> The "unbanked" concept is also complete BS, in those 3.rd world countries the banking systems and the fintech infrastructure is much more advanced than the ones in the west.
I've always noticed this hole said by cryptobros, and 4/5 of them who says this are Americans who never have interacted even with SEPA or (Canadian) Interac. It seems that this disconnect that "since American banks are already worse imagine what banks these people do have" without realising that the US has one of the worst domestic interbanking systems in developed countries - actually, delete developed as you correctly pointed out that developing countries have way better interbanking systems than the US. (To be fair, some of the hurdles apparently have legal concerns, but most of them can be explained by "(US) banks don't care about new technology".)
Edit: I have actually explained years ago why the unbanked are usually unbanked: it's not really solvable by technology.
- 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*. 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.
* I mean you could write them on paper, but that's really stretching it, mainly because you need a computer to execute transactions.
> Also banking the unbanked. There are a couple billion people without access to traditional banking. Most these people now have mobile phones, where instead of signing up at a bank, they could download an app where these people can store their value traditionally for the first time.
If you live a society where access to a bank is rare or difficult, chances are that you also live in a society where mobile phones are not as common, education levels are lower, understanding of what a cryptocurrency is and how to use it is lacking. Getting to use a cryptocurrency for people in the developed world can be difficult, in less developed countries even more so. And if somehow you managed to get yourself set up and understand how to use your wallet, it's still empty. And if it wasn't, there wouldn't be enough businesses around that accept the currency. And if there were, the value of what you hold would fluctuate constantly, making actual use close to impossible. It's just a big "no" on every level.
Cryptocurrencies are a toy for people in rich societies, not a banking solution for the developing ones.
> I'm not 100% steeped in cryptocurrency theory, and so I don't understand why this is presented as if it's agreed on by everyone. What problems does the world have that would be solved by an online, independent [of any nation, presumably?] currency?
Visa and Mastercard are taking a 3-4% cut of every single consumer payment made in much of the world. That ends up being a very, very big number.
There are many people all over the world without access to banking - they can't store money, they can't transfer money, and they can't invest money. That may be someone who has poor credit in the US, or someone who's living in rural India or Africa. Without access to banking, you are essentially cut off from globalization.
If you live in a country that has extremely tight currency and economic controls but with a corrupt government, and are experiencing hyperinflation (Zimbabwe, Venezuela, others https://tradingeconomics.com/country-list/inflation-rate), access to alternative currencies can literally be the difference between life and death for individuals, where the money you make on your salary will be worthless by the time you get your check.
Plenty of other examples. Whether this is a good solution I don't know, they just announced it.
Neither am I either, I am using Asia as an example because the financial system has similar features to those you mention you desire in a system. There is an entire world out there with many countries (contrary to the world series of baseball), and many of them have different needs and services.
I am a westerner, I grew up having to go into banks to make transactions and I have seen the technical advancements which banks have made over many decades. I moved to Asia, and the financial system here is different. It functions different, many people do not have bank accounts let alone id to open one.
What I am suggesting is that the issues you may have have grown from a market with different drivers. The banks aren't just difficult because they want to be, they need to be. Legislation and regulation has made them that way.
> It doesn’t matter what banking or remittance services are available, crypto not just works, but works in a way that lets you send more money, cheaper, with zero paperwork’s or middlemen. Really frictionless.
You are describing part of the system, not its entirety. It is easy to send money, you could send me 10,000 USD now for an example (feel free to :)), I cannot access it easily. To access it I would have to sell it on Binance, then have the proceeds sent to a virtual wallet. I am fortunate, I have these accounts setup, many people in Asia and other places in the world don't have bank accounts, they don't have id's, they don't even have smart phones. All you are doing is moving blocks on a block chain it's not really moving, while people in other parts of the world still use money as a functional part of their daily lives.
> Like handing cash to someone in real life (which I guess in your world wouldn’t be allowed because you might not get it back)
It's not like that at all. I live in a real cash based economy, one where shops cannot even take credit cards in almost all but the minority of cases. I would not hesitate to say that 99% of transactions in the country which I am currently in are cashed based, real cash, not swiping your credit card, real paper. I would be lucky to find a store which could sell me a banana for a full bitcoin.
