If you came to Fanta-Citron in Mvog-Ada, the shantytown where I grew up in Yaoundé, Cameroon, on a Sunday afternoon, you were greeted by women dressed in Kaba Ngondo, or Kaba, a traditional outfit worn by women in Cameroon made of fabric with emblems. The men wore shirts that would mirror the Kaba. There were, in fact, the outfits of the tontines, which were held on that day.
Sunday was known to be the day of the Lord and of the tontines. There was mass in the morning and tontines in the afternoon, the former being the legacy of colonization and the latter the legacy of our traditions.
Tontines were a kind of informal banks because a large majority of Cameroonians were excluded from the traditional financial system due to barriers such as having to be employed and to prove the origins of your income. What an irony, in a country where the under-the-table unemployment rate was at historic highs and most people survived thanks to this informal system.
In my neighborhood, I am not sure whether more than 50 people had an account with a bank, let alone a savings account. Not only did tontines supplement banks for the middle and lower classes, but they also encompassed local values of solidarity, mutual aid, trust and community building. There were no criteria for joining a tontine.
A tontine could be created by anyone who would then promote it among their circle. They could be created between friends or colleagues, members of a family or between neighbors. The men at songo’o, the traditional game that men used to play during my childhood, had created one. My mother and Auntie Blandine had created one too. These tontines served as a savings bank, granted loans to members and helped them in times of hardship, among other things. They gave a sense of belonging. They took many out of isolation and, above all, allowed them to be the drivers of their lives in a country run by a small group that had taken control of all the resources and wealth to the detriment of the people.
Tontines had made it possible to create a resourceful credit system, because they provided micro loans, like what microfinance does, to start a business activity. When, for example, my mother and Auntie Blandine decided to end their tontine, Ambiance, I remember the dismay and sadness that gripped many of the residents of my neighborhood. It was as if they had fallen ill, as if they had lost an important piece of them. In some ways it was true.
Tontines were not without risk, however. There was no equivalent of the $250,000 insurance per depositor which is provided by FDIC (the Federal Deposit Insurance Corporation) in the U.S., in the event of a failure. A member could disappear with all the funds of the tontine, causing colossal losses to the other members who had put all their savings into it. And it did happen, but those were isolated cases.
It is the tontines that I think of when I see the craze for cryptocurrencies resurfacing again, like in the heyday of the COVID-19 pandemic. At the time, this surge had made many speculators, generally young men, millionaires. But fear of missing out had also caused colossal losses to many who were the victims of scammers. The crypto crisis in 2022 also burned many retails investors. This crisis reinforced the bad reputation that crypto has with mainstream media and often with regulators and politicians.
The problem is that they only see one side of the coin of this emerging technology: Bitcoin and its volatile price. It is a bit like looking inside a house from the window. There is no doubt that, once you step through the door, you have a much better view.
Were they on the other side of the wall, this is what they would see. Crypto can help narrow the financial gap between the haves and the have-nots, White people on one side and Brown and Black folks on the other. It is not that crypto would reduce the inequalities in America. It is that crypto can provide financial services to anyone, services which are not offered to millions.
First of all, there are no middlemen in crypto, so no need to pay exorbitant fees. There are no barriers linked to the color of your skin or your socioeconomic background.
How is this possible, one would ask. It is possible because of the Blockchain, the technology behind cryptocurrencies like the Bitcoin or Ether. At a high level, the technology allows to build what is called a smart contract, which is basically a transaction involving different parties. The contract sets the conditions, which are all encoded in the contract itself. These contracts are executed once the conditions are met. It is almost mathematically impossible for the parties to change the terms once the contract goes into effect. If they did, it would become evident as all the contracts are public.
Basically, you can get a loan from someone living on the other side of the world, as long as you agree on the terms (interest rate, maturity, etc.). You can trade and you can easily move money (stablecoins) around the world.
Another advantage of crypto is that it knows no borders. You could do business with anyone anywhere. In a strange way, crypto connects people. For my Black and Brown bros, who are most often excluded or offered limited services by traditional banks, crypto is a game changer. It gives them not just one but multiple seats at the financial table.
According to the FDIC, in 2023, about one in six households (15.7 percent) had no mainstream credit. Households with no mainstream credit do not have a credit card, an auto loan, or other credit product, making it difficult for them to get access to credit without a credit history and a credit score. It is a vicious circle.
Even worse, according to the same study, 14.2% or about 19 million of U.S. households, are underbanked, which means, that they use non-bank money orders, and remittances, pawnshops, auto title loans, tax-refund anticipation loans and other methods, rendering them victims of predatorial loan schemes.
These numbers show that banks and credit unions are failing to meet the needs of many of the people who live in disadvantaged or economically fragile communities. The crypto industry can step in, as it does not discriminate.
Crypto is also an opportunity for my Black and Brown bros to build wealth by investing in new asset classes, or even in financial instruments reserved until now to very few on Wall Street.
It can allow them to reduce their disadvantage compared to white people, especially those who benefit from generational wealth. Race and social and economic background do not matter when it comes to crypto. There is no advantage whether you are white, Black, brown, Asian, rich or poor.
You can also save (stake) your cryptocurrencies by holding them on a platform, which earns you money in the form of rewards.
The big difference between crypto and traditional banks is that there is no insurance if a crypto instrument fails, while the FDIC guarantees up to $250,000 per bank depositor in case of the failure of a commercial bank.
This is a major difference that adds to crypto’s villain reputation. Consequently, the media focuses on speculators and criminals who use the young industry to get rich quickly and to launder money. It is not that different from traditional financial firms, which, even though they have been marred with Ponzi schemes, fraudsters and speculators, they often get away with murder. In an obvious example, how many bankers or traders involved in the 2008 subprime crisis are behind bars? The 2008 financial crisis, on the other hand, ruined millions of people around the world.
Every day in trading rooms, traders speculate and create products that the average person does not understand. Crypto has at least the merit of being for everyone, and, above all, of fulfilling a function that banks don’t: to serve everyone.
Crypto is the wild west, I usually hear. And that my crypto bros don’t want regulation. This is not entirely true. Like in any industry, my crypto bros want rules but not ones which would restrict their access to it.
Like the tontines in my childhood, crypto can help minorities to overcome financial and wealth discrimination. This is a story that should also be told. Seen from this angle, we must focus on educating the general public rather than discouraging people from investing in crypto. Unlike the dollar and other currencies, Bitcoin does not depend on or is controlled by any political authority.
For many of its supporters, crypto has democratized the financial system. I am certain that many of my Brown and Black bros would welcome that.
