Of the numerous humanitarian applications of blockchain that are being tested, and in some cases already used around the world, implementing cryptocurrency in places where populations are under-served by financial institutes is considered a winner.
Poor countries or island nations with rural people living far from city centers, who have had no chance at getting loans to create a small business or to take payments from family members working abroad through the banking system, can now by using Bitcoin or any number of cryptocurrencies.
Bitcoin ATMs are Becoming the Norm in Poor US Neighborhoods
Normally it is countries in Africa, South East Asia, or South America that are presented as case studies for the use of digital money. But the number of Bitcoin ATMs popping up in poor inner-city neighborhoods in the US are being used for the same reasons. According to The Virginian-Pilot, there are 80 Bitcoin ATMs in the Detroit area and 2,032 across the country.
Some may wonder how a Bitcoin ATM in the back of a Detroit gas station convenience store could solve anyone’s financial service needs. But the owner of just such a service station, Andy Attisha, has the answer at hand; “People who use the machine most likely don’t have bank accounts,”
Low-income households are likely to manage their finances outside of the traditional banking system. Many people working as day laborers, or off the books in some other way, use check cashing or payday loan centers to avoid reporting income that may conflict with government services their families receive. Others can be shut out of the banking system for having chronic low balances or bouncing too many checks.
John Sedunov, assistant professor of finance for Villanova University in Pennsylvania, has another viewpoint on why Bitcoin ATMs are showing up in poorer neighborhoods across the US. “It does seem that they are starting to pop up more and more in lower income areas,” he said, before adding “people may be viewing bitcoin as a lottery ticket in and of itself,”
Sedunov speculates that some people are only now hearing about the vast increases Bitcoin made in value during the bull market of 2017 and are depositing money in the cryptocurrency ATMs hoping for big returns on their one, two and three hundred dollar investments.
“A lot of people do day trading on it,” Attisha said. “I see people coming in here every day messing with the machine.”
Money Laundering or Lottery Machine
Any kind of cash transaction that also promises anonymity is going to attract money laundering and Bitcoin ATM’s seem an ideal solution for street-level drug dealers to store their cash in exchange for the 7 or 8 percent fee that the machine charges.
Joe Ciccolo, founder of BitAML, a compliance firm that offers consulting services to digital currency startups, says that money laundering with ATM’s is an overrated concern. He noted the ATMs enable operators to obtain customer information, including a driver’s licenses. The ATM can also enforce transaction controls such as daily limits per person and caps on transaction denominations.
Whether ATM’s are becoming a regular fixture in poor neighborhoods as a service to the community, or because companies expect to make a lot of money from fees as people use them either as a lottery substitute or to store their cash, there is no denying their popularity and the fact that numbers are increasing in major cities.