
Why Bitcoin Matters for Africa - frankdenbow
http://www.ariannasimpson.com/bitcoin-matters-africa/
======
hawkharris
This article was well written and thought provoking, but the title should be
changed to "Why Bitcoin Matters for Zimbabwe."

The current title makes the article sound like a generalization about all the
economies in a continent.

~~~
barretts
Agreed. And hyperinflation is terrible when it happens, but quite rare in
modern economies. Double-digit declines in bitcoin values are, however, quite
common. It would be profoundly irresponsible to encourage the poor of Africa
to make the switch at this point.

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res0nat0r
Hard to take this article seriously when the first few paragraphs are talking
about the hyperinflation of the currency of Zimbabwe, then trying to rectify
that with bitcoin, which can fluctuate hundreds of USD in the span of a couple
of hours.

It specifically mentions M-Pesa, which is already used by the majority of the
continent, but trying to improve and go all-in on something established and
accepted like that wouldn't be web 2.0 enough.

~~~
blushrt
She lost me when she said Yugoslavia was a continent, also Yugoslavia doesn't
exist anymore.

~~~
ariannahsimpson
Yugoslavia did exist at the point in time when they had hyperinflation, which
is what I was referencing. For the record, I certainly do not think
Yugoslavia, Angola OR Peru or are continents. I just rephrased to make that
more clear. Thanks for your input!

~~~
eaurouge
You list five countries, only two of which are in Africa, and yet you
generalize your prescription to one continent. You do know there are some 52
other countries/economies in Africa?

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rowanseymour
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-g...](http://www.economist.com/news/21588896-some-worlds-fastest-
growing-economies-2014-will-be-africa-digging-deeper)

[2] [http://www.rnw.nl/africa/article/hello-bitcoin-goodbye-
weste...](http://www.rnw.nl/africa/article/hello-bitcoin-goodbye-western-
union-future-remittance-could-be-digital)

~~~
barretts
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
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.

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anigbrowl
_Since bitcoin is a decentralized currency that is controlled by algorithms
rather than one or a small handful of individuals, there is no option to
simply “print more money”. This precludes governments from instituting
reckless monetary policies and subverting entire economies on little more than
a whim._

Countries will just have fiscal rather than monetary disasters in such
situations. Look at Greece. Really, hyperinflation is a pretty rare occurrence
- obviously it's bad, but bitcoin boosters and gold bugs seem to think it's
practically the norm or that all fiat currencies eventually fall victim to it.
This is simply not the case.

~~~
nhaehnle
What's more, governments usually don't wake up one morning and decide to start
hyperinflation out of the blue. Instead, hyperinflation is usually the result
of economic disasters that came before.

In fact, I would "fix" what you wrote, because the fiscal disasters are
typically a required precondition for the monetary disasters. When using
Bitcoin, the countries might be limited to fiscal disasters, but - as the
example of Greece shows - those are the real problem anyway.

------
zamalek
Please tell me more about how Bitcoin (an _electronic_ currency) matters for a
country with very poor internet connectivity and constant power outages.

Furthermore the country has abandoned its native currency and is using
USD/GBP/ZAR in any case.

Economic freedom is irrelevant when there is a gun being held to your head [in
a very literal sense].

Disclaimer: I lived there for 14 years of my life, and visit my family there
often.

------
netcan
The 'no central bank' concept in bitcoin is interesting academically to
economists and people with strong opinions on the matter. IMO, it's not the
most important part of bitcoin for countries like Zimbabwe or other developing
economies.

(1)Bitcoin is a long way from being a steady, safe currency that solves
currency instability problems. (2) I don't think it's all that different from
simply using foreign currency, which is what people in countries with a
failing currency do.

IMO what _is_ interesting about bitcoin and bitcoin in developing countries in
particular are its basic advantages: digital, transaction cost free cash. This
may open up the door to all kinds of activities held back by the non access to
financial services. Remittances, long distance commerce, saving, etc. Remember
the splash microlending made? A lot of later studies (after the initial noble
prizes and mass interest) found that micro-loans acted as (poor) substitutes
for other basic financial services like savings or insurance. It's hard to
save when everyone in your tight knit extended family is broke and owed
favors. You just can't keep your penny jar tucked away. But, paying back your
loan is not optional so microloans are the only way of doing big ticket
purchases, even if interest rates are very high.

