Can Blockchain Help Improve Financial Inclusion? A Comparative Study

The financial inclusion of poor populations and/or refugees can be hindered by difficulties in proving or reluctance to disclose their identity. Bank accounts and mobile money services require that identities be provided. Financial digital services based on blockchain technology can provide anonymous authentication to poor/refugee populations and be a first step towards financial inclusion. We scrutinize several examples of such projects by comparing them with blockchain-based digital identity or financial inclusion programs that are not necessarily restricted to poor/migrant populations. We use social network activity as a proxy for the failure or success of such projects. We find that blockchain projects targeted to migrants and poor individuals are more likely to fail than are those targeted to all. We more closely examine one particular case to check the consistency of our proxy. We present plausible explanations for our result: the discrepancy between the needs of populations of low socioeconomic status and the proposed blockchain-backed financial services and the fact that maintaining such services is energy intensive.