
Government
s
Employers
NGOs
MFS Service Provider
(Bank, MNO, 3rd party)
Account Opening Service
Consumer and
Agent Account
Management
Merchant
Account
Management
Consumers
Agents
Small
Payees
Merchants
Schools
Clinics
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Digital vs Crypto Currencies
Digital Crypto
● money supply held on
computers system
● central control
● controlled by bank or
other financial
institution
● requires KYC / AML
● secured by
mathematics
● blockchain
● distributed consensus
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An Invention like the Internet
● Innovation
at the fringes
● Inclusion
● Cost & speed
● trust-free
In 1993, the cartoon below appeared with the caption,
"On the Internet, no one knows you're a
dog,"and was widely circulated.
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Risks in Cryptocurrencies
● Unregulated marketo mining cartel
o power law wealth distribution
● Volatilityo fixed supply
● Security & Losso wallet security
● Long term viabilityo Bitcoin v. 0.9
o energy cost
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Blockchain
private key
public key
Transaction
Wallet
sign with
private key
Icons by Olivier Guin from The Noun Project
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Multi-Signature Transactions
1 unique key
1 key to
unlock
pay to script:
m unique
key
n key to
unlock
pay to
address:
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SMS Solution
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Product Demo
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Lessons Learned
Lessons learned from
crowdsourcing SMS:
● interest from local startups
● some mobile operators asked
● difficulties with reliability
● poor demand side adoption
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Summary
Financial Inclusion:
=> absorbing risk
=> allow development
Role of Crypto Currencies:
=> reduced regulatory cost
=> market driven by innovation
Beyond Money:
=> bitcoin is just the beginning
=> financial systems can mirror our values
and believes
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Backup
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Client-side Wallets
Android Wallet Overlay SIM
1
1 3
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Mobile Money vs Mobile Banking
Mobile Money Mobile Banking
● Uses transaction points that
are primarily separate from
banks (e.g. MNO agents for
cash-in and cash-out)
● Typically offers P2P
transfers, bill payments, bulk
payments and international
remittances
● Increasingly used for G2P
transfers Mobile Banking
● Uses the mobile phone as
another channel to access
banking services
● Requires users to be
customers of the bank
● Cash-in and cash-out
transactions still require a
branch or ATM