This story serves to function both as a real blog post of mine, but also as an example of data storytelling for my university Data Storytelling Course.
BIG IDEA: An anonymous cryptocurrency wallet address could provide greater equity in financial systems.
In a previous blog post, I spoke about the potential for decentralized finance to form the foundation for a different Internet. One arena where I believe this could apply is within the arena of access to loans, such as loans for home-ownership. The following line chart shows findings from a 2019 report by the Urban Institute regarding the state and barriers to homeownership for minorities.
One of the findings of this report was as follows:
“Black and Hispanic households have been disproportionately affected by overly tight mortgage lending standards — and they constitute a surprisingly large share of the 6.3 million loans that were not originated because of tight credit during the 2009 to 2015 period” (McCargo, 2019).
As a very brief story/memory, I distinctly remember growing up as a child of Korean immigrant parents and many of my parent’s friends had cash businesses (e.g., fashion supply shops, dry cleaners, convenience stores). The ability for my parent’s generation to access financial loans or other capital building financial instruments was largely non-existent, so I remember many of them storing cash in large amounts at home (out of necessity) and giving loans to each other via cash. This is different than what is experienced by black and hispanic households that have been in the US for many generations, but it highlights that there are varied difficulties for people groups when attempting to interact with financial systems within the US.
Many of the approaches to make the housing finance system accessible to minority groups involve specialized programs for people that voluntarily identify themselves as being part of these groups and I believe this is necessary and useful. What I would like to suggest is that there could also be room for finance systems that literally cannot access information regarding race of the applicant; in fact, this system cannot even access the name of the applicant.
Recently Dr. Janet Yellen, U.S. secretary of the treasury, commented on crypto-currency in a written response to her nomination interview questions by stating:
“I think it important we consider the benefits of cryptocurrencies and other digital assets, and the potential they have to improve the efficiency of the financial system. At the same time, we know they can be used to finance terrorism, facilitate money laundering, and support malign activities that threaten U.S. national security interests and the integrity of the U.S. and international financial systems. I think we need to look closely at how to encourage their use for legitimate activities while curtailing their use for malign and illegal activities” (Yellen, 2021).
When you are accessing the Ethereum decentralized financial blockchain network, you are identified by only one thing, namely your crypto wallet address. For example, one of my wallet addresses is:
(both Ethereum and BSC network)
This wallet address carries no name or any other identifiable information, but it is all I need to access certain potential collateralized loans within the crypto-realm. As a side note, this is not my main wallet, but if you would like to send me crypto for this line of research, please feel free to do so.
Yes, there are many things that could be problematic with anonymous access to financial systems (Dr. Yellen aludes to some issues above), but can I counter-argue that we are just not honest enough about problems with “identified” access to financial systems?