6 ms·

Kenya May Be Primed For Wide-Scale Bitcoin Adoption

59 points by cgi_man 13y ago

gbhn 13y ago
The title, though reflective of the article, is misleading. It should be "Some speculation about what might happen in the unlikely event that many Kenyans started using Bitcoin".
- notahacker 13y ago
  It's also speculation which doesn't exactly fill me with confidence the author knows what he's talking about: the unsupported suggestion that Bitcoin will stop people asking for bribes is frankly laughable and then he suggests the "relative consistency" of Bitcoin could be a welcome change above a chart which appears to show that over the last year the Kenyan shilling has fallen in value less than BTC fell in the last week (I'm comparing 7 day MtGox USD exchange rates with a presumably YoY Kenyan inflation rate of <5%) I really wish Western speculators whose position in BTC vastly exceeds their financial knowledge wouldn't shill their position by recommending people in developing countries risk their money
jjsz 13y ago
Theoretically, one can see all the transactions of Kenya right?
- clarkmoody 13y ago
  If one did the work to determine which addresses were used in Kenyan transactions, then one would have this record. All transactions are public, but addresses are pseudonymous.
  - jjsz 13y ago
    https://news.ycombinator.com/item?id=5872417 https://news.ycombinator.com/item?id=5872417
- jdreaver 13y ago
  Indeed, Bitcoin offers just pseudo-anonymity. However, if you are very disciplined, you can severely limit or even totally remove the possibility of someone linking you to your Bitcoins. No one even needs to know a transaction happened in Kenya.
  - stinkytaco 13y ago
    >However, if you are very disciplined, you can severely limit or even totally remove the possibility of someone linking you to your Bitcoins. I'm curious how you might do this? Basically you must be able to hide the fact that you own an address, correct? Does that mean using different addresses for handling transactions while updating the block chain from different IPs (in different physical locations, just so your phone or simple general geographic pattern doesn't reveal you)? Is there something I might be missing?
    - tocomment 13y ago
      I've also thought you could use private keys much like cash. That would be completely anonymous. The payee would just check the balance of the associated public key before the transaction and immediately transfer the balance after the transaction.
    - jdreaver 13y ago
      You are correct. Additionally, you could split large transactions into multiple destination addresses or obfuscate them with intermediary addresses. It takes longer to verify transactions, but it's harder to tie addresses to a single entity (you). Another problem you hint at is broadcasting a transaction from certain IPs. A common heuristic is to record the IP of the first node to report a transaction as the node that made the transaction. You would have to modify your client so that is not the case, or use some sort of VPN to connect to the network.
    - sliverstorm 13y ago
      IMO the best and only way to do this is to focus on the entry and exit of funds from the bitcoin cloud. As soon as one address can be tied to you, all your other accounts can be tied to you, no matter how many games you play with multiple addresses and shuffling coins around. If you want to know how to achieve this, look to modern money laundering practices.
dreen 13y ago
Can anyone explain how Bitcoin "removes vulnerability to human corruption"? Is it because you can see all transactions in the blockchain? Because I fail to see how does that prevent corruption.
- clarkmoody 13y ago
  As long as a human controls access to something, that something will be vulnerable to corruption. Bitcoin removes the vulnerability if it takes the corruptible human out of the process.
  - dreen 13y ago
    Yea ok but it doesn't do that. That is my point. So what do you mean?
    - jdreaver 13y ago
      Humans (banks, PayPal, other third parties) are not required to verify transactions. It means you and only you have access to your bitcoins, and you don't need a trusted third party in order to use your money. You don't need a trusted third party to create bitcoins, either (like when governments print fiat currency).
    - wavefunction 13y ago
      Accountability is sometimes enough to cause otherwise indecent acts to never occur.
- gasull 13y ago
  Corrupt politicians might inflate the currency and buy votes with newly printed money. Bitcoin prevents that.
  - SilasX 13y ago
    Don't know why this was voted down: it is indeed a corruption mode Bitcoin can actually prevent, because the money supply growth is declared (way) ahead of time and immune to alterations except by getting the entire network to change the protocol. (Though this doesn't stop technocrat commentators from casually suggesting you could "fix" the supposed deflationary problem by just "tweaking" the growth rate ...) Now, some people will say that money velocity fluctuates freely so this doesn't do anything about price uncertainty, but that's a rather high bar to meet in the first place.
monus21 13y ago
The OP has made some huge assumptions here but MPESA, even with all its social and economic benefits, only got to where it is today because of Vodafone's deep pockets.Don't really see a similar Bitcoin champion emerging in these parts.
- krmboya 13y ago
  I'd say MPESA met a great need, and maintained it's lead ahead of competitors because of network externalities. Speaking from first-hand experience.
bernardlunn 13y ago
why switch from mpesa which works well and has dominance? Better article maybe "why mpesa will soon dominate payments in western countries".
jdreaver 13y ago
It seems like Kenya has very little to lose in adopting Bitcoin. I welcome adding new users, even if they just act to stabilize the currency against speculators.
- dandelany 13y ago
  I, too, would love to see wider adoption. However, Bitcoin's value is still extremely volatile. A person could convert their life's savings to Bitcoin and see its value halved overnight... As the article mentioned, the Kenyan shilling has gone through some bad inflation cycles but nothing close to Bitcoin's volatility. Why do you think they have very little to lose? Seems quite risky to me.
dobbsbob 13y ago
When Bitcoin becomes more stable it will be used on every corner on earth. Right now its too risky, unless you can immediately sell/cash the coins you take on too much risk. You could sell products online in Kenya 24hrs for a set price and find out when you wake up bitcoin plunged and you lost money to the point of giving away your products. So long as there is only 1 major exchange we are at the whims of speculators and bots.
trothamel 13y ago
Isn't bitcoin too slow to be used for many transactions? Right now, you can walk into a convenience store, buy a pack of gum, pay with your credit card, and the transaction clears within ten seconds or so. From what I understand, a bitcoin transaction isn't set in stone (that is, the money could be double-spent) until it's placed in a block that someone mines - and to prevent problems with people mining the same block twice, multiple blocks. Since one block is mined every ten minutes, we're talking significant time to process a transaction. There are ways around this - but IIRC they involve an intermediary that both sides trust. That intermediary is unlikely to work for free, so it looks like there would still be a problem. It's possible that I'm misunderstanding something, or that someone has come up with a clever solution to this problem since I last checked - in which case, I'd like to know what the answer is.
- dobbsbob 13y ago
  Can always make another digital currency backed by bitcoin for these type of quick payments. No reasons Mpesa cant be backed by bitcoin instead of kenyan shillings
- AndrewDucker 13y ago
  It is theoretically possible to double-spend a bitcoin transaction in the first 20 minutes after you spend it. However, the cost of doing so (in processing power) is high enough that it's not worth doing for small amounts. So long as amounts over $100 wait for confirmation you should be fine.
  - davmre 13y ago
    I don't understand where the cost comes from. Can't you double-spend at will until one of your transactions makes it into the blockchain? Until that point, as far as the Bitcoin network is concerned, you haven't actually spent any money. So it seems like you'd have ten minutes or so of double-spending ability, totally free, and only have to start using processing power if you want to extend beyond that ten-minute period (by forking a blockchain that excludes the transaction you intend to double-spend). My understanding of Bitcoin implementations is pretty vague, though, so I'd welcome correction if this isn't actually how it works.

