Bitcoin in Somalia ?

[CompNsci]

Just heard about this on NPR last night, as also reported in the Guardian (http://www.theguardian.com/commentisfree/2013/aug/07/somalis-money-transfers-barclays-lifeline)

Evidently new money transmission regulations in the UK are a serious problem for Somalis trying to get funds back home.

Sounds like a possible opportunity for bitcoin !

What is the state of BTC in Somalia?

[lucasjkr]

Hajahahahahaha! Hilarious!

Hmmm. Bitcoin in a country with almost zero infrastructure and nearly no Internet connectivity. I'm sure people will fight over themselves to sign up. Oh wait, they don't need to have computers, they could just do bitcoin over their mobile phones? Have a wildly fluctuating currency on an easily stolen cell phone?

Somalias got issues. Bitcoin isn't going to solve them. Once they do solve their greater issues, if banks still want nothing to do with them, bitcoin might be good as a substitute for remittances. But right now? You send BTC to a Somali, they sell them on mtgox and have no bank account to transfer to, and even if they did, Goxs' bank will surely refuse to send there.

I know a lot of people want bitcoin to supplant every other currency. Who knows, in the first world where everything is already electronic, maybe it or its offspring could one day. But it's a luxury. If you don't have the basics, its not nearly as applicable.

[giszmo]

Hajahahahahaha! Hilarious!

Hmmm. Bitcoin in a country with almost zero infrastructure and nearly no Internet connectivity. I'm sure people will fight over themselves to sign up. Oh wait, they don't need to have computers, they could just do bitcoin over their mobile phones? Have a wildly fluctuating currency on an easily stolen cell phone?

Somalias got issues. Bitcoin isn't going to solve them. Once they do solve their greater issues, if banks still want nothing to do with them, bitcoin might be good as a substitute for remittances. But right now? You send BTC to a Somali, they sell them on mtgox and have no bank account to transfer to, and even if they did, Goxs' bank will surely refuse to send there.

I know a lot of people want bitcoin to supplant every other currency. Who knows, in the first world where everything is already electronic, maybe it or its offspring could one day. But it's a luxury. If you don't have the basics, its not nearly as applicable.

Safaricom managed to turn cellphone minutes into money in Kenya. Why do you think there isn't a chance Somalis turn Bitcoin into money?

[Mike Hearn]

Africa isn't one country that's all the same, you know. Kenya and Somalia are worlds apart. Kenya is poor but is basically a functioning country with the sorts of modern services you'd expect. Somalia is hardly a country at all, it's more of a gap between Ethiopia and the sea that has been ravaged by war -- and now financial sanctions, even though it's "accidental".

[elor70]

and where do they keep theyre bitcoins? On a stone?

[tacoman71]

Africa isn't one country that's all the same, you know. Kenya and Somalia are worlds apart. Kenya is poor but is basically a functioning country with the sorts of modern services you'd expect. Somalia is hardly a country at all, it's more of a gap between Ethiopia and the sea that has been ravaged by war -- and now financial sanctions, even though it's "accidental".

and where do they keep theyre bitcoins? On a stone?

Maybe there's still alot of violence in Somalia, but Somalia has come a long way since the collapse of Barre's government. They just wrote their own constitution 2 years ago and are now resuming international mail service. Sprint and other telecom companies from China and Europe have invested in Somalia. Somalia also have relatively competitive prices for cell phone service, in fact, they have the cheapest and clearest calls according to Christopher J. Coyne, After war: the political economy of exporting democracy, (Stanford University Press, 2008), p. 154. Somalis with cell phones can also do all sorts of banking activities including money transfers. So I'd say that bitcoin in Somalia isn't so far fetched.
http://online.wsj.com/article/SB10001424052748704608104575220570113266984.html

[ElectricMucus]

http://www.youtube.com/watch?v=7QDv4sYwjO0

[Magazine]

I just don't see it working over there, not for the average Joe anyway. They would find it hard to transfer into cash. Maybe if a company was set up over there where they convert Bitcoin into cash in hand then it could work.

For example,

Person A - Decides to send money back home in Somalia and decides to use the company to process it and give his family at home the money.

