I was shocked - truly shocked - in comments the other day, to discover that the M-Pesa monetary system currently overtaking Africa isn't known to everyone here. I had mentioned it, and was asked what it was. I then did a site search, to discover that there have been three(!) references to M-Pesa in the past six months or so; and those of only an inconsequential, drive-by nature. Maybe I don't get how the search function works...
And while bitcoin has more traction, it too suffers from a lack of exposure here on Dkos.
These two, new monetary systems are becoming economically and politically important in the world: and politically important for mostly all the right reasons. Without a basic understanding of what they are, why they exist and how they work, it will become more and more difficult to understand how they impact political activism - and, indeed, to conduct successful activist campaigns at all. Because money is the lifeblood of politics. And while money has generally been used as a tool against the poorest of the world, that can change: it is, in fact, changing. And now, with the introduction of Kipochi - which integrates the two - the network effects are coming like a tidal wave.
I don't know a lot about M-Pesa - I'm not a user - but one really doesn't need to. It is instinctively impossible not to get it - it's a beautiful thing.
Bitcoin, on the other hand, I know a lot about. I've been involved with bitcoin for a little over two years - and it is, in the main, the reason I haven't been around here much. I've been heavily invested in pushing the Overton Window to the Left, at various bitcoin sites; and have met with varying degrees of success. I haven't been alone in that effort. The death-grip of the Randian libertarians on bitcoin has loosened considerably,
Kipochi is a brand new player - but will have an enormous impact on both of these monetary systems.
The venture capitalists, the lawyers, the Winklevii, and the Foundations are here: and they are not revolutionaries.
In one easy sentence: M-Pesa is money based on the value of cell-phone minutes, that is transferred from person to person via text messaging. If ten minutes have a value equivalent to a loaf of bread, you text ten of your minutes to the baker and he gives you a loaf of bread. Does it get any simpler?
80% of the population of Africa - the entire continent! - is unbanked. Why? Basically, because to be poor in Africa outside the big cities (and even in them) is to be really poor. What a poor person in the U.S. pays per month in charges on one of those scummy debit-card payroll schemes - $40-50/month - is a living wage in most of Africa. Kenya, for example - where M-Pesa first took off - has a per capita income of roughly $1,500/year: but if you take the wealthy out of that averaged number...
The banks haven't seen a way to extract what they consider to be enough money from the general population - so they just don't bother. Outside of the big cities (where banks need to be attentive to the money-laundering needs of the average tin-pot dictator) there are no banks, to speak of. That's changing slightly, as those dying behemoths realize their strategic error, and are frantically playing catch-up - but they're looking pretty late to the party. To which I say: good.
What is there in Africa, anyway? Some of the best cell-phone coverage on earth. And so, once the cell-phone providers decided that it would be in their best competitive interest to allow people to swap their minutes back and forth (beginning in 2005, with full cross-adoption by 2010), the M-Pesa system took off.
Adoption has been ferocious. This is what it looks like.
Pay attention to M-Pesa. There will be no successful activist projects in Africa that don't take it into consideration.
Bitcoin is both a currency and a commodity. It has value for the same reason that gold, or any other primary form of money, has value: because people agree on that value and exchange goods and services based on their mutual acceptance of it.
I think most people here have been exposed to bitcoin, and understand a little about how it works. I'm not going to go into that much. Frankly, I'm kind of burned out on it. I've spent the past couple of years in bitcoin wars around the 'net that make our little Snowden tiff look like a mutual admiration society meeting that begins and ends with a stirring rendition of Kumbayah in four-part harmony. So I'll just offer a quick precis, try to forestall the usual bullshit FUD, and leave it at that. If you have rational questions, I'll do my best to answer them in-thread. I'm not a crypto geek - I'll mention it, but do your own research on that, OK?
Bitcoin is a person-to-person, completely decentralized, and highly secure form of money. It is available to anyone, without identification or credit checks. Bitcoins can be sent anywhere in the world with no, or very small, fees. The transfer of bitcoins from person to person anywhere in the world where the internet is available cannot be interfered with by any government or bank. You can get it here. The best introduction to the concept and use of bitcoin is at WeUseCoins: watch it, if you don't already have a basic working understanding of what bitcoin is. If you would like to see how big bitcoin is in various places around the world, there's this WebGL Globe thingie.
