The un-banked aren't un-banked because there are no banks, or even because banks are inaccessible. They are un-banked because they do not have money. This is a social problem characterized by folks falling through the cracks. It's a lack of social safety net, a lack of unionization, a lack of inflation-adjusted minimum wage, a lack of healthcare. Broadly, a lack of of social programs.
I've never met a single person who had money but couldn't get a bank account* - have you? What good is a bank account to someone with no money anyways? What are they going to put into it? Just opening a bank account doesn't make you magically any less poor. You can grab one at ally.com free of charge right now with no minimum deposit. They'll even pay interest on your checking accounts which of course stablecoins will not unless you put them at massive risk.
Not to mention for the poor, a massively volatile speculative asset with astronomical fees is literally the worst thing they could put all their money into.
* outside people on the OFAC list, which, I would argue, is a good thing.
I don't agree with defi but this is absolutely a problem in a lot of rural america. People with money, who get paid, but without a bank so they have to take their checks to gas stations who take huge fees.
That you haven't met someone like this isn't surprising at all.
I'm also open to postal banking as a solution to this problem, but I'm not really clear on where the system is actually currently failing folks who have money. Are they banned by ChexSystems or something?
I get it, "Bank the Unbanked!" is a compelling narrative, but folks seem not to be asking the relevant questions: (1) who are the unbanked exactly and (2) why aren't they banked - specifically - when there's a ton of banks out there, a bunch of which charge nothing.
And furthermore, the institutions more likely to be friendlier to customers with less money are sometimes also institutions on a smaller scale that may have a harder time offering some of the services of larger institutions (e.g. branch/ATM locations, compelling variety of credit and account instruments, investment arms, better online banking experiences).
To the extent this is changing, it also has to change in people's perceptions, in a fashion that makes it easier to predict and feel confident in.
You have an incredible amount of optimism for both Ally's marketing department and also rural internet. Furthermore, this doesn't solve the cash problem unless you want to pay upwards of $5 just to pull out of an ATM.
> folks seem not to be asking the relevant questions
This is an incredibly well researched situation affecting a lot of americans. You not knowing isn't the same as this not being well understood.
I can transfer money and pay my bills with my phone. I can even transfer money to people not having the same bank as I have. I did it today, it took 30s or so and the recipient could immediately see the money on her phone. Where I live we also tend to use cards a LOT. I can pay in almost any store with my debit card and the money is drawn from my bank account right away. It was decades since I've saw a check.
> I've never met a single person who had money but couldn't get a bank account...
This is an exhaustively documented problem.
There absolutely are banking deserts (riffing on the "food desert" phrase). Those pay day loan and 3rd party check cashing services exist (to exploit) those communities which don't have banks, credit unions.
You dont need DeFi for that. See M-Pesa.
Social spending has risen at unprecedented rates since the 1950s:
https://ourworldindata.org/grapher/social-spending-oecd-long...
If the social democratic narrative were true, we would have seen the rate of wage growth rise. The opposite has happened.
It turns out social democracy benefits only the public sector unions.
A couple anecdotes illuminates the kind of power these unions wield:
New York has nearly 300,000 unionized public sector employees receiving over $100,000 a year:
In California, emergency workers can retire at 55 with 90% of their pension, that averages $108,000 per year.
California now has $1 trillion in pension obligations for its unionized public sector workers. That is where all the social welfare spending is going.
>>Not to mention for the poor, a massively volatile speculative asset with astronomical fees is literally the worst thing they could put all their money into.
No, the worst thing is lottery tickets:
https://www.theatlantic.com/business/archive/2012/03/amazing...
Tokens on the blockchain on the other hand provide hundreds of thousands of people in the Philippines with a way to make a living, and literally saved many from death during the mass-unemployment created by the lockdown. See the rise of Axie Infinity.
And there are plenty of crypto platforms that offer zero/near-zero fees, like Axie's Ronin, which is a near-zero-fee Ethereum sidechain.
