Case Study: Demographic Influence on Digital Currency Adoption

Introduction
This essay is a mini case study that compares and contrasts the lifestyles of two men and their families, and the potential for digital currency succeeding in their respective countries. Anrom Bulla hails from a rural section of a LDC which is very low on the spectrum of development. In contrast, Rana Tilla lives an affluent life in a thriving coastal city located in a MDC. The lifestyles of Anrom and Tilla are taken as data points and assumed to be representative of their respective nations. These family
circumstances will be used to infer the broader demographics of each country and the corresponding style of living implied in each case. Based on these conjectures, the likelihood for digital currency to be adopted and make positive impacts in both Anrom’s and Rana’s nation will be considered and evaluated.

Demographics

Demography: LDC vs. MDC
The study of demography grants insights into the structure and distribution of human populations using associated statistics, including birth rates, growth rates, and death rates. Geography is a key influence on demography which, in turn, affects the overall level of socioeconomic development and relative well-being of a given population [1]. Countries
are generally grouped into two broad categories, LDC or MDC [2]. In actuality, the level of development is best viewed as a continuous spectrum from least to most developed.

In agreement with Lecture 1 materials, Anrom and Rana typify the first law of demography: “Those that can’t, do. Those that can, don’t.” Anrom has seven children and can barely afford to feed them, let alone care for their health and educate them. He will likely have more children in the future. This is typical of LDCs, where high birth rates dominate and contribute to fast growing populations. Lifespans are shorter on average in poorer countries, so young people are by far the largestcohort of LDC population pyramids. Lack of education, restricted access to birth control, inadequate nutrition, and poor water quality can all contribute to the plight of Anrom’s family. Economic surplus tends not to accrue to people in LDCs because it is dissipated by a young and rapidly growing population [2].

On the other hand, Rana and his partner enjoy an ample surplus of  capital—they could easily afford to raise more children—yet they only have one offspring, their son, who is pursuing a law degree and career as a diplomat. Small families are typical of MDCs, where low birth and death rates, and long life expectancies typify stable or even contracting
populations [2]. Just comparing the number of children in Anrom’s family vs. Rana’s family (7 vs.1) leads one to surmise Anrom lives in a LDC and Rana in a MDC. Other factors discussed in subsequent sections of this paper also support this assertion.

Lifestyle Comparison
The table below summarizes the living circumstances of Anrom and Rana along numerous vectors. Examining the contents of the table clearly paints contrasting pictures for the lifestyles of Anrom and Rana. Anrom’s large nuclear family appears to be located in one of the least developed, rural areas of the world. The desert village of subsistence farmers is
indicative of some of the poorest, landlocked regions of Africa. In sharp contrast, Rana’s small family enjoys an affluent lifestyle in a modern bayside city with excess energy and attention to pursue leisure activities, participate in NGOs, educate their son, and further secure their financial future. If I were to speculate, Rana lives in a city similar to Vancouver,
British Columbia. Given these assumptions, and taken from a global perspective, Anrom lives near the lowest end of the working poor population, which numbers about two billion people worldwide; Rana lives at the other end of the spectrum, the small minority who control the majority of wealth in the world.

The psychological framework created by Abraham Maslow in the mid twentieth century, known as Maslow’s Hierarchy of Needs is a useful tool for comparing the lifestyles of Anrom versus Rana [3]. Maslow modeled human motivation pictorially in a pyramid of foundational needs. Higher level needs can only be met if lower levels are fulfilled first. From lowest to highest, the needs can be broadly defined as: physiological, safety, social,
esteem, and self-actualization [4]. Anrom and his nation are clearly stuck in the lowest tiers of development. Like his compatriots, basic survival and safety for himself and family are Anrom’s ongoing daily occupation. Feeding a wife and seven children is a constant struggle, leaving no surplus attention for fulfilling higher level human needs. Rana, on the other hand, lives in a much different realm. As a highly educated computer engineer, Rana does not have to struggle to meet his family’s basic physical or safety needs. Arguably, Rana has attained social needs through a successful and loving family; esteem needs through his career and faculty teaching position; and is free to further explore the apex of Maslow’s hierarchy, self-actualization, through his hobbies and leisure pursuits.