59 points by cgi_man 13y ago

gbhn 13y ago

The title, though reflective of the article, is misleading. It should be "Some speculation about what might happen in the unlikely event that many Kenyans started using Bitcoin".

notahacker 13y ago
It's also speculation which doesn't exactly fill me with confidence the author knows what he's talking about: the unsupported suggestion that Bitcoin will stop people asking for bribes is frankly laughable and then he suggests the "relative consistency" of Bitcoin could be a welcome change above a chart which appears to show that over the last year the Kenyan shilling has fallen in value less than BTC fell in the last week (I'm comparing 7 day MtGox USD exchange rates with a presumably YoY Kenyan inflation rate of <5%) I really wish Western speculators whose position in BTC vastly exceeds their financial knowledge wouldn't shill their position by recommending people in developing countries risk their money

jjsz 13y ago

Theoretically, one can see all the transactions of Kenya right?

clarkmoody 13y ago
If one did the work to determine which addresses were used in Kenyan transactions, then one would have this record. All transactions are public, but addresses are pseudonymous.
- jjsz 13y ago
  https://news.ycombinator.com/item?id=5872417 https://news.ycombinator.com/item?id=5872417
jdreaver 13y ago
Indeed, Bitcoin offers just pseudo-anonymity. However, if you are very disciplined, you can severely limit or even totally remove the possibility of someone linking you to your Bitcoins. No one even needs to know a transaction happened in Kenya.
- stinkytaco 13y ago
  >However, if you are very disciplined, you can severely limit or even totally remove the possibility of someone linking you to your Bitcoins. I'm curious how you might do this? Basically you must be able to hide the fact that you own an address, correct? Does that mean using different addresses for handling transactions while updating the block chain from different IPs (in different physical locations, just so your phone or simple general geographic pattern doesn't reveal you)? Is there something I might be missing?
  - tocomment 13y ago
    I've also thought you could use private keys much like cash. That would be completely anonymous. The payee would just check the balance of the associated public key before the transaction and immediately transfer the balance after the transaction.
  - jdreaver 13y ago
    You are correct. Additionally, you could split large transactions into multiple destination addresses or obfuscate them with intermediary addresses. It takes longer to verify transactions, but it's harder to tie addresses to a single entity (you). Another problem you hint at is broadcasting a transaction from certain IPs. A common heuristic is to record the IP of the first node to report a transaction as the node that made the transaction. You would have to modify your client so that is not the case, or use some sort of VPN to connect to the network.
  - sliverstorm 13y ago
    IMO the best and only way to do this is to focus on the entry and exit of funds from the bitcoin cloud. As soon as one address can be tied to you, all your other accounts can be tied to you, no matter how many games you play with multiple addresses and shuffling coins around. If you want to know how to achieve this, look to modern money laundering practices.

