Bitcoin & The Emerging Middle-Class

Banking the unbanked

Anyone who has taken the leap and attempted to understand the benefits of bitcoin and its use cases over the past years has no doubt heard of (or used) the term ‘banking the unbanked’. This term is somewhat ubiquitous with the decentralisation movement, and many use it frequently as one of their cornerstone arguments pushing forward bitcoin and blockchain.

It is not a hard term to grasp by any means: giving people a financial system who lack one, better yet a trusted one — but the more information we stumble across that provides this notion with scale, the more we will always take the time to share it with our community.

When it comes to my ‘worldview’, I am –or was– an ‘imist’ agnostic (neither a pessimist nor an optimist). So when I saw the title ‘Factfullnees: Ten reasons why we’re wrong about the world — And why things are better than you think’ — Hans Rosling, I thought I hadn’t heard a vast wealth of optimist information recently (except all the blockchain developments of course), so why not give it a crack? Give me some of the good stuff.

Before finishing the first chapter, let alone the book, I was surprised, entertained and maybe most importantly, I was potentially resolved to sitting on the optimist side of the fence!

But this article isn’t about my change of perception, it is about bitcoin and the blockchain. In my thinking, we must first understand the overall premise of the book to know how it relates to these two topics.

Note: This book has nothing to do with bitcoin — nothing at all — but this is when I get most excited about the future of this movement. I get excited when I come across great works describing global situations, problems and solutions by authors who have no agenda or seemingly zero knowledge of the cryptocurrency sphere, but whose visions and conclusions for a better future are analogous to the decentralisation movement. I get excited enough to write labouriously long sentences for our readers.

The Book

‘Factfulness’starts with a multiple choice questionnaire where you have three options for an answer, rather than the usual four (so my chances just got better). These questions focus on topics which we should all remember from high school Geography:

– How many people are currently living in poverty?
– How many girls finish school?
– What is the life expectancy of the world today?
– How many people have access to electricity?

So on and so forth. I thought I had a pretty good memory and idea of how the world operates, or at least how it is currently operating. My score… was 3.3 out of 20! Yikes.

Before you think that a score this low could be one belonging to an out-of-touch or ignorant person, this is surprisingly the average score among multiple focus groups, including UN representatives, investment bankers, teachers and medical practitioners. How!? Instincts. We, as humans, harbour many, which morph our worldview. No one is at fault for this — in fact, one is ‘The Blame Instinct’ — and Rosling explores our instincts in page turning depth, mixing in real-life experiences, hard data and engaging visuals.

If you haven’t guessed it, my answers were all leaning towards the pessimistic side, and thankfully I was horribly wrong. The book doesn’t aim to relieve us of (or abscond our responsibility to) the magnitude of problems that are still unquestionably a part of the world, in fact, it addresses them head on. What Rosling is adamant about is that the situation can be both ‘bad’ and‘improving’: these states are not mutually exclusive. I discovered that almost everything we consider as societal or global problems have been drastically improving over the past 50 years, so much so that sometimes we should give us ourselves a *brief* pat on the back whilst still pushing forward.

Have a look for yourself.


Even better, ‘Bad Things’ are on the decline!


The four income levels

What really has stuck with me — and the most relevant point relating to Bitcoin (you’ll see soon) — is that we need to stop grouping our world into the binary framework of ‘developed’ and ‘developing’ nations. It neither helps us understand the world in a practical way or help us find business opportunities. Rosling’s solution is to divide the world into four distinct brackets based on income levels. (Perhaps Rosling is not re-inventing the wheel here, but you will soon see the difference this will make.)


Note: Each figure in this chart represents 1 billion people and as you can see the income gap is not as dramatic as you might think. In fact, the spread actually lies mostly in the middle. But just because the majority of the population is now sitting in level 2 and 3, doesn’t mean we should take our foot off the pedal and guess what? We’re not!

As you can see people on Levels 2 and 3 still lack essential services that many of us take for granted, too many for me to outline in this article let’s concentrate on access to a financial system. Rather than let my rose coloured glasses and confirmation bias take too much of a grip though, I’ll give you an excerpt directly from the book which describes how some of the unbanked citizens of Tunisia store their wealth — it is rather crafty and innovative. If the below story isn’t screaming a use-case for bitcoin, I don’t know what is.

Rosling goes on to explain why there are many half-built homes throughout the Tunisian neighbourhoods.

“On Levels 2 & 3, families often do not have access to a bank to put their savings and cannot get a loan. So, to save up to improve their home, they must pile up money. Money, though, can be stolen or lose its value through inflation. So, instead, whenever they can afford them, the Salahis {Tunisian family} buy actual bricks, which won’t lose their value. But there is no space inside to store bricks, and the bricks might get stolen if they are left in a pile outside. Better to add the bricks to the house as you buy them. Thieves can’t steal them. Inflation won’t change their value. No one needs to check your credit rating. And over 10 to 15 years you are slowly building your family a better home.”

I am not even going to dissect how there is a more effective solution — even though I do quite like the brick one — on the horizon. I will leave it to you to craft the reasons as to why bitcoin may be the new solution, or maybe it’s not? Up to you, or more importantly, it’s up to the Tunisians! However, they, along with everybody else, need further education and development to fully grasp what is going on and what is coming.

A use case for Bitcoin

For now, when arguing the “banking the unbanked” use case for bitcoin, add this anecdote to your bow amongst the other arguments such as:

  • Approximately 2 billion people do not have access to a bank account but hey have access to a basic mobile phone and usually the internet;
  • These people need international remittance services to send money home while working; abroad. They get charged an arm and leg by the centralised banks such as Western Union;
  • They need a way to participate in the globalised world;
  • They need a currency that is not vulnerable to hyperinflation or government intervention.
  • Bitcoin = all of the above.