Financial infrastructure is important. If bitcoin (or similar) can be used to
build low cost financial services available everywhere it will have made a big
difference. The hyperinflation stuff is very theoretical for the near future
and uncertain in the farther off future.

Links on this page are a good reference for the academic thoughts on
microfinance and financial services as development tools during the recent 3-4
surge in interest on the topic:
[http://www.econtalk.org/archives/2011/04/munger_on_micro.htm...](http://www.econtalk.org/archives/2011/04/munger_on_micro.html)

*Even though there doesn't tend to be a lot of talk about savings as a way out of poverty, I think that thinking back on many of the old anecdotes from now developed economies, those people credited savings as a way of making progress on their family's financial situation.

------
interstitial
The GPU's burden. Infrastructure intense script kiddie toy currency to
enlighten technically deprived cultures of Africa. Funny how Africa's problems
will enrich the hoarding kiddies.

------
josefresco
An article about digital currency and Africa and not a single mention of the
Bill and Melinda Gates foundation?

[http://www.gatesfoundation.org/What-We-Do/Global-
Development...](http://www.gatesfoundation.org/What-We-Do/Global-
Development/Financial-Services-for-the-Poor)

Also this:
[http://www.reddit.com/r/IAmA/comments/1xj56q/hello_reddit_im...](http://www.reddit.com/r/IAmA/comments/1xj56q/hello_reddit_im_bill_gates_cochair_of_the_bill/cfbsaof)

------
21echoes
yes, bitcoin's slow-inflation-soon-to-become-deflation is preferable to
hyperinflation. no, slow-inflation-soon-to-become-deflation is not preferable
to a well-managed economy.

------
qznc
Bitcoin for Africe would require a lite-client implemented in J2ME. Afaik not
available so far.

[https://bitcointalk.org/index.php?topic=103290.0](https://bitcointalk.org/index.php?topic=103290.0)

Edit: Also, p2p in general sucks, if you have no reliable internet, power
outages, and low connectivity.

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bayesianhorse
A fundamental flaw in many people's understanding of bitcoin's "advantages" is
this notion of "not printing money" being a uniquely good idea.

Yes, extremely bad monetary policy is worse than having no monetary policy (as
in the bitcoin economy). But the case of no monetary policy being better than
even a moderately bad monetary policy is much harder to make.

I also don't see why so many people believe that there won't ever be an
increase in the money supply from bitcoins. With a growing market
capitalization and growing number of businesses dependend on Bitcoin,
financial services and products around btc are becoming more common. Virtually
no contracts, even in the bitcoin world, are instantaneous, thus investment
banking will evolve and distort the idea of a new gold standard.

------
randomafrican
So now the country with the worse case of hyperinflation of may be the last 30
years is somehow representative of a continent of 50 countries ?

Anyway.

Capital flight (especially unearned capital) has been a more common issue for
much longer. I'm not sure how making that problem worse would help.

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dabrowski
"Zimbabwe suffered from the second worst hyperinflation on record; it reached
an absurd 231,000,000% in the summer of 2008. That means that the price of
goods doubled every 25 hours."

Unless the hyperinflation lasted only about 3 weeks, then that statement is
obviously wrong. 2^21 * 100 = 209,715,200

~~~
shawabawa3
Yep, should be every 35 hours.

I think they got a bit confused - in Aug 2008 the inflation was up to
471,000,000,000%, which _is_ roughly doubling every 25 hours

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mercurialshark
Enabling peer-to-peer transactions - whether via bitcoin in its current form
or a successor - opens up economies for untold millions without stable,
trustworthy or conventional banking. Most people, even in the third world,
have access to cell phones.

~~~
amalag
This is why I am impressed with Ripple. They are not interested in creating an
alternative currency. They are solely about facilitating peer-to-peer
transactions. And it doesn't require mining or proof-of-work. They compare it
to SMTP for payments.

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zhaodaxiong
BS...

