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I hate conspiracy theories as much as the next guy, but there are a few basic principles I follow: 1) When people are making money off of something, they prote

I hate conspiracy theories as much as the next guy, but there are a few basic principles I follow: 1) When people are making money off of something, they protect that method of making money, and evolve if necessary. 2) There are intricacies to our currency that might not seem immediately obvious. People depend on the discreet nature of physical currency - it controls the entire world of corruption (a lot of movies like to use diamonds as black market currency, but in reality its too difficult to rule out man-made diamonds these days, or to quickly evaluate the worth of a lot of diamonds). Corruption does not occur solely among gangsters, but all manner of people - from the most prolific bankers to the most "reputable" politicians. Digital currency can too easily be traced. 3) The government has made little effort to create its own digital currency, despite the fact that it would save tax payers billions, negating the need for the IRS, Mint, and reduce the need for the FBI and Secret Service (which monitors counterfeiting among other things)...and the corruption associated with physical currency. You might encounter more red tape and inertia than you anticipate -- if not now then when Visa lobbies its favorite candidate to create laws that work against you. 4) Third world countries are not a great target for digital currency IMHO, unless they have prevalent technology and understanding of it.

DevX101 15y ago
Without commenting on your first 3 points, I'd argue that a 3rd world country could potentially be an excellent place to gain mass adoption. In the U.S. we have credit cards and fixed addresses to mail bills. There's probably a billion people who don't have this. There is absolutely an opportunity in 3rd world countries to leapfrog credit card systems, which for a variety of reasons don't work in these environments. There's a mobile phone currency company in Kenya called MPesa which is currently processing 20% of the countries GDP! There's simply no way you could get that adoption in the U.S. that fast, since you'd have to displace VISA, Mastercard, and debit cards...no easy feat. So OP is working on a hard problem, but its doable.
- gavanwoolery 15y ago
  That is (genuinely) a great point, but I would ask what this mobile currency is based on - the country's currency? Is it mined like bitcoin? Processing payments via mobile phone bills is a different beast than creating a new currency, IMHO...but then again, maybe I am not understanding these companies correctly. :)
  - utunga 15y ago
    you may not have heard of m-pesa - which arose out of people being able to transfer mobile minutes and then became a fully fledge mobile currency in it's own right.. as xtrumanx says (below) m-pesa is huge. you might also note that this has already happened ;-)
    - itmag 15y ago
      That is very interesting. Is there some way I can start developing apps for the M-Pesa ecosystem? Mind pointing me in the right direction? :)
      - utunga 15y ago
        sure is (interesting). unfortunately I don't know enough about it beyond just suggesting you google m-pesa and go from there.. ;_)
- maxcan 15y ago
  IIRC, M-Pesa was launched by the dominant mobile phone carrier in Kenya. Its not exactly a model that a typical lean-startup even has an ice cube's chance in hell of success with.
  - maxcan 15y ago
    Just to clarify, I dont think that its impossible for a lean-startup to be successful in mobile payments, but I doubt that they can do that just by emulating m-pesa.
xtrumanx 15y ago
> 4) Third world countries are not a great target for digital currency IMHO, unless they have prevalent technology and understanding of it. I live in Somaliland. The top telecom company here, Telesom, has a mobile money transfer service here called Zaad. Basically, people setup a Zaad account at their local Telesom office and exchange their physical currency for credit in their Zaad account. They then buy stuff at shops or send money to folks right from their mobile phone using a USSD interface. The USSD interface works like this: 1. Dial *888# 2. A prompt appears on your mobile phone. The prompts could be a menu, a request for a password or whatever 3. The user clicks reply (a context menu appears on the phone) and types in a reply. 4. Go to no. 2 until the transaction is complete. Zaad has exploded in growth in the 2 or 3 years it's been around and has freaked out a lot of other businesses here who suddenly got a scary new popular competitor. The best part of Zaad is that you don't need a smartphone or internet connectivity to use it. Literally any mobile phone works with it. Even an old-school Nokia 3310. Telesom isn't the first country to come up with this idea. If I'm not mistaken, the first company was a Kenyan company called Safaricom and their product is called M-Pesa. It has 6 million subscribers using it. Imagine 6 million folks sending transactions and getting a tiny cut out of every transaction. M-Pesa is huge.
- Dexec 15y ago
  Very informative post, thanks for sharing. For anybody who'd like to get a feel for how well the existing players in this market are executing, take a look at Zaad's site: http://www.zaad.net/ http://www.zaad.net/
  - xtrumanx 15y ago
    If you think that's bad, try removing the www in the address. It just hits a GoDaddy parked page. Also, take a look at this site: http://hadhwanaag.com http://hadhwanaag.com. It's the most popular news website in Somaliland. I'm pretty sure someone can make a pretty penny just by setting up a nice themeforest-based theme for many of the country's websites. The hard part will be convincing them their website looks atrocious.
nmridul 15y ago
Third world countries are great targets. In India (if you can still call it 3rd world) one of the largest mobile phone provider has come up with digital money that you can send to any other phone number. And most people own a mobile phone even if they have not seen a credit card in their life. http://airtelmoney.in/wps/wcm/connect/airtelmoney/airtelmoney/home http://airtelmoney.in/wps/wcm/connect/airtelmoney/airtelmone...

DevX101 15y ago

Without commenting on your first 3 points, I'd argue that a 3rd world country could potentially be an excellent place to gain mass adoption. In the U.S. we have credit cards and fixed addresses to mail bills. There's probably a billion people who don't have this. There is absolutely an opportunity in 3rd world countries to leapfrog credit card systems, which for a variety of reasons don't work in these environments. There's a mobile phone currency company in Kenya called MPesa which is currently processing 20% of the countries GDP! There's simply no way you could get that adoption in the U.S. that fast, since you'd have to displace VISA, Mastercard, and debit cards...no easy feat. So OP is working on a hard problem, but its doable.

gavanwoolery 15y ago
That is (genuinely) a great point, but I would ask what this mobile currency is based on - the country's currency? Is it mined like bitcoin? Processing payments via mobile phone bills is a different beast than creating a new currency, IMHO...but then again, maybe I am not understanding these companies correctly. :)
- utunga 15y ago
  you may not have heard of m-pesa - which arose out of people being able to transfer mobile minutes and then became a fully fledge mobile currency in it's own right.. as xtrumanx says (below) m-pesa is huge. you might also note that this has already happened ;-)
  - itmag 15y ago
    That is very interesting. Is there some way I can start developing apps for the M-Pesa ecosystem? Mind pointing me in the right direction? :)
    - utunga 15y ago
      sure is (interesting). unfortunately I don't know enough about it beyond just suggesting you google m-pesa and go from there.. ;_)
maxcan 15y ago
IIRC, M-Pesa was launched by the dominant mobile phone carrier in Kenya. Its not exactly a model that a typical lean-startup even has an ice cube's chance in hell of success with.
- maxcan 15y ago
  Just to clarify, I dont think that its impossible for a lean-startup to be successful in mobile payments, but I doubt that they can do that just by emulating m-pesa.

xtrumanx 15y ago

> 4) Third world countries are not a great target for digital currency IMHO, unless they have prevalent technology and understanding of it. I live in Somaliland. The top telecom company here, Telesom, has a mobile money transfer service here called Zaad. Basically, people setup a Zaad account at their local Telesom office and exchange their physical currency for credit in their Zaad account. They then buy stuff at shops or send money to folks right from their mobile phone using a USSD interface. The USSD interface works like this: 1. Dial *888# 2. A prompt appears on your mobile phone. The prompts could be a menu, a request for a password or whatever 3. The user clicks reply (a context menu appears on the phone) and types in a reply. 4. Go to no. 2 until the transaction is complete. Zaad has exploded in growth in the 2 or 3 years it's been around and has freaked out a lot of other businesses here who suddenly got a scary new popular competitor. The best part of Zaad is that you don't need a smartphone or internet connectivity to use it. Literally any mobile phone works with it. Even an old-school Nokia 3310. Telesom isn't the first country to come up with this idea. If I'm not mistaken, the first company was a Kenyan company called Safaricom and their product is called M-Pesa. It has 6 million subscribers using it. Imagine 6 million folks sending transactions and getting a tiny cut out of every transaction. M-Pesa is huge.

Dexec 15y ago
Very informative post, thanks for sharing. For anybody who'd like to get a feel for how well the existing players in this market are executing, take a look at Zaad's site: http://www.zaad.net/ http://www.zaad.net/
- xtrumanx 15y ago
  If you think that's bad, try removing the www in the address. It just hits a GoDaddy parked page. Also, take a look at this site: http://hadhwanaag.com http://hadhwanaag.com. It's the most popular news website in Somaliland. I'm pretty sure someone can make a pretty penny just by setting up a nice themeforest-based theme for many of the country's websites. The hard part will be convincing them their website looks atrocious.

nmridul 15y ago

Third world countries are great targets. In India (if you can still call it 3rd world) one of the largest mobile phone provider has come up with digital money that you can send to any other phone number. And most people own a mobile phone even if they have not seen a credit card in their life. http://airtelmoney.in/wps/wcm/connect/airtelmoney/airtelmoney/home http://airtelmoney.in/wps/wcm/connect/airtelmoney/airtelmone...