episode 18 of lets talk bitcoin
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8/14/2019 Episode 18 of Lets Talk Bitcoin
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Host - Adam B. Levine
[Intro Music Plays]
Adam: Coming up on today's show. Bitcoin, MPESA,Bitcoin, MPESA and Kenya- Courtesy of
GenesisBlock.com. What is Microlending, and does it work? Its Not That Simple - Life as theLargest Canadian Exchange with Joseph David, CEO ofCAVirtex. 16 Bribes a monthIs
Corruption just Developing World tipping. Mutually Beneficial Mesh Networking on your
Smartphone with Stanislav Shalunov CTO of OpenGarden and the origins of M-Pesa, and what
are bitcoins chances in Kenya really?
Adam: If you're new to Bitcoin check out letstalkbitcoin.com/learn to be directed to the bitcoin
education project. If you like what we're doing please review us on iTunes or your preferred
podcast platform.
[Music Break]
Adam: This helps other find the show but just generally we really appreciate it, we do an hour
long show every week and it can be overwhelming to our new listeners. I'm excited to announce
a brand new tool to help share the show called, Givepodcast.com. Using your phone just take a
screenshot of your podcast player at the time you want to share, email the image to
clip@givepodcast.com with the description in the subject and the email address of the friend
you'd like to send it to, the service grabs a 10 minute clip of the show starting at the time
indicated by the screenshot, hosts it and emails it to your friend in a nice clean format. This is an
experiment, please give it a try and tell us what you think.
[Music Fades]
Adam: Hi, and welcome to letstalkbitcoin a twice weekly show focused on the ideas, projects
and people building the new digital economy and the future of money, my name is Adam B.
Levine and I'm a writer and speaker who likes to talk about complicated topics in
understandable terms. Joining me in our twice weekly search for clarity Andreas M.
Antonopoulos is an expert in Distributed systems and decentralized networks.
Andreas: Hello
Adam: Dr. Stephanie Murphy is a scientist and syndicated radio host.
Stephanie: Hello
Andreas: The potential of cryptocurrencies such as Bitcoin in Africa is an issue we've talked
about on this show quite a bit and in fact I've coined the term, Bitcoin is for the other 6.5 billion
and it's something I fell strongly about. Recently, Noel Jones writing for one of our favorite
blogs, the genesis block wrote a great piece explaining how specifically Kenya would benefit
http://www.thegenesisblock.com/guest-post-kenya-primed-for-wide-scale-bitcoin-adoption/http://www.thegenesisblock.com/guest-post-kenya-primed-for-wide-scale-bitcoin-adoption/http://www.thegenesisblock.com/guest-post-kenya-primed-for-wide-scale-bitcoin-adoption/http://www.cavirtex.com/http://www.cavirtex.com/http://www.cavirtex.com/http://www.thegenesisblock.com/guest-post-kenya-primed-for-wide-scale-bitcoin-adoption/ -
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immensely from such adoption if only they knew. So, from the article "Africa today has one of
the fastest growing mobile phone markets in the world with 20% annual growth and 93% of
Kenyan households owning mobile phones. What makes Kenya a particularly unique case for
Bitcoin is that it is also a world leader in mobile payment usage. In 2007, Safaricom, one of
Kenyas leading telecommunications companies, launched a mobile payment service called M-
PESA." And that's something we've talked about quite a bit on this show. Back to the article"Today, two thirds of Kenyans use the service and more than 30% of Kenyas GDP flows
through it. The benefits to the Kenyan population are astounding as well, with M-PESAs rural
adopters often seeing dramatic income increases after adopting the program." What do you
guys think about M-PESA Kenya, and the opportunity of Bitcoin in those environments?
Stephanie: M-PESA seems to be working pretty well for a lot of people in Kenya, and other
parts of Africa and perhaps it's because a lot of people have mobile phones and they're using
basically this SMS based mechanism to send small payments around, I think that they've
already been used to this concept of using their phones to send money and to send small
amounts of money. So, perhaps Bitcoin would be excellent for them, you know microlending is
another thing that I think of when I think of the developing world and Bitcoin makes microlending
so super easy. It doesn't require these big websites and things to administrate. It's just like you
can make a fund, and it's really easy to send payments to people and pay it back.
Andreas: When you say microlending, let's actually talk about that for a second. What does that
mean in a nutshell.
Stephanie: Microlending is basically the issuance of small loans to individuals or groups of
borrowers in the developing world. Typically most beneficiaries of microlending are actually
women or groups of women that are looking to start their own small businesses, those loans
can be backed by. For instance people in the developed world, and there are many differentvariations and twists on it. Generally considered the first micro lending institution was this bank
called Grameen bank. And that was, Muhammad Yunus I wanna say. Got the nobel peace prize
for Grammen bank because they were doing these small loans and that's the thing in the
developing world because people don't usually have collateral they don't usually have ways to
get credit, they don't have a credit history. And so it's really challenging to think about issuing
them a loan, but microlending is specifically for those types of borrowers. And as far as having
those loans being paid back without credit history or without collatoral, which people often don't
have. Lending to groups enables sort of like a social pressure kind of incentive to pay it back, or
a group sort of assurance that the loan will be repaid. So, it's really helped a lot of people in the
developing world, I mean there's definitely critics of it too, who say things like abusive husbands
will use their wives to get credit essentially. Or like if they can't pay it back, sometimes people
will commit suicide and things like that. So, it's got a couple of critics but overall I think a lot of
people recognize it has actually helped spur economic development in some places in the world
were there weren't those options before micro lending came about.
Adam: Do you know if anybodies doing this in the bitcoin space yet? Because I mean you're
totally right it seems like a very natural venue.
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Andreas: I'm involved in micro lending quite a bit, I've used two services, one is more oriented
towards peer to peer lending which is more the western or developed world and you can find
services like that on lending club and prosper.com etc. In terms of micro lending one of the
services I use extensively for a big chunk of my savings is KIVA, K,I,V, A dot org.
Stephanie: Me too.
Andreas: You'll like this. I've started an effort to persuade KIVA to use Bitcoin and I've sent them
a number of emails, I haven't received a response back, I'm trying to create a little petition
perhaps on one of those petition sites. To persuade them to start accepting bitcoin. There's
some obviously significant advantages to using bitcoin in that environment including the fact that
a big chunk of their cost is the aggregation and transfer of the funds overseas with wire
transfers and things like that.
Stephanie: They have to partner with these local intermediaries basically, KIVA is not peer to
peer lending it's basically they broker, as I understand it. And loan that's given by a local bank
but is funded or guaranteed by donor's to KIVA.
Andreas: Yeah, exactly. It's not exactly about cutting out the intermediaries because these local
organizations, many of them charitable organizations as well are responsible for distribution for
finding the borrowers for helping the borrowers creating a profile and tell their story and
translating their story, etc. But also collecting the payments and being able to keep the system
sustainable. Here's one very interesting thing, on lending club I'm mostly lending to Americans,
on KIVA I'm mostly lending to people in developing countries who are much poorer. Guess who
defaults more?
Stephanie: The Americans?
Andreas: The default rate on my KIVA loans is about half of the rate on lending club by the way,
even the lending club default rate is quite low and still gives me a fantastic return. KIVA, I don't
get a return, it gets funneled back into charity. So you don't make money off it. But, it's really
interesting the default rate is much lower. That's an impressive testament to the fact that when
you give opportunities like this, to people who don't have the opportunities. Together with the
peer pressure of community loans and things like that it's actually a very effective way to
distribute and get money to where it's needed.
Stephanie: Could Ripple be a medium for Bitcoin microlending or, do you guys know of any
specific websites that are only for Bicoin microlending at this point and time?
Andreas: I've seen at least 3 different sites that do Bitcoin peer to peer lending but I think the big
challenge there is the matter of having infrastructure partners that are able to distribute these
loans. Which why I'm essentially trying to get KIVA.org to adopt bitcoin. Because they already
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have the infrastructure the connections and thousands and thousands of needy borrowers it's
much better to convert that.
Adam: I'm real curious here, I do not participate in micro lending, Andreas, what type of
amounts are you talking about on a per loan basis? When you're talking about KIVA are we
talking about 50 bucks, couple hundred dollars, couple thousand dollars?
Andreas: The loans range from about 200 dollars to about 3 or 4 thousand dollars, and usually
the larger loans involve groups of borrowers. The uses of the loans range, at first you may be a
bit surprised, people may think these are kind of investments loans. Like, "help hussein buy a
taxi so he can increase his taxi business" or "help Jimmy get a motorcycle so he can distribute
cell phones to his customers or whatever." But a lot of it is just plain old consumer loans right? If
you think about it consumer loans is just as important in this environment because it creates
liquidity. So sometimes it's "help so and so buy a new TV" and that's fine too.
Stephanie: Individual lenders or funders can contribute as low as I think $25 increments on
KIVA?
Andreas: Yeah, I do all of my loans, I have a limit of 25 is the maximum allotted to any one
lender and then it's basically crowd sourced, so you have enough people contributing 25 dollars
that the loans get funded pretty quickly in fact.
Stephanie: So I did some research on this real quick, and I searched for Bitcoin micro lending.
There's actually a website called BTCJam.com which is peer to peer bitcoin micro lending. And
so basically you can be a borrower or investor the borrowers can define like basically the
parameters of the loan, like the interest rate they're willing to pay, there's an optional soft credit
check and a peer to peer reputation system that goes along with this. Investors get some perksas well, so that might be something that's coming out, but I'm not aware of it yet.
Andreas: I've used it, I unfortunately have some bad news about it. I have used BTCJam and I
find that the concept and
Stephanie: Did you get your self in a Jam? (laughs)
Andreas: I got myself in a bit of a jam, I think the concept is brilliant, I think the execution is not
quite there yet. So, my default rate on BTCJam was 75%.
Stepahine: Wow
Andreas: That compares to 7% on lending club and about 3% on KIVA. Here's the problem it's
an anonymous currency, there's a soft credit check as you said, many of the accounts are
linked only by meager information. At the same time, here's the problem. When one of those
loans went default there was absolutely nothing in terms of recourse. BTCJam didn't even
respond to emails. In fact you can't put a negative review against one of the borrowers unless
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you have sufficient reviews yourself as a borrower, well I'm not a borrower, I was a lender. I had
no reviews against my account so I couldn't essentially put a negative review against the people
who had defaulted and they went out and took more loans. So, badly structured.
Stephanie: Well, thank you for sharing that experience, I think it's very important for people to
know.
Andreas: I think I didn't have the great experience because it's very much a beta attempt. And I
wish them all the luck in the world if they can learn from those experiences and improve them. I
was very much willing to lose that money, I probably put in 3 or 4 bitcoin, not a huge amount just
to try it out, I'm not upset about it. And in fact I hope they're able to improve the service because
it's a brilliant service that's absolutely needed in Bitcoin.
Stephanie: It's like when you make a loan to your cousin, don't loan them anything that you
wouldn't consider a gift.
Andreas: Well I can always track my cousin down and kick him in the nuts.
Stephanie: That's true you can't do that with a bitcoin address.
[Music Break]
Adam: Joining me this morning is Joseph David, CEO of CAVirtex, a Canadian exchange and
you're actually the largest player in the Canadian space these days right?
Joseph: Yes, we are the single largest in Canada with 20 million dollars traded since inception,
of course a majority of that has been in our second year when Bitcoin really started taking off.But yes, we're the only ones in Canada.
Adam: We talk a lot about the regulatory situation in the US, and I had a conversation with Zack
from the lamassu Bitcoin vending machine. They're kind of in the same situation where there
are different regulations in the United States than there are in Canada. He said it's actually
much better in Canada, they're taking a lighter touch with the regulatory side, paint us a picture
of what it's like operating an exchange in Canada these days.
Joseph: I'm glad you're getting this directly from me because it's a little bit inaccurate when
people make comments like that. What really hit us in the media lately has been the article that
has been circulating the web where they imply that Canada is a safe haven for Bitcoin
exchanges. And the Canadian regulatory authorities don't really view it the same way. And
what's really actually happening is FINTRACK the regulatory body in Canada that monitors
money transfers of any kinds and deals with anti money laundering regulations as well as KYC
Know your customer regulations. They have ruled that Bitcoin is a barter instrument and that
Bitcoin exchanges do not have to be registered as a money service business. However, the
banks do not take direction from FINTRACK. That's extremely important to understand. When
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we operate in Canada we have to satisfy the banking requirements and as far as the banks are
concerned and the world is concerned when it comes to Bitcoin, everyone is very new to it, they
don't know what it is, it's a big huge grey area. It's a big long story, there's not simple
explanations to give them of exactly what a Bitcoin is. So, what they see right away when you
look at bitcoin and Canadian dollars being deposited and withdrawn is they just see risk. They
just see unknown, and because of that unknown they say no, before the say yes. Basically wehave to approach the bank in a proactive stance, we have to approach the bank and build those
relationships from the beginning like we have, by saying things like. We have a legal team,
we're proactive with regulatory front. We actually want the Canadian government to recognize
us and tax us. Please tax us! GST is a big one for example. In Canada we have a Goods and
service tax and there's these big long investigations that go on. Does your business need to be
registered with the GST. Do you need to pay taxes to the government like a goods and services
tax. Instead of waiting for a ruling, we collect it and remit it now! So it's things like that we're
doing that's showing the bank that we are serious about being proactive. We're saying no to
customers by the way that want to deposit large amounts of cash and bypass all these
mechanisms, this is where it gets tricky. Even though FINTRACK says no problem you don't
need to follow these rules. We are following them and we're saying no to customers and
actually turning customers away that want to bypass the rules and regulations. So, explaining all
this to the banks gives us that edge and lets us operate and of course the main reason we're in
operation with the banks is because we actually have that money service business license
through our investor and business partner TAPE international, so they are a registered money
service business, they are collecting our payments and remitting our payments to customers
and satisfying all FINTRACK and AMF requirements.
Adam: Essentially you're complying with regulations with regulations you don't need to comply
to
Joseph: That's correct.
Adam: Not to satisfy the regulators but to satisfy the banks because otherwise they don't want
to do business with you is that right?
Joseph: That's exactly what is happening here in Canada.
Adam: See that's really interesting because that actually strikes me as almost being a complete,
like its' the same situation in the US. I had a conversation with Jared Kenna of trade hill which
kind of takes it the other way, they say. Okay since we're so concerned with compliance and
that we're so concerned the rules are going to change further out we're turning away customers
that have less than 10 thousand dollars that they want to spend on this. So, you're actually
taking the opposite approach, and again, their concern isn't the bank but their concern is the
regulatory structure where they're concerned the regulations are going to change and become
harsher in a later point and in doing so, essentially retroactively make their actions in their past
not work. Unless they do this proactive, are you concerned about the regulatory system
changing, or is this just about the banks for you?
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Joseph: Well again because we're proactive we want the regulatory system to change, we want
the regulatory body to be formed in Canada, we have the ambitious goal of being part of that
movement, I would like nothing better than to be on the board of directors of the new regulatory
agency in Canada that governs and regulates digital currencies. We have a really interesting
development on that front if I may tell you about it, this is very groundbreaking stuff in Canada,is the Canadian government has something called the Mint Chip project, and the Mint Chip is
actually digital currency in Canada created with a crown corporation, which just means
government corporation here in Canada, and run by the Canadian government. Endorsed by
the royal Canadian mind, and it's being used as the testing the waters type sample project right
now, so it's not just a currency you can buy right now and use in circulation in Canada, they're
on the beginning stages of introducing this as a testing digital currency in Canada. So you'll be
able to go to any Canadian bank for example and change Canadian dollars into mint chips. And
to follow that even further Mint Chips into Bitcoins. Wouldn't that be amazing?
Adam: Yeah, when you talk about wanting to be part of the regulatory structure that you're trying
to incentivize the creation of basically. In your mind is this an industry group that is self
regulating exchanges and self regulating, or is this a government regulatory body that you would
want to be a part of, to actually be a part of the government in that way?
Joseph: In your first scenario of some kind of self regulating industry group that would
eventually merge into a government body. So, I don't know what steps it's going to take. I forsee
starting with an industry self regulation group, and then going toward government. But I don't
think you can stop the government noticing this. As Bitcoin gets bigger in Canada, and more
and more people start using it, the government is going to notice. For example one of my
ambitious plans of restarting very shortlier than next month is to sign up every single, or try to
sign up every online Canadian merchant that excepts online payments to add a Bitcoinshopping card checkout button to their web page. This I think is the best way to educate the
public. Because we have to remember something here about Bitcoin we both know, we're both
following this. But I estimate that a large majority of the population doesn't even know what a
Bitcoin is, so. There's a lot of people who don't know what's going on in the whole Bitcoin
revolution, so the best way I think to get the word out there is to get on that shopping card
checkout sites. All these customers that are going on their daily activities of purchasing goods
online. See this thing called a Bitcoin checkout, beside Visa, Master Card and Paypal then they
see the price difference okay, $100 on Visa, MasterCard and Paypal. $95 on Bitcoin checkout,
and then they ask themselves a question, why is it cheaper in Bitcoin and what is a bitcoin? And
that's where I think we're going to start spreading like wildfire, that's going to ignite the
government a little bit when they start seeing a majority of online Canadian business add this
alternate currency for checkout.
Adam: You mentioned the Mint Chip earlier in our conversation the Mint Chip is something that
popped up a couple of years ago and I wasn't aware it was getting and traction. With the Mint
Chip is this a crypto currency or is it just a digital currency? I mean, does it have and of the
advantages Bitcoin does?
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Joseph: Yes it does, I don't know too much about it but I know enough to know that even if it is a
cryptocurrency or digital currency or however they want to do this. It is controlled there is a
server somewhere with a balance of Mint Chips on it. You could change the balance very easily,
of course you can't do that with Bitcoin. So, it has similarities to Bitcoin in that it can be
transmitted digitally online. But I think that's where the similarities end.
Adam: Paint me a picture here, what's the winning scenario, you know if you're successful with
your ambitious plans, what does the landscape look like in a year or two years?
Joseph: The winning scenario is to be officially recognized by the Canadian government to have
a license to operate, to require a license to have operation because right now we have a lot of
Wild West cowboy type operations that think they could just start a Bitcoin exchange. Open up
corporate accounts, don't even worry about money service business licenses. And accept
payments through all types of forms. That actually make the industry and make the exchange
space in Canada look bad, ideally I'd want an operating environment where a license is required
to operate, guidelines have to be followed, government regulations are satisfied when it comes
to money in and money out, official recognition and a license would be ideal operating status.
Adam: In this winning scenario what this gives you is, the willingness then and the trust of not
only banks but of big business to participate in the system and to accept this system because
this type of scenario where you have a regulatory structure and a licensing structure lends
legitimacy to it in the eyes of the government, is that right?
Joseph: It does, and it also makes our banking relationships a lot easier. Another big headline
news and big development in Canada here has been the bank shutdown, everyone's focusing
on bank shutdowns. The banking network in Canada is very different then in the states, we have6 major, major banks, then we have credit unions that are part of one major network. But we
don't have these private banks and these third party banks like the US does. So in Canda when
we started your only choices for major banks are TD, Scotia Bank, Bank of Montreal, CIBC,
Royal bank. So I just listed to you some of the major banks. We have HSBC, and ING and other
ones, but those 5 ones are pretty much the major banks. So, the thing with those banks were,
when we started with them we started accepting cash deposits at those banks. Then those
banks started shutting us down one by one. Every single bank I just listed to you had shut us
down for cash deposits. Okay?
Adam: Right.
Joseph: And that's because again of their concern over AML. Not over fraud because you can't
commit fraud by depositing cash. And that five minutes later and going to the teller and saying I
didn't deposit that cash. So their concern was not the fraud aspect it was the AML aspect and
the KYC, know your customer aspect. Now in the US, look at the landscape. It's much much
different you have a company like Bitinstant that allows cash deposits across the US at
something like 7000 different banks. So that's very surprising and shocking to me that that kind
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of activity is allowed in the US. But not allowed in Canada. And the reason it's not allowed in
Canada again back to my original point, is Banks think it's big grey area, they don't have an
easy answer to cash, so they shut cash down. So the point to my whole statement here is that
you don't have to deal with us in Cash, there are other ways to deal with us. The major way right
now is online bill payments and direct deposit and direct withdraw to your own Canadian bank
account. Now that is something the bank does allow under a money service business license,so that is what we're doing now. We have multiple ways that we're going to increase that. We
might even actually get back into cash, but the key message here of course is you need to
satisfy regulations on one hand but at the same time you have to educate the banks and not
push it too far. They're letting us do online bill payments and direct deposit, direct withdraw but
they're cutting us off with cash.
Adam: You said AML, anti money laundering right?
Joseph: Yeah
Adam: The question we keep coming back to with the banks is whether or not it's ignorance you
know they just don't understand this and so therefore there's no incentive for them to take it, or
fear. Because a lot of people feel like the fundamental technologies and some of the
fundamental does and enables sort of obsoletes banking Do you think this is something that's
going to change banking and therefore there's resistance to it from that angle, or do you think
it's simply a knowledge gap.
Joseph: Lets first understand again that the banks back to a questionable fear. The banks don't
know what this is, so it's not knowing plus a combination of fear. Banks are very risk averse
right? They're extremely risk averse especially here in Canada when we have the government
they're called CROWN corporations. Corporations run by the government of Canada. They'reunder specific mandates to not take on any risky business whatsoever. When you walk into a
Canadian bank there's actually a sheet they give you that says if you're this type of business,
and they actually list them, don't even bother applying for a bank account. They're really risk
averse. It's going to take a lot of time I think to have the banks in Canada to come around and
educate on the payment method of cash. But lets not forget here what they're doing, they're
already allowing current state, and current state is as long as the money flows through a money
service business that is licensed and as long as proper due diligence is performed, and as long
as the relationship, the personal relationship they have with me and my legal team and my
lawyers and that is all solid and in tact. They allow us to operate. So it's going to take the
government of Canada I think to step in and say, you know we're going to recognize the Bitcoin
and we're going to give them a license and then I can take that license to the bank, and with this
license I can add on cash and I want to add on this and I want to add on that. It's going to take
the government and the licensing agencies to make the banks change their minds I think. The
Canadian Revenue Agency, CRA did actually rule that any capital gains on Bitcoin transactions
must be reported and that is a ruling and we're following that internally as a company and we're
answering that to any customer that asks that question.
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Adam: It seems like the ability to control and exert regulatory force over cryptocurrency is kind
of difficult just because of the way it's built. Outside of these limited exchanges, because you're
one of the major exchanges, you are the major exchange left, and there are a few other small
ones and you can count them on 2 hands. I'm trying to figure out how possible it is to regulate
Bitcoin outside of the exchanges, because the exchanges are the choke points.
Joseph: I think it's very possible, I think it's very possible because this actually relates perfectly
to the comments I want to make here, this is an extremely important point in any country and
that's why I'm very interested in what happened in Italy. I really should read up back on that but
from what I remember on what happened, either Italy or France, but I think it was Italy tried to
shut down Bitcoin exchanges. Very early in Bitcoin world, were you aware of this?
Adam: I was not, no.
Joseph: This is just from my memory long ago back in year one, actually probably in month
seven of when Bitcoin passed around the 20 bucks area. So the Italian government tried to shut
Bitcoin exchanges down, they succeeded, a couple months went by something got appealed,
the exchange owners went to the supreme court and appealed the decision. And then that got
overturned and they were allowed to operate. That was a long time ago though so things may
have changed now. But that brings me to my point, they could very simply and very easily
decide that they just want to shut the exchanges down. They can simply phone up the banks
and say whoever is doing the bitcoin exchange shut them down. It's illegal, we're going to just
make it illegal, the government can do that. That's one avenue the government can go. The
second of course is everything we have just been discussing, legalizing it, getting regulated,
recognizing it, taxing it. That's avenue 2. But if we just talk about avenue one here for a second.
The government can just step in and pull the plug. If that does happen Canadians would have
no choice then to go offshore and go deal with different countries, take their money offshoresomehow, what would our action plan be? That's something I struggle with every day. Would we
take our servers off shore as well and continue with our customer base and try to service
Canadians? Well of course we can't do that, the government makes it illegal and the
government begins seizing physical locations, that's really how the government could step in
here, and that really is a concern for me in the bitcoin space. Not just for Canada but for the
world, you have US politicians and senators that are against it and are on record publicly saying
this is not good. Bitcoin has an image problem. And that's another thing I want to address is
Bitcoin's image problem. And how you can buy drugs and guns and sex and all this stuff with
Bitcoins. You can do the same thing with cash by the way. That's what people leave out, is that
just like Bitcoin has an image problem it has the exact same issue that cash does that's why to
a lot of people I explain that Bitcoin's are like digital cash. That's a very easy explanation of what
a Bitcoin is, it's like digital cash. So that's sort of my ongoing concern, the government could just
say we're shutting you down. That's where it could go.
Adam: You're actually kind of in the mix with this so what do you think the chances are relative, I
mean obviously this is totally off the cuff. What do you think the chances are of avenue a vs
avenue b?
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Joseph: Right now today because we're so early, because we're so early in Bitcoin the evolution
is just beginning here. We're very early in it. The chance of avenue A. The government shutting
us down I think is very very low. Again, very few people even know we're out there. But as
things progress here in the next year as we get the merchant sign ups happening and we start
educating business owners about how Bitcoin is really a way better payment method thatthey've really ever seen. That's when the government might take notice. But, if you want my
personal prediction, I really hesitate to give predictions, especially being CEO and everyone
being able to go back in time and listening to my comments and saying he's making all these
predictions, I'm always cautioned by my advisors not to make predictions but, I may make an
exception and make a prediction in this case. What do you think?
Adam: I think that if you want to that's fine. The reality of this is, this is such a complicated topic.
I think that predictions are just guesses. So you know that's how we treat em. We make
predictions all the time.
Joseph: Exactly they're just hunches and guesses. I'll give you mine if you want it. So, I think we
are going to go to avenue b. I think the governments are going to recognize that we need to be
taxed we need to be regulated, that if they try to make it illegal that it'll just create a lot more
problems then it'll solve. If one world government steps down and puts the gavel down and says
Bitcoins are illegal in this country, other countries may either follow suit, they may have their
own rules. So then of course citizens will flock to the other country. But long story short my
hunch and my personal guess is that governments aren't going to make it illegal, but are simply
going to tax it heavily and try to regulate it heavily.
Adam: I'm on record for saying that by the year we're going to see congressional hearings on
this within the United States talking about specifically Bitcoin and cryptocurrencies as well. Doyou think there's a timeline like that in Canada, or do you think that it's just unpredictable at this
point?
Joseph: No where near it, I wouldn't even venture to say within the year again, because it's so
new, because they hardly know about it, I don't think it's even a topic of conversation, there
might be a couple of MLA's in Canada, members of legislative assembly that even know that
Bitcoin exists, and we actually contacted them. And their response has been, wow this sounds
like a new interesting thing, and then they just take weeks to get their head wrapped around it
and don't return our phone calls. It's so new here I don't think it'll happen this year.
Adam: Joseph David, CAVertex thank you very much.
Joseph: Thank you for the interview.
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new digital economy. Our listener base of Bitcoin owners, miners, investors, technologists and
merchants are growing fast. We offer a limited number of short advertising slots in each show to
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[Music Fades]
Adam: Lets get back to the article, Despite having a robust mobile payment network with M-
PESA, Kenya is still subject to a slew of economic issues such as corruption, inflation, and
remittance costs. Kenya faces high corruption costing more than $1 billion dollars per year
(approximately 3% of GDP), with individual Kenyans paying an estimated16 bribes per month.
M-PESA has not avoided this trend, with114 casesof fraud in 2011 alone, resulting in millions
lost. A protocol like Bitcoin, which removes vulnerability to human corruption, would likely be a
welcome entrant into the world of mobile payments. M-PESA is also comes at a cost to its
users. With Safaricoms feesranging from 1-10%for money transfers, users are losing value to
a centralized entity with every transaction. On top of that, the Kenyan government recently
began taxing M-PESAtransfers, which will further increase costs by 10%. Another substantial
benefit that bitcoin has over M-PESA is with regards to inflation. Only in the last year has Kenya
somewhat stemmed inflation after reaching peak rates above 30% in 2008. Though concerns
linger with regards to bitcoins volatility compared to developed market currencies, the relative
consistency of bitcoin could be a welcomed change in less stable regions.
Andreas: I think there's a dangerous tendency for geeks to try to assume technological solutions
to social problems, corruption is not a technology issue it's an institutional and political issue
and it occurs because of widespread problems in a society and the lack of institutional control to
solve those problems, I've lived in corrupt societies, I know what it's like to pay bribes. And, the
problem is that when it becomes so entrenched into the culture it's very difficult to resist even if
you want to, you can't get your driver's license even if you can pass the test and can drive well,
because the bribe is required. So you know, you have to, you can't get a doctor's appointment
unless you bribe the doctor, you can't get your paperwork done unless you bribe the bureaucrat.
So, essentially you succumb to this pressure, technology won't change that. You'll just bribe
people with Bitcoin and in fact if anything it might make it easier because frictionless commerce
means frictionless bribes right? I'm not necessarily convinced that technology is the solution
here, but at the same time I think that Bitcoin would be a fantastic fit in many developing
countries. Just like M-PESA it offers immediate person to person transactions with very little
technology perhaps especially if we can adapt it to using SMS, the standard should be, can it
work on a Nokia 2100? A phone from 10 years ago. Because that's really the technology base
in these countries.
http://lcweb2.loc.gov/frd/cs/profiles/Kenya.pdfhttp://lcweb2.loc.gov/frd/cs/profiles/Kenya.pdfhttp://lcweb2.loc.gov/frd/cs/profiles/Kenya.pdfhttp://www.itwebafrica.com/telecommunications/153-kenya/229957-safaricom-kenya-fires-70-employees-for-fraudhttp://www.itwebafrica.com/telecommunications/153-kenya/229957-safaricom-kenya-fires-70-employees-for-fraudhttp://www.itwebafrica.com/telecommunications/153-kenya/229957-safaricom-kenya-fires-70-employees-for-fraudhttp://www.safaricom.co.ke/personal/m-pesa/m-pesa-services-tariffs/tariffshttp://www.safaricom.co.ke/personal/m-pesa/m-pesa-services-tariffs/tariffshttp://www.safaricom.co.ke/personal/m-pesa/m-pesa-services-tariffs/tariffshttp://www.businessdailyafrica.com/Corporate-News/Safaricom-raises-tariffs-for-mobile-money-users/-/539550/1681630/-/yudapg/-/index.htmlhttp://www.businessdailyafrica.com/Corporate-News/Safaricom-raises-tariffs-for-mobile-money-users/-/539550/1681630/-/yudapg/-/index.htmlhttp://www.businessdailyafrica.com/Corporate-News/Safaricom-raises-tariffs-for-mobile-money-users/-/539550/1681630/-/yudapg/-/index.htmlhttp://www.safaricom.co.ke/personal/m-pesa/m-pesa-services-tariffs/tariffshttp://www.itwebafrica.com/telecommunications/153-kenya/229957-safaricom-kenya-fires-70-employees-for-fraudhttp://lcweb2.loc.gov/frd/cs/profiles/Kenya.pdf -
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Adam: 16 bribes per month though per person, I mean that's like. That small? I have no concept
of this, I'm California born and raised, this is not something I have any experience with, that's a
small amount for a country like this?
Andreas: Oh yeah absolutely, 16 bribes a month is nothing, if you go to India it's probably 16
bribes a day, seriously this is the norm for the rest of the world. It's very easy to see things froma different perspective if you're born and raised in the states. This is the norm for the rest of the
world, this is what oils the machine, this is how buarocracy works and this is how most people in
the developing world who have any measurable authority this is how they get paid, this is their
salary. The don't make much getting paid by the government or by the fees they collect so
essentially you have this whole shadow economy. It's almost like tipping so the way that tipping
works in the US, and most foreigners don't get it. Oh wait you have to pay 20% on top of every
payment for this service? Well that's not corruption but in other countries, corruption works in
the exact same way. You assume the people are not making much on the government salary
and therefore it's normal for them to collect a small extra fee, it's almost like a tip, and it's in the
form of a bribe.
Stephanie: It's not like a tip, it's not, a tip is way more voluntary than something like a bribe, I
mean especially when it's backed my political force and pressure and the authority that these
people have to make you pay for it in some way if you don't pay them a bribe. You can't easily
just leave a country, especially if you're born in the developing world and go to somewhere
where there's not rampant bribery. However, you don't have to eat at a restaurant and pay a
server a tip.
Adam: Yes that's true except where it's not. Maybe this is different in other parts of the country,
but here, most of the time, if you have more than 6 people in your party there is a mandatory tip
that is put on your bill, so it might feel like it's voluntary because, hey you get to choose to pay it.But, the option besides that is not paying your bill. So I don't see it as a voluntary thing in that
case.
Stephanie: Nobody's holding a gun up to your head and saying eat at this restaurant or eat at
any restaurant right? You have options for that but, they are holding a gun to your head and
saying fill out this paperwork and you're subject to my rules, and you have to give me a bribe as
well.
Andreas: So I think the only comparison you have with a tip of course, coercion is an issue. But
the comparison you have with a tip is that it's embedded in the culture and all economic
transactions. And you have to realize that these bribes are not just paid to the police or to the
bureaucrat that's approving your application, they're paid to every person involved in any
transaction you make. You get your refrigerator repair person to come in, your meat supplier,
your ophthalmologist, your kid's teacher, your kid's soccer coach. Whatever, it might be. And
they all take bribes and in fact bribes are how you do it. It's almost inevitable because people
aren't getting paid any other way. The bottom line here is that wallet is completely corrosive by
perverting all of the economic incentives and feedback loops for price and it's also so embedded
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in culture you can't really solve it with technology. People have tried certainly there's entire
movements in countries like India to fight corruption and it's so difficult. That even the people
who want to fight it and are very much against it and are committed to not paying bribes, wears
you down eventually. You know, you can't just function in that society without succumbing.
Adam: So another thing is of course the fees, there's the 1 to 10% fee that's applied bySafaricom. Which owns the technology and that enabled M-PESA and that enabled M-PESA
and basically is M-PESA. In addition to that there's a 10% tax that's been put on these
transactions by the Kenyan government and also the Kenyan government routinely inflates their
currency because if I'm correct here, M-PESA is not a currency onto itself but it's rather a
transmission mechanism and a kind of wallet for the local currency is that right?
Andreas: Yeah, that's my understanding.
Stephanie: If I understand where you're going with that, Bitcoin would at least provide a
technological solution to the issue of inflation.
Adam: Well, yeah there's that part of it but actually I'm looking at it from a different perspective.
On this show we spend a lot of time focusing on what the US government is going to do about
Bitcoin but looking at a situation like Kenya doesn't it seem like the Kenyan government is going
to really, really, really, hate Bitcoin. Because it provides competition, it's very difficult for them to
tax, again it goes back to the competition thing, because by offering an alternative to a currency
that's inflating at a substantial rate it means people are more likely to switch to a currency that's
losing value to the currency that's gaining value and is cheaper to use overall? Don't you think
there'd be some aggression from the Kenyan government, if a chance like this were made?
Andreas: Absolutely I don't think that change would be very easy, there's another issue we'vekind of skirted. Which is M-PESA or systems like that could be implemented throughout sub-
saharan Africa, throughout south east asia. There's certainly a need for them. So why haven't
they been? That's an interesting question. Why isn't M-PESA being used more broadly, why
aren't similar systems being used more broadly throughout Sub-Saharan Africa and south east
asia. And the answer I think is rather instructive here, it has to do with two factors. One is that
Safaricom had a very massive deployed base of users and therefore was able to introduce this
simultaneously to a volume of users that were sufficient to sustain a parallel economy from the
get go. So you have mass adoption at a level that creates simultaneously enough buyers and
sellers to launch a market. It's very difficult to do that chicken and egg solution where you
simultaneously have enough buyers and sellers within the locality to make the currency viable.
And that's one of the reasons why M-PESA hasn't taken off in other countries, or as similar
systems haven't taken off despite efforts to do so. And it's also one of the reasons why I think
Bitcoin adoption is not that easy or will happen that fast in some of these countries. So there's a
lot of pre-requisites that go into Bitcoin adoption. Beyond just hey, it's useful and I can put it on
my cell phone.
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Adam: It's almost like you need mass awareness before you can even approach the question of
adoption because if people don't know about it, then it almost doesn't matter for the initial users
because it's not useful to them, just like a language isn't useful if you're the only one that speaks
it in your country.
Andreas: The network in fact cuts both ways, which is if the network is too small there's no valuethat's added when you join it, and especially in the case of currency. The value of the currency
is only based on the expectation that someone else will be willing to accept it in a transaction,
that requires two things. It either requires a mass adoption where you're almost guaranteed that
other parties will accept your transaction or it requires you to adopt the currency for reasons
other than transacting. And so with Bitcoin what we saw is the first three years the people who
adopted Bitcoin were not really into it for transactions per se, or for the value per se, but more
for the ideological reasons. And that created sufficient volume and sufficient market growth so
then it could start attracting people who are interested in using it as a currency, it's essentially
an ideological political movement that turned into a currency. Can't really bootstrap it like that in
a developing country, because there are much more programmatic considerations.
[Music Plays] [43:02]
Stanislav: Good afternoon Stanislav Shalunov, you can call me stats. I'm the CEO of
OpenGarden. A few of the things I've done in the past was transport protocol work and QS work
at Internet to and the design of a new congestion control in Bittorrent. Which currently is
responsible for somewhere about 1 in 6 bytes on the Internet, about 15% maybe.
Adam: So you're background is really all about decentralized systems then?
Stanislav: Well, you could say that yes.
Adam: So how did you find yourself going into mesh networks created my cell phones?
Stanislav: I was interested in creating mesh networks before there was the term mesh network, I
was interested in making better, but there was not really get a technology that would allow to
connect devices in an Ad-hoc manner. In say to seldom one. What you need are devices are
heterogeneous wireless capabilities and smart phones are the platform that allows to do that.
Adam: When you say heterogenous wireless capabilities, can you explain that?
Stanislav: On a phone, you have multiple wireless technologies. You have your 3G or 4G you
have WIFI, you have maybe WIFI Direct, Blutooth, you have maybe a FC. And all of these
things can be used to interconnect devices and you can be using simultaneously multiple
networks at the same time. And that's what allows to build this additional capability that the
phone may be on 4G but if there is another phone nearby that's also on it's own carrier's
network you might connect them locally using WIFI direct and create new capacity. These are
our phones and I am perhaps using my phone less than 1% of the time for data transmission.
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Same for you. So when I'm getting something from the internet I can get it fast if I can get it from
both exits and more reliably.
Adam: You're saying that even though you might be connected in one capacity with one of
those technologies, since each phone has multiple communication means and has the ability to
use each one independently you can have interconnections that are completely separate fromthe upstream or downstream to the internet in that case, is that right?
Stanislav: Exactly, so what OpenGarden does, we create all sorts of wireless connections we
support bluetooth, Wifi direct, we're particularly concerned with the specific underlying
technologies. So, we're creating those connections with those devices. Whenever they're
nearby, wirelessly, seamlessly for the user. The user don't need to worry about establishing
them, the user doesn't need to open the app. Once connected devices will access the internet
connectively using whatever internet capacity they together have, this produces better statistical
multiplex. This gives everyone faster speed, better coverage.
Adam: That's really interesting, have you touched the router space at all, or is it entirely about
phones?
Stanislav: We leverage existing infrastructure and things that already exist and can be used. We
address the mass market. So we want the kind of adoption that successful peer to peer
applications have. Not just addressing small audiences of people who are willing to flash a new
ROM to their Linksys. But people who can install a mobile app, and there are a lot more people
who can install a mobile app. We currently support Android, Windows and Mac. The computers
also have ability to use multiple networks at once these days. We have dual WIFI radios in
many computers and additionally we have bluetooth.
Adam: Lets take a step back for a second, OpenGarden how did this come about? You said
you've been interested in mesh networks before they were called mesh networks and before the
technology was there to do it. What occurred to insight the creation of opengarden?
Stanislav: Micha and I got together about 2010 and the enabling technology for open garden is
the smart phone, the computer inside everybody's pocket with multiple radio interfaces that
makes OpenGarden possible and interesting. Before the smartphone the density of mobile
laptops for example was not sufficient to make a difference for internet access, for other
devices. And when you are at home or at the office and you're laptop is on local WIFI, the need
for internet access is less Acute. The need for internet access is the most acute the worst your
internet connection is. And generally mobile situations travel, being on mobile networks is where
your need for better internet access, faster and in more places is the most visible.
Adam: So you started in 2010, what has the journey been, are you out in the wild with this right
now?
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Stanislav: When we started up, we wanted to first test the waters as a minimal viable product.
What we did was released an app that simply provided tethering. Just let you turn your phone
into a mobile hotspot. We wanted to see what would be the uptake, we didn't do anything to
promote this app. And the it required you to root your android phone so it was addressed to a
small audience of people capable of rooting their phone and there was no market then. By the
time we had the half million we knew that we were onto something. We thought that peoplewant this. So, we started full time work with Greg Hazel and Micha Benoliel. On making this
current app. The real OpenGarden mesh network and app. We launched in New York in 2012,
the first three weeks we got a hundred thousand downloads, by now the two apps together have
more than 2 and a half million downloads. We like to release our software early so that we can
see how it behaves in the wild in general development for android is made difficult by the
diversity of the android ecosystem. Our software runs on devices that we've never seen and
never will, so it's important to have a user base to even develop this software.
Adam: You've got two and a half million downloads, what does the use look like, I mean, is this
working, is this being used, are there any geographies specifically where it's used or is it more
of like an AD-HOC as needed people will get it, and then they'll throw up the temporary net
wherever they are. Or is it something people walk around with on their phones and are just
using in day to day events. Are we to that point?
Stanislav: Particular situation where opengarden today makes probably the biggest difference is
tablets. Particularly 7 inch tablets. People on Nexus 7 or a Samsung Galaxy Tab without a 3G
connection and a highly portable tablet. Are in a strange position, you have this device, it can go
in your coat pocket, it can go if you carry a purse, it's very portable. But it's practically useless
without an internet connection, and it doesn't have a 3G modem. And even if it did, it would cost
$120 probably extra and you'd need to pay $20 per month to be able to use the internet from it,
what OpenGarden does is basically give you the benefit of having a 3G connection on yourTablet for free. Because if you have an android tablet, chances are you also have an android
phone, and you probably carry it with you at least as much as you carry your tablet.
Adam: The android phone provides the connectivity to the tablet, and you only need to carry
one internet connected device to benefit on both.
Stanislav: Correct
Adam: So, even though this is a mesh network building tool what it's being used for now, is to
build little personal, it's not even really mesh, it's more like a wireless tether or something.
Stanislav: The experience is far better than using Wireless tethering, the experience of using
wireless tethering requires you to take out your phone, go into settings, tap more, go into
tethering, turn it on, go to your tablet now, connect to the right network then when you're done
remember to turn off the tethering hotspot on your phone otherwise your battery will be dead in
two hours. With OpenGarden you use the internet like you usually do. You take your tablet and
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you use it for whatever it was you were going to use it, instead of fiddling with settings on your
phone.
Adam: Does it have an impact on battery life in the same way a wireless tether would?
Stanislav: Lower than wireless tethering.
Adam: The name OpenGarden, you guys are not an open source software project are you?
Stanislav: Our main app is currently not open source, but I see where you.
Adam: Well, yeah it was confusing to me when I first started talking to paige about OpenGarden
I assumed it was OpenSource. Do you have intentions to make it open source, or is this aimed
to be a proprietary platform?
Stanislav: Greg and I have created open source software currently used by a quarter billion
people in the form of the BitTorrent transport library. Interested in making open source software
widely available and successful, we've also created open protocols, several between the two of
us, by now standardized. The application OpenGarden is not open source, it's open in the
sense of anyone being able to join the network, it's a garden anybody can walk into. Hopefully
open windows don't confuse people similarly, and expect them to be able to get the source for
the window. But we are interested in open source in general and how we can make open
garden more successful using it. We're not yet prepared to discuss anything about our future
moves on open source and open garden.
Adam: Fair enough, on the show we have a focus on Bitcoin and Cryptocurrencies. Not just
Bitcoin but it's cryptocurrencies and kind of the things they enable. And one of the things we'vebeen talking about on and off with regards to mesh networks or Tor nodes, or there's a variety
of situations, in your tablet phone scenario. That's one person who's gaining benefit from
utilizing one service that would normally be available on one device, on two devices. I see the
value of it there. But, with cryptocurrencies and automated contracts basically, you can set it up
so that individual nodes that provide internet connection, or service within one of these mesh
networks are compensated on a, as used basis. And I'm wondering have you looked into
cryptocurrencies and Bitcoin into doing things like this, or is it outside the scope of your project?
Stanislav: We are interested in exploring ways to limit free riding on the system. The system is
most efficient when it doesn't deny people it's service. It creates the maximum amount of value,
that's generally good, that's generally how things should be. If you look at the design of
Bittorrent, partly is successful because you can download even before you've uploaded. If there
were more steps to using the system then fewer people would benefit from it. The problem to
the extent that it exists here is preventing people who perpetually free ride from doing so, and
for now the main mechanism by how that is accomplished is by need of physical proximity. If
you install OpenGarden to be able to get connectivity from others, you also contribute by nature
of the software if you're internet connected at all, so there's a contract of mutual help by virtue of
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installing open garden, we've also thought about making credit ecosystem, it might convert to
real currency or might not, and whether real currency is a cryptocurrency or another form of
distributive currency or dollars is not really the interest in part. Conversion to real currency is
however different from simply bite account, and bite account can well be sufficient, so we're not
yet sure how we'd approach this problem in the future. Right now in practice we don't have that
problem. If you install open garden today nobody will follow you around trying to use yourinternet constantly.
Adam: So if someone wants to get involved with open garden or download the application, do
you have a website?
Stanislav: Yes, of course, we are available fromhttp://opengarden.com/and the app is also
available in the Google Play store where it's called OpenGarden just like you'd expect.
Adam: Do you have any intentions to rolling out to iOS devices or will this be a strictly an
android project
Stanislav: We don't have current plans that we can disclose about iOS, obviously we're
interested in all platforms, not just android and we already have support for two desktop
operating systems, but we have to focus our efforts somewhere, and that's where we've chosen
to focus for now.
Adam: Stas, thank you for your time.
Stanislav: Thank you.
[Music Cues]
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Adam: So to finish up, we return to the genesis block article. Should widescale adoption actually
occur within Kenya the effects could be tremendousnot just for Kenyans, but for the bitcoin
market as well. In 2011, Kenyas GDP climbed over $33B with mobile payments comprising
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some $10B of that figure. Bitcoins current transaction volume is roughly $20M per day, or just
over $7B per year. If bitcoin were to replace Kenyas mobile transactions, BTC market liquidity
would more than double. To date, Kenyas bitcoin adoption has been muted, with approximately
1,300 downloads in a country with 41 million people, but with all the pieces set align over the
next few years, it is only a matter of time before Bitcoin and Kenya find one another. So, do we
think this is inevitable? Pretty clearly there are advantages here, there are hurdles here, and theconclusion here is this is gonna happen, what do you think about that?
Andreas: I doubt it very much, while Kenya is very promising. I've often expressed the fact that
there are multiple preconditions for burstly adoption of bitcoin ,you need technology, electricity,
you need utility of the currency over local currency. And you also have to not have fear,
arrested, or shot for holding Bitcoin. And all of those things really become a big equation where
at some point it reaches a tipping point and you have mass adoption. I think it's far more likely
that you might see localities within places like Cyprus and Argentina having burstly adoption,
where the technology infrastructure is more developed, there's more consistent electricity and
it's more compatible with people's adoption of technology in general. So, I don't see Kenya
being the first place to do it despite M-PESA. The model I think is right.
Stephanie: Did anyone see M-PESA coming out in Kenya? That sounds like something that sort
of came out of the blue perhaps, so maybe it could happen in Kenya, I'm not sure. I think it's
interesting to think about what would happen if Bitcoin's market liquidity doubled, I mean that's
pretty huge and it really puts it in perspective just how many people are transacting and trading
bitcoins, or could be potentially in Kenya every day. I think that would increase the value of
Bitcoin quite a bit, perhaps enrich people in the developing world if they had gotten them early
enough
Andreas: I think that's a great suggestion but the actual adoption of M-PESA was anything butorganic or grass roots. It was a planned adoption from the carrier that already had 75% of the
market of mobile telephony of the country, they were able to essentially turn on a 75% market
share into a currency in one move. I think that would be a great model for adoption for other
places or even Kenya if some corporation already has an established user base creates a
Bitcoin derived currency or bitcoin itself as either a rewards card or an in app currency or an in
store currency or a loyalty card or something like that. Then from that basis bootstraps it as a
general transactional currency, I think that's a good chance of happening I really don't see how
that kind of planned introduction compares to the grassroots of organic adoption we've seen of
Bitcoin.
Adam: The number I keep looking at is this 93% of Kenyan households owning mobile phones, I
think that you're right about it being a planned roll out and about the people who have the ability
to implement and roll out something similar in Bitcoin have almost no incentives to do it, and I
think that's kind of the core problem we're going to come to in most of these places. Anywhere
there's a monopoly on technology like there is here where a vast majority of people are on this
same Safaricom network then that basically means that until there's an actual reason to change
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that it increases the profitability or offers some advantage to the company rather than the users
it's very unlikely it'll actually happen.
Andreas: That's the other big advantage for Safaricom is they can charge a transactional fee so
why would they go to Bitcoin which would essentially remove their ability to tap into that flow of
money?
Stephanie: There is potentially a profit incentive for somebody if they can encourage people to
adopt this technology that could really work out for them as well, not only would it provide an
alternative to M-PESA which sounds kind of monopolistic actually. But it would also increase the
market liquidity and therefore I think the value of Bitcoin, so Bitcoiners have an incentive to help
this happen whether it's going to Africa and doing some activism or trying to get people
interested in it, or make some kind of app that can run on older phones, I'm not exactly sure.
But, maybe someone will take up the mantle on that.
Adam: Well there are apps that run on older phones, there are a couple of services out there,
one of them I believe is phone coin, and there have been a few more that have come out, that
basically leverage SMS messaging, text messaging.
Stephanie: Coinapult does that too, can send Coin by SMS.
Adam: Yeah, exactly so I think you're right if we lived in a perfect world, but because we live in a
world, I mean clearly Safaricom doesn't have this monopoly there on these technologies
because the government hates them right? They have it because they've partnered with the
government and they've enabled them to essentially tax these transactions in a way. It doesn't
really matter what you call it, the point is, anytime you go into a situation where there's an
entrenched power structure like for example monopolies, be the government, be the technology.You say, hey what you're doing is great, but wouldn't it be better for your customers if you
charged them less by using this more efficient technology? I bet you'd get major push back, in
some types of cultures there may be violent repercussions for you. So, it's just something to
keep in mind, that change is great if it's change that benefits you but a lot of times if it's
benefiting you it's at the expense of someone else that's higher up in the food chain and that's
not something that's too popular. So there's hope.
[Music Plays]
Adam: Thanks for tuning into episode 18 of letstalkbitcoin, whether you liked, loved, or hated the
show we want to know what you think, please send all listener mail to mail@letstalkbitcoin.com.
Content for this episode was provided by Stephanie Murphy, Andreas M. Antonopoulos,
Stanislav Shalunov, and Joseph David. Music for this episode was provided my Jared Rubins,
for links to his work visit letstalkbitcoin.com/music if you're an open source musician and think
your work would fit in well with the show, please email adam@letstalkbitcoin.com if you like
what we're doing and want to support us with bitcoin or litecoin donations please visit
letstalkbitcoin.com for episode specific addresses. If you have questions you'd like answered on
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8/14/2019 Episode 18 of Lets Talk Bitcoin
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air, call us at 1-855-WeTalkBitcoin. By the way if you're still listening, you should know that
letstalkbitcoin is growing up and I'm quietly looking for potential partners who are on the same
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adam@letstalkbitcoin.com Stay tuned.
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