Bitcoin: too flaky for the unbanked?

Bitcoin has been heralded as a fee-free alternative to the cash-based remittance market that could help the world’s low paid overseas workers to send money home. Its volatility, though, could shut them out.

The remittance market is a multi-billion-dollar industry and Africa is a major – and growing – destination, with inbound payments quadrupling between 1990 and 2010. Often, the recipients are underbanked or lack a simple way to transfer funds electronically, meaning that overseas payments typically come with hefty fees. All this means that some of the poorest workers in the world are forced to forfeit a substantial cut of their wages just to hand them over to their families.

A wave of Fintech startups, such as Azimo, have sought to address the issue by introducing low-fee alternatives. However, others have pointed out that Bitcoin, as a totally borderless currency, could offer a completely fee-free option.

The trouble is that the upshot of being totally international and decentralised is inevitable instability. While fluctuations of a few cents here and there are unlikely to have a significant impact in the West, they can be genuinely distressing when you’re counting the pennies in order to survive.

Anybody who’s unbanked or anybody who’s at the lower end of the spectrum financially doesn’t want a fluctuating asset. There are many, many uses for fluctuating assets, but holding value for people who are conscious of it is not one of them,” Elizabeth Rossiello, chief executive of the Kenyan bitcoin remittance service BitPesa, told CoinDesk.

For the time being, Rossiello suggests, it makes sense for bitcoin entrepreneurs to focus on developing the bitcoin-based e-commerce market in the continent. As cryptocurrencies become more firmly established in the region, bitcoin payments and transfers will begin to show their value.



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