For those of us who live in the developed world, we often take for granted how our monetary systems work. We think that anyone can go to the bank and open an account and have access to all of the things in life that we use in our daily lives. Well, that’s not the reality for many people around the world. In fact, excessive monetary regulations are propagating financial exclusion and keeping the poorest parts of the world poor.

Understanding Financial Regulations

When you go to the bank to open up an account, you probably don’t give much thought to all of the information that you are required to give to them. Without really thinking about it, you probably hand over your name, address, phone number, date of birth, some sort of government ID number (SSN in the U.S.), and then you get a checking account.

Seems pretty straightforward, right?

If you are from a poor part of the world, it might not be possible for you to provide all of this information because you might not have a verifiable address, a government-issued ID number, or be able to meet the minimum financial requirements.

These sorts of financial regulations are some of the world’s most troublesome because they put limitations on who can use money and in many cases, who can even own money.

Financal Regulations Hurts The Underbanked The Most

It’s estimated that there are over 2 billion people in the world who don’t have access to modern financial tools such as a savings or checking account. This lack of basic financial tools perpetuates poverty by not granting access to modern monetary tools.

How do you think your life would be affected if you couldn’t access a bank account or a debit card? Imagine how difficult it would be to purchase even daily necessities. How would you pay your rent or mortgage if the only form of money that you had was cash? How would you keep your cash safe? How would to make any transactions online?

These are just some of the problems that are facing those who live in the developing world.

Proof Of Address/Residence

In order to open something as simple as a bank account, one of the very first things that you need is a physical address.

While this may not seem like a big deal, this is actually one of the most difficult things for immigrants (legal or illegal) to achieve. Sometimes getting an apartment or house is incredibly difficult for immigrants and poor families. Even for legal immigrants, it can still be incredibly difficult to get a residence as you often need to meet certain financial requirements and have proof of income.

Know Your Customer

Know Your Customer regulations, more commonly known as KYC, are potentially the most problematic for the underbanked since they are often unable to meet these requirements.

KYC requires an official government-issued ID, proof of address, and a government-issued ID number such as a social security number.

This seems trivial for citizens of the first world but for the underbanked, having any sort of ID might be incredibly difficult to obtain.

Source Of Wealth

Source of Wealth forms are often used by banks to require their users to prove that their deposits are not from any illegal sources. Since many of the world’s poorest households rely heavily on cash transactions, it can often be difficult or even impossible for them to prove where their money comes from. Some of these individuals and families work for years to save enough money to move to more developed parts of the world where they have to declare their cash holdings at border crossings.

Without the necessary documentation, it’s possible that these poor individuals are unable to use their money to buy a house, rent an apartment, or get a car.

Citizenship Requirements

In most jurisdictions in the world, in order to have a bank account, you need to be able to prove that you are a citizen or at the very least that you are a legal resident within the jurisdiction that you want to open a bank account in. If you are a citizen in the first world, is probably something that you have not taken into consideration. You were probably born into the country that you live in now and you have always had access to decent financial services.

For many, getting a checking or savings account can be incredibly difficult because they are not citizens or don’t have the means.

Bitcoin Fixes Financial Exclusion

Since Bitcoin is just an open-source math equation that exists purely on the internet, it isn’t bound to the same restrictions that banks and other financial intermediaries are. There are no prerequisites such as having a provable physical address, proof of citizenship, proof of income, or minimum balances.

Bitcoin is literally the most open and inclusive form of money in the world.

Here are some of the ways that Bitcoin is fixing global financial exclusion.

Bitcoin Doesn’t Require A Physical Address

In order to use Bitcoin, you don’t need to have a physical address. You just need access to the internet and the ability to download a wallet. Making private keys has a long way to go before it is easy for the world’s poorest households but the very fact that you don’t need to have any verifiable address in order to accept bitcoin is incredibly powerful.

Bitcoin Doesn’t Know Your Name

Since Bitcoin isn’t a bank, it doesn’t have any requirements like needing to know anything about your identity. Anyone can download a wallet and begin accepting bitcoin transactions without providing any sort of personal information. Bitcoin doesn’t need to know its customers because it isn’t a bank.

Bitcoin is just an open-source math equation on the internet.

Bitcoin Doesn’t Care About Your Source Of Wealth

When bitcoin is sent from one address to another, the only thing that matters is that the private key signs a transaction and then broadcasts it to the rest of the network. If there is a large enough balance to send, then the transaction gets sent to the recipient. It’s that simple.

There are no checks to see how the money was earned.

Bitcoin Doesn’t Care About Citizenship

Again, since Bitcoin is just a math equation, it doesn’t require you to be a citizen of any particular jurisdiction in order to send or receive. People from anywhere in the world can download a wallet and begin accepting Bitcoin for payments. Just as easily, they can send transactions to the next recipient regardless of their nationality or citizenship.

Citizens from the world’s poorest countries need a monetary system that enables them to own and transact with their own money regardless of their legal documentation.

Use Bitcoin

If you already have access to the world’s best financial tools, then bitcoin may be less interesting to you than your existing framework but for the world’s underbanked, global regulations are propagating financial exclusion. While this may not be a problem for you, it prevents financial upward mobility for those who need it the most. Bitcoin is the financial system that underbanked nations need.