Bitcoin ATMs are an oasis in financial deserts
Despite the Community Reinvestment Act, financial deserts are still scattered throughout the U.S. These underbanked and unbanked communities are hindered from creating significant wealth or getting ahead financially.
Because in these financial deserts of underbanked and unbanked markets, residents lack access to traditional financial services and products due to their low credit scores, lack of credit, or low incomes. The financial deserts in which they live do not offer many, if any, traditional banking institutions to visit for a credit card or even a loan. They are left with severely limited financial options, such as check cashing, bill pay and wire services. Their borrowing choices are particularly prohibitive since high-interest lenders might extend credit to them or give them a loan, but the interest rates are so exorbitant that simply staying above water is still challenging.
And yet, while the unbanked communities in these areas have very little, if any, access to everyday financial products and services, residents of affluent neighborhoods enjoy free and easy access to a diverse array of opportunities, all at low interest rates. This blatant disparity only further increases the wealth gap, exacerbating income inequality.
This is not an accusation pointed toward the traditional financial institutions and large banks: They are really only doing what they have done for years, both before the recession of 2008 and after. These banks are risk-averse, and someone with poor or no credit or very little income represents a significant risk. Traditional financial institutions typically refuse to work with the underbanked because, based on the statistics and metrics they have collected, many low-income consumers with deficient credit are considered “high-risk borrowers” and will likely not be able to repay their debts.
So, what are the underbanked in financial deserts to do if they would like to diversify their financial options and participate in e-commerce with digital payment sources despite lacking traditional bank and credit card accounts? Enter bitcoin ATMs, which enable the members of this community to digitize their cash by utilizing the universally accepted digital currency known as bitcoin.
Although most people would like to think that financial deserts are not very common and the underbanked population is small, the truth is that approximately 25% of all households in the U.S. fall in this category. A significant portion of the community in financial deserts deal almost entirely with cash. And since many cryptocurrency transactions are completed through online exchanges linked to bank accounts or credit cards, underbanked communities are unable to attain bitcoin through such websites and apps.
However, with bitcoin ATMs and point-of-sale teller services, these individuals can instantly take their paper money to the machine and exchange it for a different payment source: bitcoin. And like that, the underbanked have a new tool in their toolkit. Now they can access a new, modern payment source that will give them more freedom as a consumer. Plus, since these cash-to-bitcoin transactions are instant and irreversible, there is no possibility of holds, delays or other substantial restrictions, the underbanked gain a significant opportunity to broaden their financial outlook. All with the bonus that they will already be one step ahead of the public since bitcoin is likely to gain even more mass-market appeal. In this sense, bitcoin ATMs provide the underbanked with some relief from their position.
In a financial desert, there are not many options for access to financial products and services — even types of currencies and payment sources are severely limited or can be prohibitively expensive. Despite so much stacked against the underbanked population in these areas, access to bitcoin ATMs can provide them with a better path toward financial well-being.