Beyond Money: The Role of Digital Currencies in Financial Inclusion
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Beyond Money: The Role of Digital Currencies in Financial Inclusion
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Beyond Money: The Role of Digital Currencies in Financial Inclusion
- 1. Bitcoin 102 Beyond Money: The Role of Digital Currencies in Financial Inclusion by Johann Barbie
- 2. Unbanked: Cause or Effect? Adults with an account at a formal financial institution (%)
- 4. 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.
- 5. Agenda 1. Definitions 1. Chances for crypto currencies 1. Risks with crypto currencies
- 6. 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
- 7. 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
- 8. 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.
- 9. Risks in Cryptocurrencies ● Unregulated market o mining cartel o power law wealth distribution ● Volatility o fixed supply ● Security & Loss o wallet security ● Long term viability o Bitcoin v. 0.9 o energy cost
- 10. Blockchain private key public key Wallet Transaction sign with private key Icons by Olivier Guin from The Noun Project
- 11. Multi-Signature Transactions 1 unique key 1 key to unlock pay to script: m unique key n key to unlock pay to address:
- 12. SMS Solution
- 13. Product Demo
- 14. Lessons Learned Lessons learned from crowdsourcing SMS: ● interest from local startups ● some mobile operators asked ● difficulties with reliability ● poor demand side adoption
- 15. 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
- 17. Backup
- 18. Client-side Wallets Android Wallet Overlay SIM 1 1 3
- 19. 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
Editor's Notes
- parallel financial system inclusion vs exclusion individual control vs institutions risks
- how many adults don’t have a formal bank account? 2.5 billion • Only about one out of every five adults living on less than $2 (U.S.) per day has a formal account—that means nearly 80 percent of poor adults are excluded from the formal sector. • While accounts are nearly universal in high-income economies, with 89 percent of adults reporting that they have an account at a formal financial institution, less than half that number of adults in developing economies is banked: only 41 percent. • For women in developing countries, the situation is worse: Only 37 percent have formal accounts, compared to 46 percent of men.
- source: http://www.ausaid.gov.au/Publications/Documents/financialservices-fullstrategy.pdf
- source, gates foundation learning session 11.11
- innovation at the fringes - individuals and small companies can contribute no investment or licenses needed sum of it’s part inclusion: on the blockchain, no one know you are a fridge cost & speed not as good as the internet huge improvement over bills
- Mining Cartel: Bitcoin-mining is now so specialized that it is only available to groups with the financial strength to get custom hardware made. I'm not believing in cloud mining or even the sell of mining hardware. It is almost always more profitable to jun rust the miners yourself if you are able to produce them. Ghash has been close to 51% of the mining power a few times. They have purposefully not crossed that line, but probably pooled power with another mining pool. This situation is very similar to a market oligopoly, where a few powerful players agree on a product price in advance. Bitcoin mining is a cartel. Power Law: A few accumulate the most. libertarian dream proven wrong. Volatility: price is psychology self referential fixed supply
- source: http://www.slideshare.net/JohnnyRizq/financial-inclusion-lanscape-and-challenges?qid=ec3a7fc0-81e1-48a1-9a6f-2eb759571864&v=qf1&b=&from_search=6