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Why Bitcoin Matters for Africa

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Re: Why Bitcoin Matters for Africa

#31

Post by rowanseymour »

barretts wrote: post #29
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…

I think the solution to the distribution challenge is already here: mobile money. It's huge in Kenya and on the rise here in Rwanda and other neighbouring countries. Bitcoin would serve only to get the remittance to an in-country distributor, at which point it would be converted to local currency and delivered via mobile money.

Re: Why Bitcoin Matters for Africa

#32

Post by nhaehnle »

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…

Thank you for this comment, I was about to post something very similar. The thing about hyperinflation is that people are hypnotized by the many zeros that are involved and ignore the underlying root causes.

Zimbabwe suffered economically for reasons entirely unrelated to hyperinflation. Hyperinflation was just a kind of release valve for the economic mess that already existed before it started. Had Zimbabwe used Bitcoin at the time [0], the well-intended but badly implemented land reform would still have caused economic collapse and wide-spread suffering. The symptoms would have been slightly different, but they would have been just as bad.

The same could be said for the Weimar republic hyperinflation of the 1920s, by the way. Hyperinflation was a release valve for the economic problems that Germany was already in, and ultimately helped demonstrate that the war debts imposed from World War I were onerous and should be forgiven. Arguably, using Bitcoin would have made the long-term situation worse for Germany back then.

[0] Obviously completely hypothetical since Bitcoin did not exist, but that's beside the point.

Re: Why Bitcoin Matters for Africa

#33

Post by nhaehnle »

anigbrowl wrote: post #19

Since bitcoin is a decentralized currency that is controlled by algorithms rather than one or a small handful of individuals, there is no option to simply “print more money”. This precludes governments from instituting reckless monetary policies and subverting entire economies on little more than a whim. Countries will just have fiscal rather than monetary disasters in such situations. Look at Greece. Really, hyperin…

What's more, governments usually don't wake up one morning and decide to start hyperinflation out of the blue. Instead, hyperinflation is usually the result of economic disasters that came before.

In fact, I would "fix" what you wrote, because the fiscal disasters are typically a required precondition for the monetary disasters. When using Bitcoin, the countries might be limited to fiscal disasters, but - as the example of Greece shows - those are the real problem anyway.

Re: Why Bitcoin Matters for Africa

#34

Post by uonyx »

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.

Thank you. The trend that 'X' country in Africa equates to Africa really really grinds my gears.

Re: Why Bitcoin Matters for Africa

#35

Post by randomafrican »

So now the country with the worse case of hyperinflation of may be the last 30 years is somehow representative of a continent of 50 countries ?

Anyway.

Capital flight (especially unearned capital) has been a more common issue for much longer. I'm not sure how making that problem worse would help.

Re: Why Bitcoin Matters for Africa

#36

Post by bayesianhorse »

A fundamental flaw in many people's understanding of bitcoin's "advantages" is this notion of "not printing money" being a uniquely good idea.

Yes, extremely bad monetary policy is worse than having no monetary policy (as in the bitcoin economy). But the case of no monetary policy being better than even a moderately bad monetary policy is much harder to make.

I also don't see why so many people believe that there won't ever be an increase in the money supply from bitcoins. With a growing market capitalization and growing number of businesses dependend on Bitcoin, financial services and products around btc are becoming more common. Virtually no contracts, even in the bitcoin world, are instantaneous, thus investment banking will evolve and distort the idea of a new gold standard.

Re: Why Bitcoin Matters for Africa

#37

Post by randomafrican »

natrius wrote: post #7
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…

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.

M-Pesa is one service by one telco operator. Almost every teco in Africa has implemented an equivalent.

Now the penetration may not be as deep in the other countries as in Kenya but that will change.

Re: Why Bitcoin Matters for Africa

#38

Post by netcan »

The 'no central bank' concept in bitcoin is interesting academically to economists and people with strong opinions on the matter. IMO, it's not the most important part of bitcoin for countries like Zimbabwe or other developing economies.

(1)Bitcoin is a long way from being a steady, safe currency that solves currency instability problems. (2) I don't think it's all that different from simply using foreign currency, which is what people in countries with a failing currency do.

IMO what is interesting about bitcoin and bitcoin in developing countries in particular are its basic advantages: digital, transaction cost free cash. This may open up the door to all kinds of activities held back by the non access to financial services. Remittances, long distance commerce, saving, etc. Remember the splash microlending made? A lot of later studies (after the initial noble prizes and mass interest) found that micro-loans acted as (poor) substitutes for other basic financial services like savings or insurance. It's hard to save when everyone in your tight knit extended family is broke and owed favors. You just can't keep your penny jar tucked away. But, paying back your loan is not optional so microloans are the only way of doing big ticket purchases, even if interest rates are very high.

Financial infrastructure is important. If bitcoin (or similar) can be used to build low cost financial services available everywhere it will have made a big difference. The hyperinflation stuff is very theoretical for the near future and uncertain in the farther off future.

Links on this page are a good reference for the academic thoughts on microfinance and financial services as development tools during the recent 3-4 surge in interest on the topic: http://www.econtalk.org/archives/2011/04/munger_on_micro.htm...

*Even though there doesn't tend to be a lot of talk about savings as a way out of poverty, I think that thinking back on many of the old anecdotes from now developed economies, those people credited savings as a way of making progress on their family's financial situation.

Re: Why Bitcoin Matters for Africa

#39

Post by qznc »

sanswork wrote: post #16
mrb wrote: post #14

Earlier quoted context omitted.

Look harder. Over the last 4-5 years volatility has gone down. And episodes of volatility spiking up are rarer. A linear regression on the volatility line is clearly going down: http://btcmag.9wizards.netdna-cdn.com/wp-content/uploads/201...

What method of tracking volatility are you looking at because all the ones I've tried on http://bitcoincharts.com/ at the all data length show an increase in volatility. (Tried Chaikin Volatility, Donchian Channel, ATR, and Bollinger Band)

http://bitcoincharts.com/charts/bitstampUSD#tgTzm1g10zm2g25z...

Chaikin Volatility goes down imho. I do not really know what the others mean. Are they adjusted for volume?

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