And western KYC/AML laws that are forced upon all countries exclude those people from having bank accounts.
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These kids can't access any services because they don't legally exist in government systems. No birth certificate means no school enrollment, no healthcare, no social grants.
You think a 15-year-old footballer who can't play in tournaments because he has no birth certificate is going to be helped by Bitcoin?
What school is letting them enroll because they have a hardware wallet?
This is a civil administration problem that needs government solutions: streamlined processes, digital systems, reduced fees, and political will.
However I don't see the binary extremes you see.
The undocumented people can pool together and start their own schools. They can start their own soccer league. They can hire a pooled doctor. They can put some amount of stored value into a crypto account, which might be better in some cases than hiding gold in a hole or something, because they aren't going to be able to access banking.
And yes, that situation sucks, and it's wrong, and it encourages apartheid-light, and is not an acceptable solution. But in the meanwhile, it would be better for them than nothing and it is something they might have the agency to do.