Bitcoin 102Beyond Money: The Role of Digital

Currencies in Financial Inclusion

by Johann Barbie

Unbanked: Cause or Effect?

Adults with an account at a formal

financial institution (%)

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.

Agenda

1. Definitions

1. Chances for crypto currencies

1. Risks with crypto currencies

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

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

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.

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

Blockchain

private key

public key

Transaction

Wallet

sign with

private key

Icons by Olivier Guin from The Noun Project

Multi-Signature Transactions

1 unique key

1 key to

unlock

pay to script:

m unique

key

n key to

unlock

pay to

address:

SMS Solution

Product Demo

Lessons Learned

Lessons learned from

crowdsourcing SMS:

● interest from local startups

● some mobile operators asked

● difficulties with reliability

● poor demand side adoption

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

Backup

Client-side Wallets

Android Wallet Overlay SIM

1

1 3

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