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Except the unbanked have been transmitting money across the world outside of banks for a few centuries now: http://en.wikipedia.org/wiki/Hawala http://en.wikipe

Except the unbanked have been transmitting money across the world outside of banks for a few centuries now: http://en.wikipedia.org/wiki/Hawala http://en.wikipedia.org/wiki/Hawala I'm not so sure Bitcoin is a ground breaking change for the unbanked in developing countries, especially when the hawala market is substantially bigger and already widely used.

IkmoIkmo 12y ago
Except that poor people pay the most money for value transfer even using Hawala, just like paying the most for electricity or water or healthcare. When you can't make large infrastructure investments like most OECD countries can, ordinary utilities become massively expensive. And even clever systems like Hawala command a market price just like any other service. In a world without great alternatives, that price is high. Read some reports and you'll find the average cost of remittance for poorer countries averages around 10%, an absurd borderline criminal rate. You'll simultaneously find inflation rates of 10-30% not being uncommon. The ability then to access international derivative markets, i.e. the option to easily buy and hold dollars using bitcoin providing relief from crazy inflation, and the ability to transfer it to others at the cost of moving 500 bytes of data, is hugely interesting. Services like Bitpesa (cheaper remittance) or Bitreserve (hold money in different currencies using bitcoin) are the first such steps. In a few years I expect these things to massively undercut remittance costs and provide interesting relief from inflation. Some of the things the early Paypal founders were interested in, including Peter Thiel who spoke on the topic often in the early days.
- quinnchr 12y ago
  Where are you finding your information for the 10% number? I'd be curious to see. From what I've read formal financial institutions typically charge ~10% which is why poorer people tend to use hawala in the first place. "El Qorchi et al. (2003) state that the cost of a hawala transaction averages around 2 to 5 percent of the total amount of the funds involved, although Maimbo (2005) report that these fees averaged 1 to 2 percent in Afghanistan. Passas (1999) offers several examples where hawaladars offer free services to their compatriots, in the corridor Australia-Africa." https://ideas.repec.org/p/una/unccee/wp0812.html https://ideas.repec.org/p/una/unccee/wp0812.html You make an interesting point about bitcoin being a potential hedge against inflation. Given the current volatility I don't see that being much use at the moment, but it certainly has potential if the volatility ever drops to a reasonable level.
smokeyj 12y ago
You describe the Western Union of bitcoin. The game changer will be the Nasdaq of bitcoin. The frictionless issuance of stocks bonds and dividends will change everything. Operating agreements will be codified in software and organizations can operate entirely transparently with a degree of accountability never before seen. Why would this be cool? Communities can come together and finance join ventures that were previously too small to be viable (incorporating, compliance, lawyers, bribes, etc). Money can now be pooled and organized in a way that mitigates the risk of theft and corruption. While the software isn't ready for this today, I think it's a short matter of time before we get there.
- zwtaylor 12y ago
  I think that you could be right about this particular vision of Bitcoin as a financial platform. It's my belief that the future of Bitcoin will be analogous to something like Linux; a great deal of financial infrastructure will rely on blockchain technology, but Bitcoin itself will have little visibility or use to the average consumer outside of a small, dedicated circle of enthusiasts.
  - CyberDildonics 12y ago
    If you take into account the fact that Android runs on Linux you could be right.
- random28345 12y ago
  > The frictionless issuance of stocks bonds and dividends will change everything. Right now, I can issue all the stock I want for a minimal filing fee. In spite of this, companies regularly pay investment banks billions of dollars to file an IPO. If you think that Bitcoin is somehow going to change that, I have a blockchain to sell you.
  - smokeyj 12y ago
    My comment wasn't about billion dollar IPOs. I'm talking about small communities that would like to purchase something like a solar panel. Maybe they want to sell excess power and return the profits as dividends. My point is, small scale joint ventures require prohibitively expensive overhead (even without the threat of corrupt government officials). Bitcoin stands a real chance at tackling some of those problems.

IkmoIkmo 12y ago

Except that poor people pay the most money for value transfer even using Hawala, just like paying the most for electricity or water or healthcare. When you can't make large infrastructure investments like most OECD countries can, ordinary utilities become massively expensive. And even clever systems like Hawala command a market price just like any other service. In a world without great alternatives, that price is high. Read some reports and you'll find the average cost of remittance for poorer countries averages around 10%, an absurd borderline criminal rate. You'll simultaneously find inflation rates of 10-30% not being uncommon. The ability then to access international derivative markets, i.e. the option to easily buy and hold dollars using bitcoin providing relief from crazy inflation, and the ability to transfer it to others at the cost of moving 500 bytes of data, is hugely interesting. Services like Bitpesa (cheaper remittance) or Bitreserve (hold money in different currencies using bitcoin) are the first such steps. In a few years I expect these things to massively undercut remittance costs and provide interesting relief from inflation. Some of the things the early Paypal founders were interested in, including Peter Thiel who spoke on the topic often in the early days.

quinnchr 12y ago
Where are you finding your information for the 10% number? I'd be curious to see. From what I've read formal financial institutions typically charge ~10% which is why poorer people tend to use hawala in the first place. "El Qorchi et al. (2003) state that the cost of a hawala transaction averages around 2 to 5 percent of the total amount of the funds involved, although Maimbo (2005) report that these fees averaged 1 to 2 percent in Afghanistan. Passas (1999) offers several examples where hawaladars offer free services to their compatriots, in the corridor Australia-Africa." https://ideas.repec.org/p/una/unccee/wp0812.html https://ideas.repec.org/p/una/unccee/wp0812.html You make an interesting point about bitcoin being a potential hedge against inflation. Given the current volatility I don't see that being much use at the moment, but it certainly has potential if the volatility ever drops to a reasonable level.

smokeyj 12y ago

You describe the Western Union of bitcoin. The game changer will be the Nasdaq of bitcoin. The frictionless issuance of stocks bonds and dividends will change everything. Operating agreements will be codified in software and organizations can operate entirely transparently with a degree of accountability never before seen. Why would this be cool? Communities can come together and finance join ventures that were previously too small to be viable (incorporating, compliance, lawyers, bribes, etc). Money can now be pooled and organized in a way that mitigates the risk of theft and corruption. While the software isn't ready for this today, I think it's a short matter of time before we get there.

zwtaylor 12y ago
I think that you could be right about this particular vision of Bitcoin as a financial platform. It's my belief that the future of Bitcoin will be analogous to something like Linux; a great deal of financial infrastructure will rely on blockchain technology, but Bitcoin itself will have little visibility or use to the average consumer outside of a small, dedicated circle of enthusiasts.
- CyberDildonics 12y ago
  If you take into account the fact that Android runs on Linux you could be right.
random28345 12y ago
> The frictionless issuance of stocks bonds and dividends will change everything. Right now, I can issue all the stock I want for a minimal filing fee. In spite of this, companies regularly pay investment banks billions of dollars to file an IPO. If you think that Bitcoin is somehow going to change that, I have a blockchain to sell you.
- smokeyj 12y ago
  My comment wasn't about billion dollar IPOs. I'm talking about small communities that would like to purchase something like a solar panel. Maybe they want to sell excess power and return the profits as dividends. My point is, small scale joint ventures require prohibitively expensive overhead (even without the threat of corrupt government officials). Bitcoin stands a real chance at tackling some of those problems.