Family Member - Goes to the company in Somalia and collects the cash in hand with some type of reference number.

Company - Earns money with a type of fee.


It could work, but I don't see it to be honest.

[BCB]

http://www.youtube.com/watch?v=7QDv4sYwjO0

Hilarious!

[2_Thumbs_Up]

Apparently they have internet coverage in 53% of the country.
http://www.balancingact-africa.com/news/en/issue-no-345/top-story/somalia-s-civil-war/en

And about 1% of the population is connected to internet according to wikipedia (in 2009 that is).
https://en.wikipedia.org/wiki/Communications_in_Somalia#Internet

After the start of the civil war, various new telecommunications companies began to spring up in the country and competed to provide missing infrastructure.[1] Somalia now offers some of the most technologically advanced and competitively priced telecommunications and internet services in the world.[2] Funded by Somali entrepreneurs and backed by expertise from China, Korea and Europe, these nascent telecommunications firms offer affordable mobile phone and internet services that are not available in many other parts of the continent.

Besides, everyone doesn't need direct internet access. If an equivalent to M-Pesa using bitcoin started, cell phone access would be enough.

Seems like a lot of people let their prejudices come in the way of actual analysis of the situation here. They may not be there quite yet, but considering their growth it doesn't seem like that bad of an idea for an entrepreneurial somali to start a bitcoin company that makes transactions easy for people there.

Interesting read:
Better off stateless

Edit: Another point. While internet and cell phone access is still a lot better in Kenya, there are other things that speak in favour of Somalia for Bitcoin adaption. First, the competition is far from as established as in Kenya, and second Somalis do suffer heavily from inflation. These two factors together speaks heavily in Bitcoins favour. As internet and cell phone coverage continue to increase at the rapid pace it is currently doing, a bitcoin company could be a force to reckon with offering a low cost, inflation proof and international payment method.

[tacoman71]

I just don't see it working over there, not for the average Joe anyway. They would find it hard to transfer into cash. Maybe if a company was set up over there where they convert Bitcoin into cash in hand then it could work.

For example,

Person A - Decides to send money back home in Somalia and decides to use the company to process it and give his family at home the money.

Family Member - Goes to the company in Somalia and collects the cash in hand with some type of reference number.

Company - Earns money with a type of fee.


It could work, but I don't see it to be honest.

That sounds almost exactly like western union.

[Mike Hearn]

There's another problem that you guys are overlooking - the state of BTC in the UK is nearly as bad as in Somalia. Banks won't open accounts for money transmitters anymore because of the HSBC fiasco, so there are no exchanges in the UK. Simple as that.

[Magazine]

There's another problem that you guys are overlooking - the state of BTC in the UK is nearly as bad as in Somalia. Banks won't open accounts for money transmitters anymore because of the HSBC fiasco, so there are no exchanges in the UK. Simple as that.

That's true, I guess there is still cash in hand transactions. Unlike in Somalia where obviously shopping online is barely used unlike in the UK there are far more sites to use Bitcoin and they are easier to arrange cash in hand transactions. Also I would want to be in Somalia arranging a cash in hand transaction, seems a little unsafe. 

[2_Thumbs_Up]

There's another problem that you guys are overlooking - the state of BTC in the UK is nearly as bad as in Somalia. Banks won't open accounts for money transmitters anymore because of the HSBC fiasco, so there are no exchanges in the UK. Simple as that.

I live in Sweden. We have plenty of Somalis here and don't suffer the same fate as the UK.

I think you are overlooking the actual state and growth of internet and cell phone coverage in Somalia. There is a very real opportunity for a bitcoin start up in Somalia that could become a major player in 5-10 years time, by undercutting all their competition.

[countryfree]

Yes, Somalia has a chance, but I'd say BTC needs to be adapted to work there. M'Pesa is a huge success in neighboring Kenya because it works with simple text messages. The average Somalian can't afford a fast computer, an iphone or a good Android smartphone. If someone could design a BTC app which could work on the most basic smartphone using very little bandwidth, this is all they need.

