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Hawala: The Working Man’s Bitcoin (priceonomics.com)
99 points by ryan_j_naughton on Feb 7, 2014 | hide | past | web | favorite | 23 comments

Hawala seems more analagous to Ripple or the #bitcoin-otc IRC channel than to Bitcoin imho. Interesting read, nonetheless!

Yes Ripple is much more similar because it doesn't have any mining, the theoretical basis is disparate parties are unlikely to collude, not proof-of-work.

Ripple is superior to Bitcoin, but because it lacks the speculation element (i.e. "get rich quick"), it's not attractive.

How exactly is it superior? If I understand correctly, Ripple moves around IOUs backed by trust in intermediaries. Bitcoin is a commodity in itself that can be owned directly, without trusting any broker. Ripple to Bitcoin is like a banking network of inter-bank promises to personally owned physical gold under the mattress. Of course, Bitcoin can be stored cheaper and in many more interesting ways than gold, which makes it much safer and more useful.

Well, in the real world, Bitcoin needs the exchanges, which are good only for speculation and hoarders and not having this in Ripple is actually a good thing, especially for commerce! Ripple builds the system and specifications from A to Z, so, it's a more complete piece of technology, more universal, and more applicable to our daily lives, but it's not attractive to anarchists and speculators as there's very little in it for them.

Bitcoin does not need exchanges. Exchanges are just one method to get your hands on Bitcoin. Then you can trade in Bitcoin directly without any extra financial institution in between you and another guy. Exchanges are prevalent today as the easiest way to get BTC, but you can do it also by mining, by buying on the street or by selling your goods and services for BTC. You can invent new trading places or entire networks, or trade directly. Once no one needs USD or EUR, existing exchanges will become irrelevant.

Most people who sell bitcoins at LocalBitcons.com have their price based on an exchange plus a significant premium, not to mention, amounts you can get are very small. A lot of Bitcoiners don't look into Ripple or totally discount it as they see it as a competitor, when, in fact, it's the only thing that can save Bitcoin and keep it truly decentralized.

The point of ripple is not to accumulate coins, the point is to provide a transaction network. They didn't build Ripple to create a store of currency value, they built it to solve the problem of transactions.

If Ripple can finish turing complete contracts things could get very interesting.

I'm comparing just Bitcoin to Ripple and Bitcoin isn't Turing-complete either and arguably for a good reason.

Hawala is discussed widely on HN before, see https://news.ycombinator.com/item?id=6666557

I thought this was a fairly good explanation of Bitcoins broken down into simple terms so that non-technical people can easily grasp the concepts. The Hawala parallel only helps.

That said, it's not really news and doesn't bring any new information to the Bitcoin discussion on Hacker News.

This is a fairly good article on hawala too, but tacking on the somewhat forced Bitcoin analogy makes it clickbait.

I found the parallels interesting -- many people would like fast cheap payments to anywhere in the world without interacting with a bureaucracy. Though there's almost no demographic overlap right now in who uses the various techniques for this!

I wonder what hawaladars' techniques for information and communications security are like, and what efforts people have made to spy on their communications -- or to defraud them by impersonating another hawaladar and originating fraudulent payments.

By using personal trust relationships, hawaladars don't need to solve the full Byzantine Generals problem, but they do face authentication and confidentiality problems from outsiders.

They probably just call each other up on the phone. If two hawaladars know each other well it would be pretty difficult to impersonate one to the other.

Hawala is closer to traditional banking than is made out to be. Despite the hash code entries there must be a form of eventual resettlement. There must also be a distributed enforcement apparatus that charges its own fees. Also, in many countries hawala operators are 'too big to fail', which is the ultimate proof that they are banks.

So it seems there is an opportunity for a hawala/bitcoin exchange is there not? I'm not sure the payments would balance out (would people accept btc and pay cash) but its an interesting thing to think about.

I think that's effectively what Ripple is trying to do (https://ripple.com/) -- a sort of Hawala-like exchange protocol with an open ledger, mixing in their own cryptocurrency. At least, that's the way I thought of it since I last looked..

Didnt the templar do something like this before? I think so:


The Templar is interesting history, but every society everywhere in the world has done this before. Because what do you think came first: regulated or unregulated banking? That's all hawala (and bitcoin, and the Templar system) is: unregulated banking.

It seems that Hawala might be used for import tax evasion:

>Most hawaladars take care of money transfers as a side part of their small business, so often hawaladars pay each other back in non-monetary ways. The most common case is by discounting goods in an export/import business. So in Ibrahim’s case, if the hawaladar he visits in Dubai exports goods to the hawaladar in Alexandria, the Dubai based lender can pay off his debt by discounting the value of his goods.

If the cost of the imported goods is discounted, then proportionally less import tax will be paid.

All I know about this I learned from that Joseph Gordon Levitt movie about bike messengers in New York

Premium Rush (http://www.imdb.com/title/tt1547234/). I loved that movie!

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