Of course I would be worried if I sent 10,000 USD to the wrong person and could not get it back. Now in saying that I am not an opponent to the idea of crypto in fact I have some, I am not sure even if I am proponent of regulation of the crypto industry. But I did need to point out that the problems you mention are because of the attributes of the banking system, in some ways crypto lacks attributes which makes it worse in other areas. If USDT crashes one day, we can compare why the regulation of the banking sector made that industry a better one for example.
> Crypto currencies (or atleast DeFI) is trying to solve a pretty pragmatic problem: There is 1.7B unbanked people in the world and banking services are outdated and unavailable for large portion of humankind.
This take is quite plainly absurd. If anyone has enough access to a working internet connection to make crypto transactions possible, they already meet all the requirements to perform transactions through any other service such as PayPal or even any bank at all.
> Meanwhile 1.7 billion people around the world do not have a bank account.
Do you know why the majority of those people don't have bank accounts? Because they have no fucking use for it! They either have no money (how does crypto help those people?) or they use banking services through their family/friends.
Do you know what 3.7 billion people don't have? Access to internet.
> As someone who was unbanked for a long time, and having talked to many people in that situation (most recently a couple of Russian immigrants), you are talking out of your ass here.
I think you missed my overall point. What I'm saying is that a transaction settlement value nearly equal to Visa is not primarily made up of these kinds of use cases. Obviously it's impossible to get real data on it but as a portion of transaction volume and value this valid (to me) use case almost certainly makes up infinitesimally small fractions of a percent of these transactions and value.
I have several friends that have fled civil wars and extremely unfavorable conditions. The (unfortunately) classic story of fleeing a country for your safety, leaving everything behind, and having to economically start over from zero in the US. In one example, I have a friend who's family was very wealthy in a country experiencing a brutal civil war in the 1980s. When their parents got to the US they were forced to take minimum wage jobs and the family lived in what was essentially poverty. They're alive but I cannot imagine what that must have been like. They talk about how jarring and terrible it was to this day and it was clearly one of the more traumatic aspects of the experience.
Do we all wish cryptocurrencies were available to them 40 years ago? I know I do. However, this runs into at least two gigantic problems in practice.
Let's say I flee from Ukraine today and get to the US with $100k of crypto currencies after I was (somehow) able to liquidate some portion of my wealth and get it on chain. Now I'm in the US. How, exactly, am I going to get it into the financial system? Once I get my documents, etc, in order I would imagine showing up to an off-ramp (like Coinbase) as a recent immigrant/refugee/asylum seeker and trying to end up with even $10k in a US bank account is going to be challenging to say the least. Again assuming I could somehow get this value on chain in the first place...
Granted this isn't an inherent fault of cryptocurrencies but it is how the real world works today in terms of the absolutely necessary on-ramps and off-ramps to the larger financial system where funds can actually be utilized. There's only so much you're going to be able to get out of a shady gas station bitcoin ATM with 15% fees. Is even $1 better than $0? Yes. Is a bank, the IRS, etc going to take issue with more significant amounts? Absolutely. Is that fair? Unfortunately, kind of. Ideally there would be some kind of program to validate this use case and source of funds similar to the process used for people to claim asylum. However, talk to anyone who has gone through that... Just being able to get into and stay in the country is a long and arduous process when you're not also bringing funds in some cryptocurrency long associated with criminality, fraud, etc.
What should/would be the process for validating the source of these funds to ensure I'm not actually some part of that oppressive government, a warlord, "terrorist", etc? It's a valid use case in theory but given the lack of ability to use cryptocurrencies directly for nearly all daily needs I'm very skeptical of the real utility.
Back to my concluding point: it's touted a lot by cryptocurrency proponents but mentioning it at the same time as pointing to a source talking about settling 11 trillion dollars of transactions is bizarre to say the least. The people pointing to this use case are, as you say, "talking out of their ass" and repeating a talking point used by cryptocurrency proponents as reference to one valid use case that is sympathetic to the rest of the population who otherwise generally has a very negative view of cryptocurrencies.