Lifestyle Comparison At A Glance

Anrom Bulla Rana Tilla
Country LDC MDC
Location landlocked, desert, rural village coastal seaport city
Infrastructure no electricity, water from buckets and well, TV and phone at small community center only modern amenities / high-speed Internet, computers, smartphones
Finance unbanked / barter / no surplus capital, or property rights affluent / investment portfolio, exotic cars, real estate, etc.
Family seven children, lacking educational opportunities one child, studying law and pursuing career as diplomat
Health first wife died in childbirth access to world class healthcare
Education illiterate, subsistence farmer Ph.D., computer engineer, PR consultant partner, high earnings
Travel difficult, bumpy roads, cattle wagons business & leisure with modern roads, sports cars, and air travel
Leisure no free time for hobbies, only survival duet singers in a club, NGO members, car collector
Maslow’s Hierarchy focused on lowest basic physiological & safety needs lower needs fulfilled, able to focus on self-actualization

Prospects for Digital Currencies in Anrom’s LDC
Given the immense disparity in living circumstances between Anrom’s country and Rana’s country, the prospects for digital currencies to succeed in each nation are quite divergent. As a LDC on the bottom end of the development spectrum, Anrom’s country may have to wait awhile before DCs can make a positive impact. At the very least, Anrom’s rural village
appears to be too poor and remote to be adopting digital currencies in the near future. Obstacles and challenges abound in this case. Basic infrastructure is lacking, so technical barriers must be overcome. Perhaps by the end of this decade the story will be different. By then, many predict 100% global Internet coverage will be available through initiatives such as Google’s project Loon or Facebook’s internet.org [5,6]. In addition, mobile phones will need to be affordable even to working poor such as Anrom’s family. Of course, these are just some of the technical challenges. Illiteracy and digital illiteracy are also major factors to consider. Anrom cannot read and would presumably have to learn how to use a cell phone. Perhaps, given the opportunity, one or more of his children could learn to
read with the help of a village teacher and cell phone. A recent study by UNESCO, shows that mobile phones in developing countries are a “gateway to long-form text” and can thereby help alleviate illiteracy [7].

Despite the specific challenges faced by Anrom’s village, there are likely other regions of his country where Internet access is readily available, cell phone infrastructure is in place, and the use of mobile money has become commonplace. It is estimated that there are six billion phone subscriptions worldwide and only two billion bank accounts [8]. This offers the opportunity to leapfrog physical banking infrastructure to a mobile banking model, thereby reducing the number of unbanked in LDCs globally.
Founder and CEO of BitPesa, Elizabeth Rossiello, communicated in a forum post recently, that mobile money in Africa has been widespread since 2007 [9]. She should know, having lived in Kenya since 2009. The objective of BitPesa is to connect the African continent to international remittance channels more efficiently and at a fraction of present-day
double-digit costs. BitPesa offers exchange services and uses Bitcoin for the international transmission leg, pushing funds to recipients via local mobile money services offered by MNOs [10]. The success of companies like BitPesa provide hope that even Anrom’s village will eventually benefit from innovations based on digital currency.

Prospects for Digital Currencies in Rana’s MDC
Rana, as a computer engineer and lover of innovation, is familiar with Bitcoin and the many advantages it offers. In fact, he has already invested a small portion of his portfolio in Bitcoin and funded startup ventures in this emerging sector as an angel investor, recognizing the long-term potential of digital currencies and blockchain technologies. Fully compliant DC exchanges are readily accessible to Rana and his family. The challenges
facing the success of Bitcoin in Rana’s country are more obscure compared to those faced by Anrom. Living in a MDC, Rana’s fellow citizens enjoy access to a sophisticated and globally interconnected financial infrastructure, including a mature banking sector, developed regulatory framework, proven legal system, and widely available access to
credit. What immediate advantages can digital currencies such as Bitcoin offer given these circumstances?

Among the tech savvy minority in Rana’s country, digital currencies are already a viable means of low friction P2P value transmission. On/off ramps between fiat and DC are readily available. Digital currencies are also bearer instruments, a true form of digital cash when owners take responsibility for their own private keys. As the price of Bitcoin continues to rise, more attention is given to DCs in the press. As a result, more people
choose to hold Bitcoin as an alternative investment and experiment with it as a payment rail. In MDCs, venture capital continues to pour into the DC and Crypto 2.0 space at a healthy and growing pace [11]. All this being said, it may take an unexpected financial crisis in Rana’s country to educate the general populace on some of the greatest advantages Bitcoin can confer on its owners, i.e, a means to bypass capital controls and
protect holders from bank bail-ins.

Conclusion
Individually, Anrom and Rana live at opposite ends of the global socioeconomic spectrum. Anrom inhabits a poor LDC; Rana, a wealthy MDC. Anrom lives in squalor near a small rural village at the periphery of civilization. Rana occupies a high-rise luxury flat with ocean views. Despite the disparity, digital currencies may prove successful in both nations. It may just be a difference of timing and relative impact. Rana and his family already experience the success of Bitcoin to a measurable degree. It is only a matter time for the rest of their country to catch on. In contrast, Anrom and his infrastructure-deficient community are not
presently equipped to benefit from DCs. However, as Internet access becomes ubiquitous by the end this decade, technical barriers for the adoption of Bitcoin will crumble. Mobile money services of MNOs in conjunction with Bitcoin may completely leapfrog legacy banking systems, reduce the number of unbanked in LDCs, and welcome Anrom and his
offspring into the digital age of financial inclusion.

Digital currency will succeed in both LDC and MDC nations, eventually. The timing for Anrom and his country is the next five to ten years, and the impact will be to lift the next generation out of abject poverty. Rana and his MDC compatriots can already benefit from access to DC as an alternative investment, wealth protection scheme, and P2P payment
method. Bitcoin, as the leading DC, is acting like a classic disruptive innovation—nibbling away at the edges of the enormous and all-pervasive financial sector [12]. In time, mobile banking will become the norm in both LDCs and MDCs, and the truly global potential of digital currency will be unleashed.

Abbreviations

CEO Chief Executive Officer
DC Digital Currency
LDC Less Developed Country
MDC More Developed Country
MM4P Mobile Money For the Poor
MNO Mobile Network Operator
NGO Non-Governmental Organization
P2P Peer-To-Peer
PR Public Relations
UNESCO United Nation Educational, Scientific and Cultural Organization

References
1. About Demography. (n.d.) Wikipedia. Retrieved from https://en.wikipedia.org/wiki/Demography
2. DFIN-535 – Digital Currencies in the Developing World, Session 1 and Session 2 Slides
3. About Abraham Maslow. (n.d.) Wikipedia. Retrieved from https://en.wikipedia.org/wiki/Abraham_Maslow
4. About Maslow’s Hierarchy of Needs. (n.d.) Simply Psychology. Retrieved from
http://www.simplypsychology.org/maslow.html
5. Google’s Project Loon. (n.d.) Retrieved from www.google.com/loon
6. Internet.org by Facebook. (n.d.) Retrieved from info.internet.org
7. Guerrini, F. (2014, April 23). Forbes / Tech. Could Mobile Phones Save Millions
From Illiteracy? Retrieved from http://www.forbes.com/sites/federicoguerrini/2014/04/23/could-smartphones-save-millions-from-illiteracy/
8. UNCDF Website. Mobile Money For The Poor. Retrieved from http://www.uncdf.org/en/mm4p
9. Elizabeth Rossiello’s post on Bank to The Future’s forum. (2015, December 11).
Retrieved from https://www.bnktothefuture.com/pitches/2659/conversations
10. BitPesa website. (n.d.) Retrieved from www.bitpesa.co
11. Bitcoin Venture Capital. (2015, December 7). CoinDesk. Retrieved from http://www.coindesk.com/bitcoin-venture-capital/

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