[Magazine]

Yes, Somalia has a chance, but I'd say BTC needs to be adapted to work there. M'Pesa is a huge success in neighboring Kenya because it works with simple text messages. The average Somalian can't afford a fast computer, an iphone or a good Android smartphone. If someone could design a BTC app which could work on the most basic smartphone using very little bandwidth, this is all they need.

Yep, they need a way to make a device which can hold BTC affordable.

[2_Thumbs_Up]

Yes, Somalia has a chance, but I'd say BTC needs to be adapted to work there. M'Pesa is a huge success in neighboring Kenya because it works with simple text messages. The average Somalian can't afford a fast computer, an iphone or a good Android smartphone. If someone could design a BTC app which could work on the most basic smartphone using very little bandwidth, this is all they need.

I believe the M-Pesa model is the way to go. One company stores the bitcoins and allows the people to transfer ownership by whatever way they are used to do banking there already. Somalis using actual P2P transfers probably won't happen with their current infrastructure.

From the company's point of view it should be very attractive, since they would have a lot less overhead by not having to deal much with cash in a very unstable society. He could easily store his bitcoins abroad if he partners with some business savy person. This would allow him to undercut his competition.

It would also be highly beneficial to the somali people, ending inflation, most of the remittance costs from relatives and getting access to a cheap international payment method.

Mr Ahmed Mohamed Yusuf seems to have the entrepreneurial spirit and the infrastructure in place.
http://online.wsj.com/article/SB10001424052748704608104575220570113266984.html

One of the largest, Hormuud Telecom Inc., has sales of about $40 million a year, substantial in a country where an estimated 70% of the population lives on less than $2 a day. Hormuud declined to disclose its profit.

Hormuud's chief executive, Ahmed Mohamed Yusuf, started his business selling bread, spaghetti, sweets and other groceries. He later opened a popular supermarket.

But like his competitors, Mr. Yusuf saw huge gaps in the telecom sector. "Everyone wants to get in touch with his brother or sister, whether inside or outside the country, to hear the latest news" amid rising violence, says the 50-year-old CEO.

In 2002, he pooled money with friends and launched Hormuud, a cellphone and land-line telecommunications company. It would later expand to include a bank and a mobile money-transfer service, which Somalis now use to avoid being robbed in this cash-based economy.

I wonder if he knows about Bitcoin...

[BCB]

Bitcoin is not ready for prime-time in africa.

but https://kipochi.com/ is trying to do something about  it.

[Magazine]

Bitcoin is not ready for prime-time in africa.

but https://kipochi.com/ is trying to do something about  it.

That's pretty cool, I wonder how secure these wallets are?

[Stephen Gornick]

If an equivalent to M-Pesa using bitcoin started, cell phone access would be enough.

M-PESA was able to sign up individuals to perform the cash-in and cash-out exchange service and receive a commission that either supplemented the person's income or was significant enough to incent the person to provide that service full-time.

There's probably enough remittance activity in Somalia to support quite a few street exchangers.  In fact, that already exists.  They are called hawalders:
 - http://www.youtube.com/watch?v=m3O15rErALg

So all that needs to happen is for these hawalders to discover Bitcoin and they can begin providing cash-out independently (i.e., without the pairing to the sender's side).  

There isn't an easy way for the hawalder to convert those recently acquired bitcoins back to shillings, dollars, euro (or whatever cash they use) so what is needed for this to work is a local buyer who will buy those coins from the street exchangers.   That local buyer might not even hold the coins, but instead sell them at an exchange and use the proceeds to pay for goods that are imported, perhaps.

I've described the process with a little more detail here:

Bringing Bitcoin to the world-competing with Western Union
 - http://bitcointalk.org/index.php?topic=220062.msg2320340#msg2320340

Here's a report on the topic of who receives remittances and how the remittances received are used:
 - http://www.fsnau.org/downloads/family-ties-remittances-and-livelihoods-support-puntland-and-somaliland-study-report
 - http://www.forcedmigration.org/podcasts/audio/pss-laura-hammond-290513.mp3 <--  Corresponding presentation, but I haven't listened to it in full yet.