>I'm going to assume you're american? America has basically the worst banking system in the first world and a lot of americans don't actually realize how far behind their banking system is.
Yes, that's really something. I suppose I shouldn't be that surprised.
>Cryptocurrency value transfer involves none of that if you already own cryptocurrency.
Yes I should have been more clear, but I was considering Crypto within the context, since switching between any currency would usually come with a cost at exchange rate and purchasing power, or remttiance in many cases.
The benefits of Crypto that I have heard are only applicable if both parties in a transaction are using Crypto.
I would agree that banks may start innovating once Crypto reaches a critical mass, some have already invested into researching how it would be done.
As a side note, my (and I speculate many others as well) inclination toward decentralized currency is simply for the political possibilities, as I think (referring to the US) the banking system is perhaps the strongest pillar of oligarchy here.
I also don't think that monetary controls can be apolitical by nature, so a method of decentralization that enables democratic influence over it is very appealing to me.
Your last statement touches on issues that make me worry whether Bitcoin can be one of those options, but I'm open to the possibility. I think at this point were Bitcoin to fork and not fully recover, others would be filling a void. The future seems more likely to have a myriad of different currencies and I wonder if we'll look back on this as the "currency boom". There are of course still very real geopolitical ramifications for these things and I await much stronger reactions from more powerful nation states.
As another aside, I think it's likely that the less developed nations will flock to cryptocurrency. Possibly extreme examples could be philanthropists developing solid currencies for such cointries, or foreign governments deploying them as a method of control.
> My online banks keep getting worse, crypto keeps getting better. Think about this: banks are CLOSED 77% of the time! Need to send a wire? 3/4 times bank will be closed.
This is a very American perspective. It's not like this in most places. And even if it was, Blockchain isn't the only solution. By far.
> World Bank estimates 31 percent of people globally do not have a bank account. Decentralisation helps these people.
Banking helps these people. Remember a fully-realized BTC transaction fee (pricing in electricity and mining hardware) is right around $250 each. That's a non-trivial amount of the GDP per capita of a lot of these countries you're alluding to.
Poor folks are also the most vulnerable to the massive volatilities of this so-called currency.
Real, centralized solutions help these people. Solutions like M-Pesa [1]. And Postal Banking, which a hundred years of legacy solving exactly these problems. [2]
> There are financial tools that only people with net worths of over $100 million have access to, such as market making, arbitrage, liquidations, insurance lending etc. Crypto solves this.
It certainly does not haha. It makes them less efficient, which is why not a single crypto-powered business in the last 14 years is competitive with any centralized solutions except in the areas of regulatory arbitrage or by throwing risk models out the window.
> If centralised finance had the potential to be more efficient, there should have been more innovation decades ago. Centralised finance needs to catch up.
It's obviously more efficient, and pretending otherwise doesn't change that.
> For arguments sake I will point out the downsides to using crypto in this case:
Which are all reasons why someone makes you drive to the nearest bank.
As others have pointed out, these issues are highly US centric, as sending money in the UK/EU can be done almost instantaneously. And so, if they can be done almost instantaneously in other countries it means the technology is not the barrier, but the politics. Thus crypto's only advantage is not a technology one, but a political/market/bureaucratic one.
One good thing about crypto is that if it does take off and becomes a legitimate threat to wire transfers, then banks will change their tune VERY quick, and then once that system is in place then we can have all of the nice things that help protect your money in a US bank accountant (FDIC insurance, access to financing, fraud protection, etc.) with the advantages of crypto.
There is a reason the Winkelvoss twins store their crypto wallet pass-phrases in bank vaults.
For the record - I have my own thoughts about how bad the US finance system is, but I think crypto advocates love to ignore why these systems exist in the first place.
> if you are one of the unbanked billions around the world.
