Jon Creasy


Bitcoin for the Unbanked: How Mesh and Microfinance Could End Poverty as We Know It

Image courtesy of Barak Bruerd

Note: I am not receiving any compensation from any of the products listed in this article. Nothing below is investment advice and should be viewed purely as a hypothetical exercise.

Over the last 30 years, the amount of people living on less than $1 USD a day has been reduced by more than half. This is an incredible milestone of which many people aren’t aware, but there is still much work to be done — according to the World Bank’s World Development Indicators, the average income of people living in sub-Saharan Africa is still just $1 USD/day.

While it is true that African nations are poor, specifically those in the fragile states of sub-Saharan Africa, it is also common nonetheless to see shoeless Africans wielding smartphones. Indeed, according to a study done by the Global System Mobile Association in July of 2018, more than half of Sub-Saharan Africa will be subscribed to a mobile service by 2025. While it is true that smartphone adoption is slower than that of standard mobile devices, the PEW Research Center has found that smartphone ownership in Sub-Saharan Africa is still increasing.

Amazingly, many of these countries have progressed through the industrial revolution at an incredible pace, and are moving rapidly towards an unprecedented form of technological revolution that can be attributed to smartphone manufacturing right on their doorstep.

Whereas the cost of a smartphone in Africa was $230 in 2012, one can occasionally find a handset for as little as $50 in 2018. Reduction in poverty combined with the introduction of new tech is creating budding markets in areas of the world one would least expect.

Today sixteen African countries boast functioning and transparent stock markets, with market capitalization in 2008 around $200 billion. — Dead Aid, Dambisa Moyo

While the growth in African economies is admirable, there are two major problems with the traditional stock market system: resources and accessibility.

Even with the introduction of cheap smartphones, most Africans are unable to invest in their own emerging markets because they have zero financial margin. Dambisa Moyo, in her book Dead Aid quoted above points out, “with over half of the 700 million Africans living on less than a dollar a day, sub-Saharan Africa has the largest proportion of poor people in the world — some 50% of the world’s poor.” At these levels, simply putting food on your table and sending your children to school is practically impossible.

Further, Moyo highlights another roadblock to African economic growth: governments. Currently, “some 50% of the continent remains under non-democratic rule. According to the Polity IV database, Africa is still home to at least eleven fully autocratic regimes.”

There is very little freedom indeed in Africa, and it is the general consensus that the status quo won’t solve the problems the Global South is facing. So what next?

Before we dive into a daydreamer’s ideal application of cryptocurrencies, solar panels, and mesh networks in sub-Saharan Africa, a brief look into a poverty alleviation method is necessary. That intervention is microfinance.

Used heavily during the post-WWII Marshall-plan, microfinance generally refers to the practice of providing micro-loans (often as small as $25) to individuals who are unable to obtain traditional loans for a variety of reasons: lack of credit, lack of collateral (or the inability to provide documentation of ownership of said collateral), corruption in the banking system, etc.

Granting organizations are generally nonprofits who utilize low interest rates, and primarily rely on relationships as collateral. Successful microfinance operations tend to use a savings-group model to keep individuals accountable with other members of their community, as the consequences of becoming relationally impoverished due to defaulting on a loan are incredibly high.

In 2015, the World Bank estimated that the microfinance industry was approximately $60–100 billion globally, with 200 million clients. While there are mixed reviews of the effectiveness of microfinance (which are beyond the scope of this article), the most successful interventions tend to include an educational and relational aspect that isn’t found in commercial microfinance. This is important for our purposes, because it implies that microfinance needs to evolve to address two significant problems: fiat currency, and individual accountability.

Firstly, the microfinance system can easily be manipulated through centrally-controlled inflation and government corruption. A microfinance savings group is only as good as the fiat currency with which it saves, and autocracies rarely tout strong fiat policies (compare the sub-Saharan inflationary average, ~8%, to that of the US, ~3%). Proof of collateral is an issue in this respect as well; farmers rarely have documentation to prove they own their farmland, which at best leads to the denial of a loan and at worst can lead to the confiscation of property by the government.

The second problem, individual accountability, is largely an issue with commercial microfinance. Even with the social accountability of a savings group, microfinance is risky for investors. Religious groups have had success combining interventions with evangelism, which tend to have long-lasting results (even from the perspective of secular scholars), but without this perceived “spiritual safety net” there is little investors can do to hedge against defaulted micro-loans.

Finally, many of these savings groups store their hard-earned cash in a container in the house of one of the members, which comes with a host of problems of its own.

So how can cryptocurrencies and mesh networks help sub-Saharan Africa?

Image courtesy of Barak Bruerd

For cryptocurrencies (specifically Bitcoin) to be a viable solution in sub-Saharan Africa, we will have to deal with two glaring problems: power and internet. A quick look at the World Bank’s chart of nations with access to electricity shows the severity of the need.

In 1990, 0% of the nation of Chad had access to power. In 2016, that number had risen to just 9%. The Democratic Republic of the Congo isn’t much better off, seeing just 17% of all their citizens with power in 2016. Ethiopia, by contrast, has 43%. For the entirety of sub-Saharan Africa, only 16% had access to electricity in 1990, with that number growing to just 43% by 2016.