>>outside people on the OFAC list, which, I would argue, is a good thing.
What about innocent people from countries on the OFAC list. Do you think that is a good thing? Acceptable collateral damage? What about WikiLeaks, which was blockaded by the credit card companies, under pressure from US government agencies, after it revealed war crimes? Good thing too?
You speak from a position of privilege, to reinforce centralized structures of control that perpetuate that privilege.
It's clearly a Ponzi scheme, where new entrants pay a large entry fee ($1k+), which funds the returns of the existing players. Poor people borrowing money to fund other poor people, until the last to join are stuck with the bill (earnings are already crashing).
More details in:
- https://news.ycombinator.com/item?id=29725845
- https://twitter.com/larsiusprime/status/1459191090100244483
- https://ambcrypto.com/axie-infinity-ronin-blockchain-see-dec...
- https://www.reddit.com/r/AxieInfinity/comments/odmdrk/how_do...
Beyond this enablement of more sophisticated coordination between those with capital and those with time, the emergence of digital collectibles might increase the aggregate amount of physical wealth, as the emergence of physical collectibles did some 30 some thousand years ago:
You say that like its even close to a good thing. It's unproductive, a waste of time, resources, human capital. It's also a Ponzi scheme because all payouts are made from new investors minus operational costs. Gains are illusory in aggregate.
>>Gains are illusory in aggregate.
Gains might not be illusionary, given they are giving rise to new stores of wealth which can have economic utility. See the essay on the rise of physical collectibles 30 some thousand years ago.
I mean, you can make the same exact argument about any exploitation of poor people for entertainment purposes. Your description maps perfectly to Bumfights. I think most would agree that your description alone does not make an intrinsically good system, let alone a moral one.
> And no, if the transfer is done for entertainment purposes, as many game asset purchases are, it's not a "ponzi" scheme.
The rich folks are buying in to make a gain, not entertain themselves. They are 100% of liquidity. The system is unproductive and yields nothing of external economic value but purports an increased value over time via 'number go up' all while operators slowly bleed capital out of the system. This is a Ponzi scheme. Ask yourself, would it work if money weren't involved in any way?
> Gains might not be illusionary, given they are giving rise to new stores of wealth which can have economic utility.
Charles Ponzi and Bernie Madoff were just ahead of their time, apparently. Given sufficient mental gymnastics, they too could have been captains of industry. Bernie after all gave rise to a new store of value! Shares of Bernard L Madoff Investment Securities LLC with meaningful economic utility! You could even lend them to others to earn a yield via a brokerage, I suspect! Alas, time makes fools of us all.
Paying poor people, who are grateful for the opportunity to feed their family, is not exploitiation. People heeding your admonishments against 'exploitation' would lead to more suffering, and no party being better off. It's pure politicization of interactions, at the expense of actual real life humans.
>>The rich folks are buying in to make a gain, not entertain themselves
It's a game, with a competitive element, so obviously some proportion are playing for entertainment.
>>Charles Ponzi and Bernie Madoff were just ahead of their time, apparently. Given sufficient mental gymnastics, they too could have been captains of industry.
Your hyperbolic comparison, between a game with digital assets, and actual ponzi schemes, is immature.
And arguing that digital assets, which become far more durable forms of property when NFTized on blockchains, can find economic utility as a store of value, is a completely reasonable argument, and your extreme reaction to this, full of snark and hyperbole, suggests your stance on this is far too motivated by emotion and bias to assess it.
I mean it depends on what you’re paying them to do and how much you’re paying them. Axie “players” now make on average less than minimum wage in the Philippines and continued earnings depends on more people buying into the ponzi.
> Your hyperbolic comparison, between a game with digital assets, and actual ponzi schemes, is immature.
The economics are clear and you haven’t really disputed them except by invoking the intangible magic of the blockchain and digital assets.
The minimum wage in the PH is zero, with millions unemployed, and many more than normal, due to lockdown restrictions.
