Why blockchain and cryptocurrency will not help the unbanked

The short answer is;

  1. Dispersing loans via cryptocurrency will be too difficult for it to become a reality in the next 5 to 10 years — at least.
  2. Encouraging enough merchants to accept payment in crypto will be too difficult to become a reality in the next 5 to 10 years — at least.

It’s likely that there are one or two projects that might do something different to what I’m about to explain. If there are, I’d love to hear about them. My opinion is based on what I know about in this space so far.

I have confidence that the team behind HelloGold will do something different however and I really look forward to seeing the end result. They have a credible track record. Check them out https://www.hellogold.org/ I hope they think about capping interest rates — keep reading to learn why.

Some context

Most people who read my ramblings here know me mostly for my work in chatbots + cybersecurity + cryptocurrency. I also give keynote presentations around the world on topics such as “Ethics in AI”.

In the context of this post I think it’s important to explain my experience in the area of micro loans, otherwise known as Microfinance. In 2010 my wife Sheetal and I founded a low-interest Microfinance Institution (MFI) called Shanti Life. It has charity status in the US, Canada, UK and India. I believe we are the only International MFI with charity status in India — this is a big deal. Everyone else must work with a partner in India — and then you lose control of quality and trust me, that’s not good.

I also believe we have the lowest interest rates in the industry at 12%.

We’re grassroots which is very important. Being grassroots is vital to forming an educated opinion on this subject. I’ve heard enough MFI founders and donors to know that they don’t really have a handle on the basics — including the social impact that they have — or don’t have as the case may be. All they know is that x number of “clients” have been given loans, the repayment rate is x% and x profit has been returned to shareholders. No mention of actual social impact on the families or communities they serve.

Microfinance has a very bad reputation. And with good reason. The main reason is because most MFIs charge massive interest rates. It’s true that the cost of collecting repayments is higher than for a traditional lender such as a bank. But it’s not as high as they say it is in order to justify their rates. Would you be surprised if I told you that the average interest rate charged by a Kiva partner is 34% while rates go as high as 64%? Yes of course you would — everyone I tell that fact to is appalled. This happens because Kiva is a technology platform run by tech teams out of San Francisco. They don’t cap interest rates and they don’t disperse the money directly— they rely on partners to do pretty much everything aside form collect money from lenders.

Most MFIs are for-profit. That’s ok. I’m more than ok with social enterprises that make a profit — it makes them more likely to build a sustainable model. If everyone can make money, better again. But it’s not ok if they are profiteering from the poor — which they are most of the time. It wasn’t that long ago that people killed themselves as a result of not being able to repay loans.

Our charity is also the only MFI that we are aware of, that opens up a bank account for each beneficiary. Obviously I’m excluding the Grameen Bank.

Money isn’t the only answer

Aside from capital, we provide ongoing mentorship and training in financial literacy. Without these benefits beneficiaries are less likely to save and spend wisely.

Our CEO is full time based in Gujarat, India and Sheetal and I travel there as often as possible. We even spent our honeymoon there working on the ground. Until you have been on the ground, in the homes of the people you serve, while negotiating with merchants, you can not possibly begin to know how to address the problems using blockchain technology and cryptocurrencies.

I read a post recently where the author talks about figuring out credit scores based on AI and big data. I don’t even know how to unbundle how unlikely that is to become a reality in a timeframe that would help anyone in the next 10 years.

Please do not invest in a new Token or ICO that claims to help the unbanked through a new approach to microloans. Instead, pick an established charity with a track record and work with them. Ahem! 🤔 😉

More about our low-interest charity here — you can also see Sheetal give a TEDx talk on the subject.

More about Shanti

Our charity has two projects.

Small businesses

We provide small loans to help people get their business off the ground — founders helping founders. When loans are repaid at 12% interest, money is recycled so more loans can be given to more people.


We provide small loans to help reduce the risk of women and their daughters being raped at night while trying to find somewhere to relieve themselves during the early hours of the morning. Our loans help to build/install toilets in their home.

We know we’re having a positive social impact when mothers refuse to allow their daughters to be married into a family that doesn’t get a toilet installed through our charity.

When loans a repaid at 12% interest, the money is recycled so more people can get more loans for more toilets.

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Paul Walsh

Paul Walsh

MetaCert CEO. Passionate about Cybersecurity, Blockchain, Crypto, Snowboarding & Red Wine. Part of the AOL team that launched AIM. Co-founded 2 W3C Standards.