4 ms·

Bitcoin matters for Africa, and all other continents... and this article contains a lot of nonsense. Yes, Zimbabwe's hyperinflation was caused in part by printi

Bitcoin matters for Africa, and all other continents... and this article contains a lot of nonsense. Yes, Zimbabwe's hyperinflation was caused in part by printing money - but it seems a grossly unfair simplification to present that as the root cause of Zimbabwe's economic woes. To quote: Gideon Gono, governor of the Reserve Bank of Zimbabwe, increased the supply of money enormously against the advice of economists, but with full support from President (read: dictator) Robert Mugabe. As any basic textbook of economics posits, the Zimbabwean dollar fell in value and hyperinflation followed Also: in many cases this was caused by impulsive, foolish “human error” in the form of printing money without thought for the consequences It sound's like we're blaiming the whole thing on stupid Zimbabweans (too stupid to read a basic textbook!) who ignored the advice of their western advisors. Let's not forget that until 1980, Zimbabwe was ruled by a white minority apartheid government. The country that Mugabe's ZANU party inherited was one where a few thousand white farmers owned the majority of all the fertile land in the country. Mugabe's land reform policies were badly implemented and caused the collapse of the country's food production, which seems to have to led to the collapse of the banking sector. On top of that their economy had to deal with sanctions from the US and EU. By the time Zimbabweans were printing money, their economy was already in a dire situation. Anyway, the gist of this article is that stupid economic policy can lead to hyperinflation. Ok. So why the generalization about Africa? Does the author think that stupid economic policy is something common to African countries? Does the author know that the IMF is predicting that four of the world’s six fastest-growing economies will be in sub-Saharan Africa this year? [1] Incidently the article doesn't mention the one area in which I think Bitcoin will be very useful for large parts of Africa: remittances [2]. [1] http://www.economist.com/news/21588896-some-worlds-fastest-growing-economies-2014-will-be-africa-digging-deeper http://www.economist.com/news/21588896-some-worlds-fastest-g... [2] http://www.rnw.nl/africa/article/hello-bitcoin-goodbye-western-union-future-remittance-could-be-digital http://www.rnw.nl/africa/article/hello-bitcoin-goodbye-weste...

barretts 13y ago
I've become skeptical about bitcoin for remittances. The biggest cost in remittance architecture isn't the electronic transfer, but distributing cash. Western Union, e.g., maintains a network of over 1 million agents - banks, post offices, dry goods stores, mobile top-up kiosks, etc. - so that recipients, often in rural areas, can collect their cash. Bitcoin does nothing to reduce these costs. (Unless you're assuming recipients in Africa et al. will keep their money in bitcoin, which is ridiculous at this point, and will be for many, many years.)
- rowanseymour 13y ago
  I think the solution to the distribution challenge is already here: mobile money. It's huge in Kenya and on the rise here in Rwanda and other neighbouring countries. Bitcoin would serve only to get the remittance to an in-country distributor, at which point it would be converted to local currency and delivered via mobile money.
nhaehnle 13y ago
Thank you for this comment, I was about to post something very similar. The thing about hyperinflation is that people are hypnotized by the many zeros that are involved and ignore the underlying root causes. Zimbabwe suffered economically for reasons entirely unrelated to hyperinflation. Hyperinflation was just a kind of release valve for the economic mess that already existed before it started. Had Zimbabwe used Bitcoin at the time [0], the well-intended but badly implemented land reform would still have caused economic collapse and wide-spread suffering. The symptoms would have been slightly different, but they would have been just as bad. The same could be said for the Weimar republic hyperinflation of the 1920s, by the way. Hyperinflation was a release valve for the economic problems that Germany was already in, and ultimately helped demonstrate that the war debts imposed from World War I were onerous and should be forgiven. Arguably, using Bitcoin would have made the long-term situation worse for Germany back then. [0] Obviously completely hypothetical since Bitcoin did not exist, but that's beside the point.

barretts 13y ago

I've become skeptical about bitcoin for remittances. The biggest cost in remittance architecture isn't the electronic transfer, but distributing cash. Western Union, e.g., maintains a network of over 1 million agents - banks, post offices, dry goods stores, mobile top-up kiosks, etc. - so that recipients, often in rural areas, can collect their cash. Bitcoin does nothing to reduce these costs. (Unless you're assuming recipients in Africa et al. will keep their money in bitcoin, which is ridiculous at this point, and will be for many, many years.)

rowanseymour 13y ago
I think the solution to the distribution challenge is already here: mobile money. It's huge in Kenya and on the rise here in Rwanda and other neighbouring countries. Bitcoin would serve only to get the remittance to an in-country distributor, at which point it would be converted to local currency and delivered via mobile money.

nhaehnle 13y ago

Thank you for this comment, I was about to post something very similar. The thing about hyperinflation is that people are hypnotized by the many zeros that are involved and ignore the underlying root causes. Zimbabwe suffered economically for reasons entirely unrelated to hyperinflation. Hyperinflation was just a kind of release valve for the economic mess that already existed before it started. Had Zimbabwe used Bitcoin at the time [0], the well-intended but badly implemented land reform would still have caused economic collapse and wide-spread suffering. The symptoms would have been slightly different, but they would have been just as bad. The same could be said for the Weimar republic hyperinflation of the 1920s, by the way. Hyperinflation was a release valve for the economic problems that Germany was already in, and ultimately helped demonstrate that the war debts imposed from World War I were onerous and should be forgiven. Arguably, using Bitcoin would have made the long-term situation worse for Germany back then. [0] Obviously completely hypothetical since Bitcoin did not exist, but that's beside the point.