dreen 13y ago

Can anyone explain how Bitcoin "removes vulnerability to human corruption"? Is it because you can see all transactions in the blockchain? Because I fail to see how does that prevent corruption.

clarkmoody 13y ago
As long as a human controls access to something, that something will be vulnerable to corruption. Bitcoin removes the vulnerability if it takes the corruptible human out of the process.
- dreen 13y ago
  Yea ok but it doesn't do that. That is my point. So what do you mean?
  - jdreaver 13y ago
    Humans (banks, PayPal, other third parties) are not required to verify transactions. It means you and only you have access to your bitcoins, and you don't need a trusted third party in order to use your money. You don't need a trusted third party to create bitcoins, either (like when governments print fiat currency).
  - wavefunction 13y ago
    Accountability is sometimes enough to cause otherwise indecent acts to never occur.
gasull 13y ago
Corrupt politicians might inflate the currency and buy votes with newly printed money. Bitcoin prevents that.
- SilasX 13y ago
  Don't know why this was voted down: it is indeed a corruption mode Bitcoin can actually prevent, because the money supply growth is declared (way) ahead of time and immune to alterations except by getting the entire network to change the protocol. (Though this doesn't stop technocrat commentators from casually suggesting you could "fix" the supposed deflationary problem by just "tweaking" the growth rate ...) Now, some people will say that money velocity fluctuates freely so this doesn't do anything about price uncertainty, but that's a rather high bar to meet in the first place.

monus21 13y ago

The OP has made some huge assumptions here but MPESA, even with all its social and economic benefits, only got to where it is today because of Vodafone's deep pockets.Don't really see a similar Bitcoin champion emerging in these parts.

krmboya 13y ago
I'd say MPESA met a great need, and maintained it's lead ahead of competitors because of network externalities. Speaking from first-hand experience.

bernardlunn 13y ago

why switch from mpesa which works well and has dominance? Better article maybe "why mpesa will soon dominate payments in western countries".

jdreaver 13y ago

It seems like Kenya has very little to lose in adopting Bitcoin. I welcome adding new users, even if they just act to stabilize the currency against speculators.

dandelany 13y ago
I, too, would love to see wider adoption. However, Bitcoin's value is still extremely volatile. A person could convert their life's savings to Bitcoin and see its value halved overnight... As the article mentioned, the Kenyan shilling has gone through some bad inflation cycles but nothing close to Bitcoin's volatility. Why do you think they have very little to lose? Seems quite risky to me.

dobbsbob 13y ago

When Bitcoin becomes more stable it will be used on every corner on earth. Right now its too risky, unless you can immediately sell/cash the coins you take on too much risk. You could sell products online in Kenya 24hrs for a set price and find out when you wake up bitcoin plunged and you lost money to the point of giving away your products. So long as there is only 1 major exchange we are at the whims of speculators and bots.

trothamel 13y ago

Isn't bitcoin too slow to be used for many transactions? Right now, you can walk into a convenience store, buy a pack of gum, pay with your credit card, and the transaction clears within ten seconds or so. From what I understand, a bitcoin transaction isn't set in stone (that is, the money could be double-spent) until it's placed in a block that someone mines - and to prevent problems with people mining the same block twice, multiple blocks. Since one block is mined every ten minutes, we're talking significant time to process a transaction. There are ways around this - but IIRC they involve an intermediary that both sides trust. That intermediary is unlikely to work for free, so it looks like there would still be a problem. It's possible that I'm misunderstanding something, or that someone has come up with a clever solution to this problem since I last checked - in which case, I'd like to know what the answer is.

dobbsbob 13y ago
Can always make another digital currency backed by bitcoin for these type of quick payments. No reasons Mpesa cant be backed by bitcoin instead of kenyan shillings
AndrewDucker 13y ago
It is theoretically possible to double-spend a bitcoin transaction in the first 20 minutes after you spend it. However, the cost of doing so (in processing power) is high enough that it's not worth doing for small amounts. So long as amounts over $100 wait for confirmation you should be fine.
- davmre 13y ago
  I don't understand where the cost comes from. Can't you double-spend at will until one of your transactions makes it into the blockchain? Until that point, as far as the Bitcoin network is concerned, you haven't actually spent any money. So it seems like you'd have ten minutes or so of double-spending ability, totally free, and only have to start using processing power if you want to extend beyond that ten-minute period (by forking a blockchain that excludes the transaction you intend to double-spend). My understanding of Bitcoin implementations is pretty vague, though, so I'd welcome correction if this isn't actually how it works.