The Bitcoin community is in a near-constant state of debate. What will the price do? What does Bitcoin mean for the future? What industry will it disrupt? In an earlier article I talked about where Bitcoin is going, and that question is very much in debate. An important question, whose answer can provide guidance on where Bitcoin is going, is where does Bitcoin fit? Innovation and disruption are well and good, but without practical insertion of innovation into an existing industry or technology there is no value. So where can Bitcoin insert itself to solve a valuable problem?
A much-hyped industry in which Bitcoin can make an impact is microfinance. Microfinance is broadly described as financial services to the poor, or those with poor credit. As a result, the amounts loaned are typically small in nature, not exactly “micro,” but certainly not as large as traditional loans for things like auto financing or mortgages. Traditional lenders are burdened by significant overhead in their business model. This is due to legal requirements like Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations,