Abstract
Blockchain, the distributed ledger technology that sustains cryptocurrencies, continues to develop as a valuable alternative for financial inclusion, considering that its successful implementation would depend on the entrepreneur’s ability to grasp contextual practices currently present in the reality of the unbanked. Lack of trust, reported as one of the main non-monetary barriers to financial inclusion, poses specific challenges to blockchain entrepreneurship, in that the meaning of trust appears to depend on context, and blockchain’s supposedly advantageous characteristics turn out to be insufficient when considering contextual sensitivities. In this chapter, we elaborate on the role and meaning of trust in the context of the unbanked in comparison to blockchain’s decentralized approach to trust, directing the blockchain practitioner to understand the informal practices of the unbanked as a much-needed factor for the creation of trust; practitioners are invited to adopt a sociotechnical approach to blockchain entrepreneurship. Finally, we exemplify this perspective by analyzing the cases of a qualitative phenomenological research, based on a sample of unbanked individuals working and interacting in a wealthy Mexican neighborhood. With this analysis, we hope to contribute to the design of more efficacious blockchain-based business models for financial inclusion.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Allen, F., Demirguç-Kunt, A., Klapper, L. F., & Peria, M. S. M. (2012). The Foundations of Financial Inclusion: Understanding Ownership and Use of Formal Accounts. World Bank Policy Research Working Paper. http://documents.worldbank.org/curated/en/348241468329061640/The-foundations-of-financial-inclusion-understanding-ownership-and-use-of-formal-accounts. Accessed 18 Dec 2017.
Anderson, J., & Billou, N. (2007). Serving the World’s Poor: Innovation at the Base of the Economic Pyramid. Journal of Business Strategy, 28(2), 14–21.
Bacia, M. (2018). Trust-Less Governance Is the Killer App of Blockchain Technology. A Medium Corporation. https://medium.com/the-mission/trust-less-governance-is-the-killer-app-of-blockchain-technology-1f5881b4e6ce. Accessed 20 Feb 2018.
Beck, T., & De la Torre, A. (2007). The Basic Analytics of Access to Financial Services. Financial Markets, Institutions & Instruments, 16(2), 79–117.
Beck, T., & Demirguc-Kunt, A. (2008). Access to Finance: An Unfinished Agenda. The World Bank Economic Review, 22(3), 383–396.
Beck, T., Demirguc-Kunt, A., & Levine, R. (2007). Finance, Inequality and the Poor. Journal of Economic Growth, 12(1), 27–49.
Beck, T., Demirguc-Kunt, A., & Peria, M. S. M. (2008). Banking Services for Everyone? Barriers to Bank Access and Use around the World. The World Bank Economic Review, 22(3), 397–430.
Botsman, R. (2017). How the Blockchain Is Redefining Trust. WIRED. https://www.wired.com/story/how-the-blockchain-is-redefining-trust/. Accessed 28 Feb 2018.
Castells, M. (1991). The Informational City: Information Technology, Economic Restructuring, and the Urban-Regional Process. Oxford: Basil Blackwell.
Christopher, C. M. (2016). The Bridging Model: Exploring the Roles of Trust and Enforcement in Banking, Bitcoin, and the Blockchain. Nevada Law Journal, 17(1), 139–180.
Collins, D., Morduch, J., Rutherford, S., & Ruthven, O. (2009). Portfolios of the Poor: How the World’s Poor Live on $2 a Day. Princeton: Princeton University Press.
Colquitt, J. A., Scott, B. A., & LePine, J. A. (2007). Trust, Trustworthiness, and Trust Propensity: A Meta-Analytic Test of their Unique Relationships with Risk Taking and Job Performance. Journal of Applied Psychology, 92(4), 909–927.
Demirguc-Kunt, A., & Klapper, L. (2013). Measuring Financial Inclusion: Explaining Variation in Use of Financial Services Across and Within Countries. Brookings Papers on Economic Activity, 1(Spring), 279–340.
Demirguc-Kunt, A., Leora, F. K., Singer, D., & Van Oudheusden, P. (2015). The Global Findex Database 2014: Measuring Financial Inclusion Around the World. World Bank Policy Research Working Paper No. 7255. http://documents.worldbank.org/curated/en/187761468179367706/pdf/WPS7255.pdf. Accessed 8 Dec 2017.
Edelman Trust Barometer. (2018). Edelman Trust Barometer: Executive Summary. http://cms.edelman.com/sites/default/files/2018-02/2018_Edelman_TrustBarometer_Executive_Summary_Jan.pdf. Accessed 20 Mar 2018.
Ennew, C., & Sekhon, H. (2007). Measuring Trust in Financial Services: The Trust Index. Consumer Policy Review, 17(2), 62–68.
Filipiak, U. (2016). Trusting Financial Institutions: Out of Reach, Out of Trust? The Quarterly Review of Economics and Finance, 59(C), 200–214.
Flood, J., & Robb, L. (2017, November). Trust, Anarcho-Capitalism, Blockchain and Initial Coin Offerings (pp. 1–25). Griffith University Law School Research Paper No. 17–23.
Fox, J., Bartholomae, S., & Lee, J. (2005). Building the Case for Financial Education. Journal of Consumer Affairs, 39(1), 195–214.
Fungacova, Z., Hasan, I., & Weill, L. (2016). Trust in Banks. BOFIT Discussion Papers No. 7. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2782358. Accessed 7 Dec 2017.
Genicot, G., & Ray, D. (2017). Aspirations and Inequality. Econometrica, 85(2), 489–519.
George, G., McGahan, A. M., & Prabhu, J. (2012). Innovation for Inclusive Growth: Towards a Theoretical Framework and a Research Agenda. Journal of Management Studies, 49(4), 661–683.
Hastings, J. S., Madrian, B. C., & Skimmyhorn, W. L. (2013). Financial Literacy, Financial Education, and Economic Outcomes. Annual Review of Economics, 5(1), 347–373.
Hilgert, M. A., Hogarth, J. M., & Beverly, S. G. (2003). Household Financial Management: The Connection Between Knowledge and Behavior. https://www.federalreserve.gov/pubs/bulletin/2003/0703lead.pdf. Accessed 20 Feb 2018.
Jarvenpaa, S., & Teigland, R. (2017). Trust in Digital Environments: From the Sharing Economy to Decentralized Autonomous Organizations. Proceedings of the 50th Hawaii International Conference on System Sciences. https://pdfs.semanticscholar.org/62bf/f772aa53596fc3dc1fd8a078abcfba87330b.pdf. Accessed 12 Jan 2018.
Keizer, B. (2016). Financial Inclusion and Characteristics of the Unbanked: A Survey Analysis. MSc Dissertation, Erasmus University Rotterdam.
Krueger, J. I., Massey, A. L., & DiDonato, T. E. (2008). A Matter of Trust: From Social Preferences to the Strategic Adherence to Social Norms. Negotiation and Conflict Management Research, 1(1), 31–52.
Kundu, D. (2015). Addressing the Demand Side Factors of Financial Inclusion. Journal of Commerce and Management Thought, 6(3), 397–417.
Larios-Hernández, G. J. (2017). Blockchain Entrepreneurship Opportunity in the Practices of the Unbanked. Business Horizons, 60(6), 865–874.
Leibowitz, J. (2016). Blockchain’s Big Innovation Is Trust, Not Money. Coindesk. https://www.coindesk.com/blockchain-innovation-trust-money/. Accessed 20 Feb 2018.
Lusardi, A. (2008). Household Saving Behavior: The Role of Financial Literacy, Information, and Financial Education Programs. National Bureau of Economic Research. http://www.dartmouth.edu/~alusardi/Papers/Literacy_Information_Education.pdf. Accessed 8 Dec 2017.
Mandell, L. (2006). Financial Literacy: If It’s So Important, Why Isn’t It Improving? Networks Financial Institute Policy Brief. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=923557. Accessed 8 Dec 2017.
Mandell, L. (2008). Financial Literacy of High School Students. In L. Mandell (Ed.), Handbook of Consumer Finance Research (pp. 163–183). New York: Springer.
Manyika, J., Lund, S., Singer, M., White, O., & Berry, C. (2016). Digital Finance for All: Powering Inclusive Growth in Emerging Economies. McKinsey Global Institute. https://www.mckinsey.com/~/media/McKinsey/Global%20Themes/Employment%20and%20Growth/How%20digital%20finance%20could%20boost%20growth%20in%20emerging%20economies/MGI-Digital-Finance-For-All-Executive-summary-September-2016.ashx. Accessed 8 Dec 2017.
Mayer, R. C., & Davis, J. H. (1999). The Effect of the Performance Appraisal System on Trust for Management: A Field Quasi-Experiment. Journal of Applied Psychology, 84(1), 123–136.
Meijer, D. B. (2017). Blockchain Technology: Trust and/or Control?https://pdfs.semanticscholar.org/4386/5e89dec44e9305086013c9c0999bfb8c6281.pdf Accessed 28 Feb 2018.
O’Dwyer, R. (2015). The Revolution Will (Not) Be Decentralised: Blockchains. http://commonstransition.org/the-revolution-will-not-be-decentralised-blockchains/. Accessed 10 Feb 2018.
Piscini, E., Hyman, G., & Henry, W. (2017). Blockchain: Trust Economy Tech Trends 2017. Deloitte Insights. https://www2.deloitte.com/insights/us/en/focus/tech-trends/2017/blockchain-trust-economy.html. Accessed 9 Jan 2018.
Pouwelse, J., de Kok, A., Fleuren, J., et al. (2017). Laws for Creating Trust in the Blockchain Age. European Property Law Journal, 6(3), 321–356.
Prahalad, C. K. (2005). La oportunidad de negocios en la base de la pirámide: un modelo de negocio rentable, que sirve a las comunidades más pobres. México: Editorial Norma.
Ranjani, K. S., & Bapat, V. (2015). Deepening Financial Inclusion Beyond Account Opening: Road Ahead for Banks. Business Perspectives and Research, 3(1), 52–65.
Riegelsberger, J., Angela Sasse, M., & McCarthy, J. D. (2005). The Mechanics of Trust: A Framework for Research and Design. International Journal of Human-Computer Studies, 62(3), 381–422.
Rousseau, D. M., Sim, B. S., Burt, R. S., & Camerer, C. (1998). Not So Different After All: A Cross-Discipline View Of Trust. Academy of Management Review, 23(3), 393–404.
Samson, A. (Ed.). (2014). The Behavioral Economics Guide 2014. Behavioral Science Group. https://www.behavioraleconomics.com/the-be-guide/the-behavioral-economics-guide-2014/. Accessed 10 Jan 2018.
Santos, F. M. (2012). A Positive Theory of Social Entrepreneurship. Journal of Business Ethics, 111(3), 335–351.
Sas, C., & Khairuddin, I. E. (2017). Design for Trust: An Exploration of the Challenges and Opportunities of Bitcoin Users. In Proceedings of the 2017 CHI Conference on Human Factors in Computing Systems, Denver (pp. 6499–6510). New York: ACM.
Schul, Y., & Peri, N. (2015). Influences of Distrust (and Trust) on Decision Making. Social Cognition, 33(5), 414–435.
Scott, B. (2016). How Can Cryptocurrency and Blockchain Technology Play a Role in Building Social and Solidarity Finance? Geneva: UNRISD. www.unrisd.org/80256B3C005BCCF9/search/196AEF663B617144C1257F550057887C?OpenDocumente. Accessed 10 Jan 2018.
Seebacher, S., & Schüritz, R. (2017). Blockchain Technology as an Enabler of Service Systems: A Structured Literature Review. In S. Za, M. Drăgoicea, & M. Cavallari (Eds.), Exploring Services Science. IESS 2017. Lecture Notes in Business Information Processing (pp. 12–23). Rome: Springer.
Selten, R. (1988). The Equity Principle in Economic Behavior. In Models of Strategic Rationality. Theory and Decision Library C (Game Theory, Mathematical Programming and Operations Research) (Vol. 2, pp. 269–281). Dordrecht: Springer.
Serrano-Cinca, C., & Gutiérrez-Nieto, B. (2014). Microfinance, the Long Tail and Mission Drift. International Business Review, 23(1), 181–194.
Shaw, N. (2014). The Mediating Influence of Trust in the Adoption of the Mobile Wallet. Journal of Retailing and Consumer Services, 21(4), 449–459.
Shim, S., Serido, J., Bosch, L., & Tang, C. (2013). Financial Identity-Processing Styles Among Young Adults: A Longitudinal Study of Socialization Factors and Consequences for Financial Capabilities. Journal of Consumer Affairs, 47(1), 128–152.
Tapscott, D., & Tapscott, A. (2016). Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World. New York: Penguin.
Vázquez, A. (2015). Determinantes para participar en el mercado formal de productos financieros: El caso del ahorro y del crédito en México. Estudios Económicos CNBV, 3, 73–108.
Venegas, P. (2017). Trust Asymmetry. A Medium Corporation. https://medium.com/@economymonitor/https-medium-com-economymonitor-trust-asymmetry-in-the-blockchain-financial-system-8ba77dbaad41. Accessed 20 Feb 2018.
Wang, R. (2015). Internet Use and the Building of Social Capital for Development: A Network Perspective. Information Technologies & International Development, 11(2), 19–34.
Yunus, M., & Weber, K. (2007). Creating a World Without Poverty: Social Business and the Future of Capitalism. New York: BBS Public Affairs.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2019 The Author(s)
About this chapter
Cite this chapter
Larios-Hernández, G.J., Ortiz-de-Zarate-Béjar, A. (2019). Blockchain Entrepreneurship and the Struggle for Trust Among the Unbanked. In: Treiblmaier, H., Beck, R. (eds) Business Transformation through Blockchain. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-99058-3_10
Download citation
DOI: https://doi.org/10.1007/978-3-319-99058-3_10
Published:
Publisher Name: Palgrave Macmillan, Cham
Print ISBN: 978-3-319-99057-6
Online ISBN: 978-3-319-99058-3
eBook Packages: Business and ManagementBusiness and Management (R0)