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Why Bitcoin Matters for Africa

ariannasimpson.com

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Re: Why Bitcoin Matters for Africa

#21

Post by aaron695 »

res0nat0r wrote: post #3

Hard to take this article seriously when the first few paragraphs are talking about the hyperinflation of the currency of Zimbabwe, then trying to rectify that with bitcoin, which can fluctuate hundreds of USD in the span of a couple of hours. It specifically mentions M-Pesa, which is already used by the majority of the continent, but trying to improve and go all-in on something established and accepted like that wou…

When has bitcoin ever even gone close to sustained hyper inflation of 231,000,000% ?

You can't just go because it dropped or rose 30% in one day that's it's inflation rate over a year, talk about cherry picking.

Re: Why Bitcoin Matters for Africa

#22

Post by glitch003 »

ariannahsimpson wrote: post #4
res0nat0r wrote: post #3

Hard to take this article seriously when the first few paragraphs are talking about the hyperinflation of the currency of Zimbabwe, then trying to rectify that with bitcoin, which can fluctuate hundreds of USD in the span of a couple of hours. It specifically mentions M-Pesa, which is already used by the majority of the continent, but trying to improve and go all-in on something established and accepted like that wou…

You could actually use bitcoin essentially as the payment "rails" for a transaction, so that people don't hold bitcoin and immediately then convert back into local currency, and therefore get around the price changes. Companies like coinbase already allow merchants to do this. Also, bitcoin prices will stabilize over time & as more people use the currency.

You just described Ripple.

Re: Why Bitcoin Matters for Africa

#23

Post by XorNot »

mrb wrote: post #12
res0nat0r wrote: post #3

Hard to take this article seriously when the first few paragraphs are talking about the hyperinflation of the currency of Zimbabwe, then trying to rectify that with bitcoin, which can fluctuate hundreds of USD in the span of a couple of hours. It specifically mentions M-Pesa, which is already used by the majority of the continent, but trying to improve and go all-in on something established and accepted like that wou…

It is extremely short-sighted to look at the volatility of Bitcoin today and say "it can never work". Volatility IS DECREASING over time, as the economy and volume/market depth on exchanges are increasing. This has been explained many times on HN.

It can never work because it can only handle 7 transactions per second.

Re: Why Bitcoin Matters for Africa

#24

Post by wyager »

XorNot wrote: post #23
mrb wrote: post #12

Earlier quoted context omitted.

It is extremely short-sighted to look at the volatility of Bitcoin today and say "it can never work". Volatility IS DECREASING over time, as the economy and volume/market depth on exchanges are increasing. This has been explained many times on HN.

It can never work because it can only handle 7 transactions per second.

That's a removable artificial limit, not a hard one.

By tweaking some settings, the network could easily be scaled to many times that.

If it ever became an issue (read: the network started to consistently max out the TPS limit), the ceiling would be lifted. If that wasn't sufficient, effort would be put into making the network more efficient. If that wasn't enough, more creative solutions would come into play (offline transaction systems, systems built to manage BTC outside of the blockchain [see CoinKite], etc).

Re: Why Bitcoin Matters for Africa

#25

Post by wyager »

res0nat0r wrote: post #8
natrius wrote: post #7

Earlier quoted context omitted.

My understanding is that M-Pesa is used in Kenya and Tanzania, which mathematically can't be the majority of the continent. M-Pesa uses local currencies, which frequently lose their value in non-OECD countries.

I should have qualified above with something like e-currency. > M-Pesa uses local currencies, which frequently lose their value in non-OECD countries. The outrageous swings of bitcoin hour by hour have the same issue. I don't see how using the USD, like Zimbabwe did to prevent inflation coupled with M-Pesa wouldn't be a better solution if you are suggesting the country move to a new system.

>The outrageous swings of bitcoin hour by hour have the same issue.

Bitcoin loses, at worst, maybe 50% of its value over the course of a few weeks. The Zimbabwe dollar lost 99.99% of its value over the course of a few weeks.

Of course, on larger time scales, the volatility of Bitcoin has been in a distinctly upward direction. So yeah, I guess Bitcoin has kind of the opposite problem of the Zimbabwe Dollar (if you can call it a problem).

And then, of course, Bitcoin will probably stabilize over time. New currencies are not historically stable.

Re: Why Bitcoin Matters for Africa

#27

Post by rowanseymour »

Bitcoin matters for Africa, and all other continents... and this article contains a lot of nonsense. Yes, Zimbabwe's hyperinflation was caused in part by printing money - but it seems a grossly unfair simplification to present that as the root cause of Zimbabwe's economic woes. To quote:

Gideon Gono, governor of the Reserve Bank of Zimbabwe, increased the supply of money enormously against the advice of economists, but with full support from President (read: dictator) Robert Mugabe. As any basic textbook of economics posits, the Zimbabwean dollar fell in value and hyperinflation followed

Also:

in many cases this was caused by impulsive, foolish “human error” in the form of printing money without thought for the consequences

It sound's like we're blaiming the whole thing on stupid Zimbabweans (too stupid to read a basic textbook!) who ignored the advice of their western advisors.

Let's not forget that until 1980, Zimbabwe was ruled by a white minority apartheid government. The country that Mugabe's ZANU party inherited was one where a few thousand white farmers owned the majority of all the fertile land in the country. Mugabe's land reform policies were badly implemented and caused the collapse of the country's food production, which seems to have to led to the collapse of the banking sector. On top of that their economy had to deal with sanctions from the US and EU. By the time Zimbabweans were printing money, their economy was already in a dire situation.

Anyway, the gist of this article is that stupid economic policy can lead to hyperinflation. Ok. So why the generalization about Africa? Does the author think that stupid economic policy is something common to African countries? Does the author know that the IMF is predicting that four of the world’s six fastest-growing economies will be in sub-Saharan Africa this year? [1]

Incidently the article doesn't mention the one area in which I think Bitcoin will be very useful for large parts of Africa: remittances [2].

[1] http://www.economist.com/news/21588896-some-worlds-fastest-g...

[2] http://www.rnw.nl/africa/article/hello-bitcoin-goodbye-weste...

Re: Why Bitcoin Matters for Africa

#28

Post by barretts »

hawkharris wrote: post #5

This article was well written and thought provoking, but the title should be changed to "Why Bitcoin Matters for Zimbabwe." The current title makes the article sound like a generalization about all the economies in a continent.

Agreed. And hyperinflation is terrible when it happens, but quite rare in modern economies. Double-digit declines in bitcoin values are, however, quite common. It would be profoundly irresponsible to encourage the poor of Africa to make the switch at this point.

Re: Why Bitcoin Matters for Africa

#29

Post by barretts »

rowanseymour wrote: post #27

Bitcoin matters for Africa, and all other continents... and this article contains a lot of nonsense. Yes, Zimbabwe's hyperinflation was caused in part by printing money - but it seems a grossly unfair simplification to present that as the root cause of Zimbabwe's economic woes. To quote: Gideon Gono, governor of the Reserve Bank of Zimbabwe, increased the supply of money enormously against the advice of economists, b…

I've become skeptical about bitcoin for remittances. The biggest cost in remittance architecture isn't the electronic transfer, but distributing cash. Western Union, e.g., maintains a network of over 1 million agents - banks, post offices, dry goods stores, mobile top-up kiosks, etc. - so that recipients, often in rural areas, can collect their cash. Bitcoin does nothing to reduce these costs.

(Unless you're assuming recipients in Africa et al. will keep their money in bitcoin, which is ridiculous at this point, and will be for many, many years.)

Re: Why Bitcoin Matters for Africa

#30

Post by zamalek »

Please tell me more about how Bitcoin (an electronic currency) matters for a country with very poor internet connectivity and constant power outages.

Furthermore the country has abandoned its native currency and is using USD/GBP/ZAR in any case.

Economic freedom is irrelevant when there is a gun being held to your head [in a very literal sense].

Disclaimer: I lived there for 14 years of my life, and visit my family there often.

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