Axie saved many lives, and if you were to put aside your agenda, and objectively study this, you'd find out how many people in the Philippines who were on the brink are grateful for the lifeline Axie provided them.
>>The economics are clear and you haven’t really disputed them except by invoking the intangible magic of the blockchain and digital assets.
Collectibles don't suddenly become "ponzi schemes" (!) when they become digital or are issued on blockchains. Your analogy is absurd, but I suppose that's ok, given the abundance of hyperbole on the pro-blockchain side.
This is no longer the case with L2 solutions, like zk-Rollups. See what StarkEx, which is one particular Validium/zk-Rollup L2 solution, is doing:
https://twitter.com/EliBenSasson/status/1475206185762578437?...
>>Past week, @ethereum ~ 9M txs. StarkEx ~ 6.25M TWO THIRDS THE TX COUNT OF ETHEREUM.
L2 solutions can process transactions at scales and fees a couple orders of magnitude greater and lower than Ethereum L1, respectively.
>>too volatile to be reliable for everyday banking use cases
Stablecoins aren't volatile, and they are a major, and rapidly growing use case of Ethereum
>>bad for the environment
Ethereum's energy consumption declines by 99.95% upon the completion of the transition to Proof of Stake.
Why do Ethereum fans keep using this example as if it’s already done, when it still isn’t?
Just like a Tesla investor might believe autonomous driving is being worked on.
The completion of Ethereum's transition to Proof of Stake will occur very soon, most likely within the year. The testnet for the merge - which is the term describing the technical process that completes the transition (it refers to the currently running Proof of Stake Beacon Chain being merged into the execution chain to allow Proof of Work to be turned off) - is already running:
https://blog.ethereum.org/2021/12/20/kintsugi-merge-testnet/
Stablecoins aren’t volatile, correct, but that’s because they are pegged to an offchain fiat currency or other form of “real” collateral. Even DAI, which is the most “truly” decentralised stablecoins of them all, is pegged against fiat.
POS is good yes, but the Eth community have been saying this for a long time now. “Show me the money” ;)
L2 block selection can be entirely decentralized. The first iterations are centralized because the software is extremely immature and having the block inclusion process centralized allows bugs to be more quickly and effectively dealt with. The major L2s all have decebtralization of coordinators in their roadmaps.
>>Stablecoins aren’t volatile, correct, but that’s because they are pegged to an offchain fiat currency or other form of “real” collateral. Even DAI, which is the most “truly” decentralised stablecoins of them all, is pegged against fiat.
Dai is pegged to the dollar, but can use entirely on-chain assets like ETH as collateral. Other stablecoins, like RAI, are not even pegged to any fiat currency, and use only on-chain assets for collateral.
>>POS is good yes, but the Eth community have been saying this for a long time now.
Progress has been made. On December 1st, 2020, the Proof of Stake Beacon Chain.
The Merge, which will complete the transition to the Beacon Chain, now has a testnet, launched on December 20th, 2021:
https://blog.ethereum.org/2021/12/20/kintsugi-merge-testnet/
The transition should be complete within a year. It can't be rushed, given the amount of financial value involved.
- slow (15 txn/sec, 22-23 with the move to proof of stake) - expensive (I read somewhere that globally Eth users spend more on 30M USD in fees per day!) - too volatile to be reliable for everyday banking use cases - bad for the environment
Blockchain technology is interesting and very powerful, but VCs and founders have all too often put the cart before the horse. A few years ago I spoke to an Aussie tech entrepreneur who had raised funding for his “Airbnb for RV” platform. He didn’t get much attention until he said it was blockchain based. In 9.99 out of 10 cases there is no need for a blockchain when a trusted, centralised ledger will do just fine.
Edge cases I can think of where a blockchain makes sense is in cases such as post-trade activities or trade finance where multiple parties need to settle complex transactions in a distributed way (Contour is a good example of this). Disclaimer: I do not own shares in Contour; I just find it interesting.