Is bitcoin risky? It depends. As a commodity-type investment, yes - it is somewhat risky: less so than a penny stock, but more so than some basket vehicle of Dow Jones stocks. Is there counterparty risk to using bitcoin as a currency: i.e., for transacting business or buying stuff? No - there isn't. The risk that the value of a bitcoin will fluctuate so much that you'll lose purchasing power (or lose income) in the time a transaction takes is nicely taken care of by the various companies that provide merchant services for bitcoin: conversion pricing is guaranteed, second-by-second. Is there a risk of hackers stealing my bitcoin wallet? Yes, there is. You are responsible for your own security: don't do stupid things on the internet with the computer your wallet is on. That said, there are many solutions to this problem, of varying degrees of complexity - they are getting better and easier all the time.
Is bitcoin anonymous? It most certainly is not. There are complicated ways to get close to anonymity - but it's almost impossible to make a bitcoin as anonymous as a hundred dollar bill.
But you can't really buy anything with bitcoin, right? Wrong. You can buy houses around the world, cars, get pizza delivered, buy any geek toy there is, buy the gift cards of almost anyplace that offers them, pay for your phone and its charges, buy computer and internet services (including VPNs - and you're crazy if you pay for your VPN any other way), Here's a partial list of bitcoin merchants. Settle in. Get some coffee. It's long...
But seriously, it's really only good for drugs and money laundering and kiddie porn, right? You're an idiot. I'll give you a simple choice: you can have one-hundredth of one percent of the money that is spent on that stuff, just in US dollars - or you can have what's spent on that stuff in bitcoin. I'm waiting on your so-obviously informed decision. I have zero patience at all anymore, with that. Don't even ask.
As I pointed out in the sub-thread that sparked this diary:
There's a lot of bank trolls on the bitcoin blogs that try to spread that stuff. Don't buy it.But I've heard that it's a Ponzi scheme. Sigh. Doubling down, are we?
You're shocked, I'm sure. The idea of folks trolling for organizations inimical to the blog they're on is a strange concept, I'll grant you. But it does happen.
But they could ban bitcoin - and the NSA can hack it anyway, right? Wrong. I see no way to 'ban' what is essentially a file transfer over an open P2P network; and I'll point out that this is a major purpose behind the design of the bitcoin protocol. And no, the NSA can't crack bitcoin's encryption. But quantum computers will crack bitcoin, right? Wrong. Bitcoin has many layers of encryption: some are vulnerable to quantum computing, some aren't. If you really want to worry about quantum vulnerabilities that aren't going to exist (as a matter of practicality) for many years, worry about your bank account. Banks use fewer encryption layers than bitcoin, and the encryption used is less strong. Also, the bitcoin software is purposefully designed to be able to plug various encryption pieces in and out. If the need should arise to strengthen bitcoin's encryption, it's trivial to do so.
That's enough. Just ask. I'll stick around for awhile.
Swahili: wallet (a flat case, often made of leather, for keeping money).
This is truly fantastic. I know almost nothing about Kipochi. But I see what it does. It accepts bitcoin and spits out equivalent value in cell-phone minutes on the African network providers. Memeburn has a decent article on it.
Kipochi just launched its Bitcoin transfer service in Kenya using M-Pesa as its running platform. This service would allow people across Kenya to send and receive funds abroad with extremely low transaction fees using the crypto online currency — Bitcoin.Think about that. Today, if you want to help out with a donation, what happens? Well, you send money to the Red Cross or some similar organization, they take their cut and the money is passed on to some company that sells stuff that is needed in Africa. They take their cut, and send the stuff on through some transport service, who takes their cut. It reaches port and then corruption takes its cut: dockworkers, local warlords or governments, national government... So your donation finally gets to its intended recipients as... what? Certainly less than 10% of the value you donated. Whoopee. And of course you had absolutely no choice at all in where your donation went, or what items were purchased with your money.
A few months ago, we heard rumours about Bitcoin ATMs in Africa. Although sounding disruptive, it doesn’t really take advantage of Africa’s unique market and has been implemented before. According to Quartz, M-Pesa accounts for as much as 31% of Kenya’s GDP. This is Kipochi’s main focus.
The company recently ran a Q&A thread on Reddit which showed much of the users’ appreciation as well as some talk of expansion to the rest of Africa including South Africa and Tanzania.
But now? Oh my! Got a village you'd like to help out? Maybe you passed through, once upon a time - they were kind, and they're having some needs unmet at the moment. Maybe you were in the Peace Corps, and you worked there? Maybe you just know a guy who knows a guy who's from there? Maybe you are from there, and you send money back regularly?
Well... send some bitcoin. How much of it do they get? All of it.
So what's the leverage here? It's enormous. At the very least, you're getting ten times more into the hands you actually wanted to help out, than if you donated through some 'normal' organization like the Red Cross. At the least. If you're floating a loan, you can do it directly through a trusted - but local - party: nobody gets a rake.
I wish I knew more about Kipochi. I will. Soon.
But in the meantime, I thought I'd pass on what I've got.