I think I can buy that. The unbanked could become centrally-banked like all of us as their countries develop, but there is a competition between that and the cryptocurrency which could wedge itself in at this point and outcompete the local government simply because the government is small and lacks in experience (maybe corrupt too). Another contender here is WeChat and similar centralized payment technologies, but they too are hamstrung by their own current governments (I'm sure that Payapal is) giving breathing room to competition.
It is not obvious to me which one of the three will win among the unbanked.
According to the Federal Reserve data, 14% of households making less than $40,000 are unbanked, compared to only 3% of households making more than that amount.
...
“Don’t have enough money to meet minimum balance requirements” was cited by 29.0 percent of unbanked households as the main reason for not having an account—the most cited main reason
--- end quote ---
But sure. Do tell me how magical crypto that expects you to pay wildly fluctuating fees for every single transaction is going to save the unbanked.
Cue in "not all cryptocurrencies in 3... 2... 1..."
> Most of the issues with "international banking" are infact just issues with North American banks.
This. Whenever someone says that Cryptocurrencies solve money transfer problems, I look where they are based and 99% of the cases it is the US. In Europe, transferring money is the same internationally as it is nationally. Type in the IBAN and the name of the recipient and they get it the same day, or latest the next day. I made seven figure international payments that went through in 24 hours.
This is not a technical problem that Cryptocurrencies are somehow uniquely placed to solve. Technically, a money transfer could take miliseconds - updating a couple of database rows. National payments in Europe at least are actually pretty much instant since they are now fully automated. International payments can take up to a day due to an actual human checking the correctness (and perhaps doing due diligence for money laundering).
> I think the only people who hate cryptocurrencies are those bloody conformists, big brother lovers who never experienced first hand how shitty traditional financial system is.
And the people who profit from the traditional system. Don't underestimate that group.
And in some regards the group you talk about and the group I talk about are overlapping. In first world countries you are really rarely screwed by your bank (when it comes to international transactions at least). But that these countries populace is allowed to live so freely might be the reason of the banks being able to screw people from shithole countries even more than them. So a change for first world country citizens might very well go the negative way and it's reasonable for them not wanting to change as it is.
> It seems you just have a negative view of the technology or a vested interest in the established world of finance
I have neither.
BTW half of my family lives in South America and I'm in Italy, we have no problem in sending money back and forth and it is cheaper to use a bank than exchanging via crypto.
Also I cannot ask my 85 years old grandma to join Coinbase or Kraken or whatever, but she has a bank account and it works pretty neatly (and yet again, it's waaaaay cheaper than Coinbase fees for example)
That "Filipinos in the UAE" is bullshit. Their problem is not about crypto vs banks, their primary problem is the UAE.
> Many in developed countries don't understand the challenges of a devaluing currency with unlimited supply or the difficulty of being unbanked.
I have to admit, being in a developed country, that I genuinely don't understand why someone would switch away from a local currency that is failing at the task of being a currency to a cryptocurrency like bitcoin that is also failing at being a currency.
> - Someone lives somewhere that the U.S refuses to bank with
Cryptocurrencies won't solve this problem. If that happens, there are much bigger issues.
> - Someone who lives somewhere that simply has no financial infrastructure readily accessible and relies on prepaid cards for things like water and electricity (Rural Africa?)
Let's be honest. The whole blockhain / cryptocurrency was never about that ever.
> - Some industries are forbidden to use the majority of credit card processing facilities without excess fee's (Adult content for example)
I think there are more than plenty online sites where people can pay for that kind of content without any problems.
I've always noticed this hole said by cryptobros, and 4/5 of them who says this are Americans who never have interacted even with SEPA or (Canadian) Interac. It seems that this disconnect that "since American banks are already worse imagine what banks these people do have" without realising that the US has one of the worst domestic interbanking systems in developed countries - actually, delete developed as you correctly pointed out that developing countries have way better interbanking systems than the US. (To be fair, some of the hurdles apparently have legal concerns, but most of them can be explained by "(US) banks don't care about new technology".)
Edit: I have actually explained years ago why the unbanked are usually unbanked: it's not really solvable by technology.
- 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*. 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.
* I mean you could write them on paper, but that's really stretching it, mainly because you need a computer to execute transactions.
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