While there are many incredible interventions that could help deliver power to African nations, let us consider options that will allow individuals to start transacting in cryptocurrency as soon as possible. One such option (among many) that I’ve found is the XTorch.

Image taken from

Taking just 22 hours to fully charge via solar panel, and a mere 1.5 hours via wall adapter, the XTorch can take a smartphone battery to 100% in one charge (for simpler phones such as the ones used in sub-Saharan Africa, one battery life could charge up to three devices), and has a shelf-life of 6–10 years.

Utilizing XTorch’s companion 2.5 watt solar panel attachment, one charge can be completed in just 6 hours. The XTorch alone is ideal for emergency relief situations, whereas the additional external solar panels are often used in longer-term development situations such as the one we are considering. This tool is much more practical and long-lasting than a stand-alone set of solar panels, is easy to use and transport.

With the XTorch we’ve temporarily solved our power problem. We can charge our smartphone and power other devices in remote areas of the world. But, as one would suspect, where there is a lack of electricity, there is also lack of internet, which prevents transacting with cryptocurrencies. This is where local mesh networks come in.

A mesh network is a kind of local area network where network nodes relay information between each other directly without any hierarchal structure, and where nodes cooperate to transmit information as efficiently as possible. Because the network doesn’t rely on any one node exclusively, every node participates equally in the relay of information. Due to this type of work distribution, one node failing rarely results in the network becoming compromised.

One such device that exists to create local mesh networks is GoTenna, a low-power node that uses radio frequencies and bluetooth technology to broadcast information. GoTenna has recently teamed up with Samourai Wallet to create “TxTenna,” a combination of physical tech and software that allows one to transact Bitcoin without the need for an internet connection (check out their site here for a neat graphic on how the process works).

This GoTenna device can be powered through the XTorch via USB cable, and could potentially operate indefinitely if connected to a solar-charged device. This tech is so new and innovative that it can be difficult to wrap your mind around — I stumbled across this helpful step-by-step walkthrough that helped me transact my own Bitcoin offline. The dev responsible was featured in a Bitcoin Magazine article here.

In an ideal world, local communities and microfinance savings groups could operate solely on their individual mesh networks with no outside influence, making them more efficient, accountable, and secure. A simple cold-storage wallet could eliminate the need for a container of paper money, and a multisig Bitcoin wallet could ensure than no one member transacts without the express consent of a majority of the group.

In a real-world sense, this system would look something like this:

  • Nonprofit A sends a micro-loan of 0.1 BTC to Amadi, a woman who runs a savings group in Ethiopia. Amadi stores her loan in a cold-storage wallet that she can access via her smartphone.
  • Since Amadi is the leader of her savings group, she is responsible for dispersing the funds as-needed via her local mesh network that is powered by a GoTenna and a solar-powered XTorch that hangs at the entrance of her hut.
  • Whenever one of the savings-group members needs to withdraw Bitcoin from their fund, they alert Amadi, who sends the proposed need to the rest of the group via WhatsApp. With a majority vote, the funds can be moved from the savings group’s multisig Bitcoin wallet to the private wallet of the recipient.

The beauty of XTorch/GoTenna system is that it could potentially solve many of the problems we’ve discussed thus far, and even a few we haven’t:

  • Protection against corrupt governments
  • Protection against centrally controlled fiat
  • Savings group accountability
  • Quick and fee-free international monetary transfer
  • Creates self-sustaining local economies that were previously non-existent

Granted, there are several glaring problems with this speculative system, including a need for an internet connection eventually for transactions to be broadcast (although it is typical for remote communities to travel in order to solve problems like this one), the prohibitive cost of entry for sub-Saharan natives (which NGOs and micro-loans could potentially help alleviate) and very little context for cryptocurrencies to be accepted as a means of payment. But allowing obvious problems to prevent speculative solutions does no good.

One such speculative solution from Gene Palusky, CEO of XTorch, could look something like this:

  • A large company like Google or Facebook could help bring the last mile internet connection to unreached areas of the world, teaming up with local internet service providers, as this has obvious business advantages
  • Micro financing NGOs could serve to offer loans to fund small business endeavors related to creating local mesh networks
  • Local partner nonprofits could facilitate and manage the project in cooperating with the community, while at the same time integrating interventions that encourage wholistic and sustainable change (donating GoTennas or XTorches as a reward for good school performance, for instance)

We know there is dire need worldwide for financial freedom and innovation, and we know there are massive roadblocks between here and the eventual demise of poverty. But we have accomplished so much in the past 30 years, and human creativity knows no bounds (who knew we would even be able to transact digitally offline with a currency like Bitcoin!).

With the beginnings of ideas like the one we’ve reviewed in this article, there is no telling what we will be able to accomplish in the next 30 years. How would you tweak this system to make it work better? How can we use mesh networks and cryptocurrencies to end poverty and make the world a little freer? Let me know in the comments! The only thing preventing progress is inaction; poverty’s only hope is our complacency.

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