Bill and Melinda Gates are investing billions of dollars into low-cost digital payment systems in developing nations. In 2013, the couple donated $1.8 billion to global development programs, with $90 million going to Financial Services for the Poor program. This program’s main objective is to help individuals in poor and rural areas use affordable digital payment systems to bank and monitor other financial processes. The foundation believes that making payments and depositing money with their phones, will prompt more financial responsibility and stimulate developing economies.
Although the Financial Services for the Poor program is investigating digital solutions to poor economies, it has decided to stay away from digital currencies. Representative acknowledge that while digital currency like Bitcoin is exciting, the currency still poses too many threats to fragile economies. Right now, the Bitcoin process is too risky for the unbanked says the foundation.
Bitcoin burst onto the financial market in 2009, and has quickly becomea prominent form of online currency in some countries. Bitcoins have no central monetary authority, as they are mined via a peer-to-peer computer network using a complex mathematical process. Many bitcoin enthusiasts believe that the digital currency was designed to become more difficult to mine over time. So why are bitcoins so popular? Unlike physical currency, a bitcoin has no set value. This means that the value of a bitcoin can change from day to day, making it an extremely flexible form of currency.
Since it is not physical, bitcoins can be freely exchanged across the globe, without the hassle of currency conversion. Plus, users don’t have to input their own personal information to make online purchases. But it is this flexibility that makes financial investors nervous, and they may have a right to be. This year, bitcoin is facing some major challenges. According to a recent report, over 65% of the general public still is unsure of what a bitcoin really is or how it works. And of the people who are familiar with the digital currency, only 84% of them have ever attempted to use it. In addition to public confusion surrounding the product, bitcoin’s ability to be used illegally has hurt its credibility thanks to the infamous Silk Road incident, where bitcoins were used to anonymously obtain illegal drugs.
Public incidents like the Silk Road and confusion about bitcoins in general, have really hurt the currency on the global market. In only a few short years, the value of bitcoins has fallen from nearly $1,200 to only $250. So for now, foundations like Financial Services for the Poor program have decided to focus their efforts on marrying traditional banking institutions with digital and mobile technologies to make the financial lives of citizens in developing nations better. But representatives note they haven’t given up on other cryptotechnologies beside bitcoin. They are currently engaged with several large providers in this industry to understand how best to utilize this technology in the future.
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