Can Crypto Really 'Bank the Unbanked'? (Spoiler: Not Really.)

It was one of cryptocurrency's most powerful, emotional promises: "banking the unbanked". Not having a bank account limits financial opportunities, increases dependence on cash, and excludes people from global economic systems.

Bitcoin's vision was simple: The 1.7 billion people worldwide without bank accounts would use their mobile phones to leapfrog traditional finance, finally entering the global economy.

It was a noble goal. However, the attempt to achieve it was a complete failure.

The Reality of Failure

Until 2022, less than 0.5% used of the unbanked population worldwide used cryptocurrency. 

Since then, these statistics improved to roughly 10%, but only because of factors like: Covid-19, crypto-industry investment in 2024 US elections, and the subsequent global economic uncertainty caused by Trump tariffs. 

This rapid, phenomenal growth in crypto adoption is NOT because of improved financial literacy or increased security of cryptocurrencies. The lack of security in the crypto space is evident from the 2024 crypto crime report.

To summarize, crypto remains, primarily, a speculative tool for the "already-banked" in wealthy countries. Those in less stable economies, especially after Trump tariffs, reportedly favor stablecoins like USDT, DAI, and USDC over speculative cryptocurrencies like Bitcoin, Ethereum, TON, etc.

Why Crypto Excludes, Not Includes

The truth is, cryptocurrency is fundamentally unsuitable for the financially vulnerable. Instead of helping, it creates new, insurmountable barriers.

To "bank the unbanked," a system must be simple, stable, and safe. Crypto is the exact opposite:

• Technical Complexity: It requires smartphones, reliable internet, and the technical knowledge to manage and protect private keys. 
• Most crypto users fail to understand that the cryptocurrencies they hold in centralized exchanges are less like “digital assets" protected by passwords and multi-factor authentication and more like “IOU (I-owe-you) receipts" for exchange-owned crypto. 
• These exchanges have full control. They can halt withdrawals any time. They own that crypto.
• Extreme Volatility: The poor cannot afford to have their life savings lose 50% value in a single crash. Stability is essential for survival, and cryptocurrencies, especially ones that are not stablecoins, promise a lot of it, but offer almost none.
• High Fees: Transaction "gas fees" on networks can cost $1 or more, making it costlier than mostly-free alternatives like UPI, PIX, M-Pesa, SEPA Instant, and others for the small, everyday payments people need to make regularly.
• Total Risk: There is no deposit insurance. No fraud protection. No password reset. If you are scammed or make a simple mistake, your money is gone forever.

This isn't financial inclusion. It's a system that excludes more people than it serves.

What Actually Worked? (The Real Revolution)

While the crypto world was busy creating speculative tokens, real financial inclusion was happening elsewhere—and it didn't need blockchain, tokens, or speculation.

Kenya's M-Pesa

In Kenya, M-Pesa reached over 90% of Kenya's adult population.

How? It used simple SMS technology that works on any basic mobile phone, no internet required. It wasn't about speculation; it was a "useful service" that solved real-world problems. Studies show it single-handedly lifted 2% of Kenyan households out of poverty.

India's UPI

In India, the government built the Unified Payments Interface (UPI).

It's an instant, free-to-use payment system that serves billions. It processed 21 billion transactions in a single month—more than Bitcoin has processed in its entire existence—instantly, and mostly for free.

SEPA Instant

Instant and mostly free transactions (in Euros) across 35 nations. 

Postal Banking

In remote regions throughout the world, where banks find it unprofitable to set up branches, post offices are providing the necessary banking services to the general public. 

While this form of banking has proven extremely helpful to the remote, unbanked people, in the US, this form of banking is being obstructed by the existing banks just because they don't want "competition."

Simple Truth: 60 countries worldwide, including many developed ones like France, UK, Japan, South Korea, Italy, New Zealand, Ireland, and Switzerland offer some form of postal banking services to their citizens. The US Does Not. 

Even Canada, after its ups and downs, has resumed postal baking because the people demanded it. In US, resolutions favoring postal banking get crushed by the rich banks lobbying against it.

These are all examples of actual financial inclusion, built on public infrastructure, not speculation.

A Case Study: Nigeria

Nigeria is often cited as an example of crypto adoption success. Despite being the one of the largest African economies, it once had the highest percentage of unbanked population. 

By 2024, this percentage increased to over 10%, up from 0.5% in 2022. However, as mentioned earlier, that's only because Nigeria faced a severe economic crisis. 

This behavior is similar to how the whole world fled to gold and crypto during the global economic crisis caused by Covid-19 pandemic. In fact, it is still in more-or-less the same state due to ongoing global economic crisis caused by Trump tariffs. 

When economic conditions improve, people are very likely to sell gold and crypto to invest in real businesses.

Moreover, any statistic that the unbanked population in Africa is adopting crypto is entirely flawed. In most African countries, anyone with a mobile phone and an id can easily open a basic bank account through "mobile money operators."  Kenya achieves this with M-Pesa, while Nigeria has its own service providers.

You can't say unbanked people are investing in crypto, when they're literally buying crypto online by paying through their bank accounts! 

The Promise Was a Lie

The above examples that truly achieved financial inclusion prove that the "bank the unbanked" promise was never about technology. It was simply about helping people by solving their problems and making their lives easier.

Crypto promoters used the unbanked people as a moral shield to justify speculation. Such promises are only meant to distract the new investors from its reality.

Financial inclusion might have just been a lie that was spread to get more people to invest in crypto.

Comment below and let me know your thoughts on this!

This is just one of the several failed promises that crypto advocates make on a daily basis. To understand the full scope of the failure, from the environmental crime to the mathematical Ponzi structure, do read the full book The Bitcoin Pyramid.

For the deep-dive technical analysis of the "proof-of-work" engine itself, read The Bucket-Water Analogy.

Kindle Unlimited subscribers can read both books for Free!!