Can Stablecoins Actually Improve Financial Inclusion: Exploring the IT Affordances of Token-Based Digital Currencies

Abstract

To motivate wider adoption, proponents of token-based digital currencies have advocated for their use for financial inclusion. Token-based currencies are closer to cash than are intermediated account-based ones (e.g., M-Pesa), which is important since cash is the least financially excluding form of money. However, in-depth evidential studies have concluded that the narrative appears compelling only in niche cases. In this paper, a re-examined exploration of the narrative, drawing from an IT Affordance lens, is presented. The paper explores how the recently introduced concept of an intermediary ecosystem can hinder or enable a financially excluded person’s potential use of stablecoins to fulfill goals associated with financial inclusion affordances. The possibility that stablecoin functionalities could be integrated into, for example, community-based initiatives like Latin American tandas is explored. Hence, reframing through the lens of IT affordance reinforces that blockchain-based tokenized digital currencies could strengthen benevolent intermediaries’ ability to aid financially excluded persons.