The above are all accurate statements — along with our brick anecdote — and I will not take away from the sheer gravity of how each one of these points can stand alone as a need for a decentralised global currency. 2 billion is a massive number, one worthy of the world’s attention, bitcoin or not. (Though I do firmly believe bitcoin or some other decentralised currency or network is the standout solution.)

What it lacks, however, is a vision for the future: a vision that these nations can catch up. It focuses on the notion that these people will not need to use bricks anymore, because they can now buy Bitcoin. They can purchase Bitcoin and live almost the same life they do now, but have a safer and more reliable way to store value, a way to save on remittance fees and, hell, maybe their wealth will even increase if they get in early…

It suggests the world will stay the same and that Africa may never catch up, but as Rosling puts it:

‘Cultures, nations, religions, and people are not rocks. They are in constant transformation.’

The benefit of separating our population into these four distinct groups is for us to avoid the ‘us’ and ‘them’ — The Generalisation Instinct — as it can lead those on Level 4 to presume the rest of the world is all ‘developing’ and not see the radical change going on. All other buildings look small and roughly the same height from the top of a skyscraper.


A New Middle Class

The graphic above illustrates the tipping point we are spearheading towards, where over the next several years the global middle class will expand dramatically.

This shift is one of the most important features of the global economic landscape today. Let’s think about this for a second. I highly doubt these people — who have found new wealth — will live and transact the same way they have previously done. Perhaps they don’t need a trusted financial service? Maybe they will continue to buy and store bricks and lack purchasing power? No. They are going to have more purchasing power for goods and services, send their children to better schools, save for their futures, and hopefully, further invest and participate in the globalised economy!

Who gives a shit what they do though really, it’s up to them, but I daresay they’ll be welcomed with open arms by most of us Level 4 leeches: “Welcome friend, sorry I don’t know why I haven’t advertised any products to you before, but here you are, do you need any life insurance? Used car? Bank account? Products, products, products?”

Anybody who ignores this imminent shift, will do so to their own detriment. Global businesses, retailers, financial institutions, whatever the industry may be, anyone who doesn’t wake up to this shift will be left behind before it even starts. In fact, it may be already happening with retailers.

Rosling describes that most Western manufacturers of sanitary items — talking tampons here people — have completely missed this. They are dreaming up ways to service the 300 million menstruating women on Level 4. “What if we market an even thinner pad for a bikini? What about pads that are invisible, to wear under lycra, How about one pad for each kind of outfit, each situation, each sport?” Blah blah… you get the point, but like most consumer markets on Level 4, the basic needs of consumers are already met, so the products are fighting to create demand in smaller segments or cultural and social enclaves of affluent society.

Meanwhile, 2 billion women are menstruating on Level 2 and 3 who have very few options to choose from, if any. They want a low-cost product that is simple to use. Once they find a product they like, they are most likely to stick with it and recommend it to friends and daughters.

Again, this middle class is set to explode in the future, any sort of strategic business planners need a fact-based worldview to find their future customers. I thank the heavens, the blockchain space has a few of those worldviews, that’s for sure. So let’s use them. Let’s push our innovation outside the bubble of the affluent. Let’s bring the future financial system to all the people who need it!

This isn’t only the perspective of a libertarian, idealist, anti-establishment type (I wouldn’t identify strongly with any of these, but I’m probably coming off that way for sure!), Financial Managers are attempting to convince their clients that not only Asia is catching (/caught) up, but that Africa might be coming in hot sometime soon too.

Rosling was hired by a Financial Manager to speak and convince his high-net-worth clients precisely that. He tried to break them away from ‘The Destiny Instinct’ (assume things won’t change) and illustrate how the Asian countries that experienced economic progress over the past decades, actually had made social progress during the decades before their economic growth. He tried to show that the same was happening in certain parts of Africa such as Nigeria, Ethiopia and Ghana. These countries are being starved for investment but have still been growing at a rate of 5% while the Western nations have stayed around 2% since the GFC. These percentages are from the IMF, take it up with them if you don’t believe it. Actually, fuck it, I’ll whack it in below.


Where the fuck are the Western Countries!?!?

Hopefully you are starting to see a bigger picture. The notion of ‘banking the unbanked’ is a far greater use case for blockchain technology — primarily its currency function — when coupled with the global projections of a new middle class emerging, a middle class who are not yet loyal to brands or services — especially financial.

Now don’t get me wrong, no one can predict the future, these two movements may never meet. They will have to play out organically and over an extended period of time. We have to remember there are forces larger than the decentralisation movement and they may not be following the same path. Bloody hell though… wouldn’t it be exciting if these forces edged closer toward each other, there would likely be some trepidation at first, but hopefully they would ultimately come together.

We are going to have to be patient though, because for this to flourish a tremendous amount of education is needed, especially since even those living on Level 4 don’t even get taught on how their current financial system works — let alone this crazy new cyberpunk one. Many suggest that we will see the uptake of these decentralised networks when the next GFC hits, when we see our current monetary policies collapse. Funnily enough, this emerging middle class has already seen enough of this compared to the “main characters of the world” Level 4 Westerners.

So while the current ‘herd’ in the wider blockchain arena are talking about coins that may: make you coffee; give you Facetime access to an NBA player; fly you a kite; or some other bullshit problem that previously didn’t exist that blockchain now has a solution for… a new ‘herd’ may be on the horizon. One that will want to use blockchain for its most simple feature, to store and transact wealth.

Bitcoin interest by region


We all learn a hell of a lot more when we converse with people who have differing opinions. So please, comment below and let me know your mind!