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Author Topic: Bitcoin in developing nations  (Read 2385 times)
worldly
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December 30, 2011, 12:29:41 PM
 #1

Kiva.org

http://build.kiva.org/

Here is a perfect platform for the community to showcase how bitcoin can benefit developing countries.
This site has thousands of potential merchants, many probably don't have bank accounts.  Lots of small transactions going on here, very easy to incentivise merchants to take bitcoin.

Im going to contact them and see if there is anything we can do together.
Will report communication back here, please let know if this has been done before or if you have any ideas.

European Bitcoin Conference Prague 2011
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December 30, 2011, 12:32:09 PM
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https://bitcointalk.org/index.php?topic=47792.0
worldly
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December 30, 2011, 12:44:39 PM
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Wow this is a big deal for bitcoin, I don't check the newbie thread.
I'd be happy to go to a village and oversee some bitcoin micro rollouts.
Will contact mrchily and we can start updating in bitcoin discussion so its more visible.

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December 30, 2011, 01:17:46 PM
 #4

Kiva.org

http://build.kiva.org/

Here is a perfect platform for the community to showcase how bitcoin can benefit developing countries.
This site has thousands of potential merchants, many probably don't have bank accounts.  Lots of small transactions going on here, very easy to incentivise merchants to take bitcoin.

Im going to contact them and see if there is anything we can do together.
Will report communication back here, please let know if this has been done before or if you have any ideas.

Just opened an account and lent $25 to a woman, and then found I could never get the money back...
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December 30, 2011, 01:27:40 PM
 #5

I won't support Kiva, heard too many bad things about their lending partners and their loan shark ways.  The wikipedia lists their interest rates and some are over 50%.  Yep, helping those poor third worlders all right.  

http://en.wikipedia.org/wiki/Kiva_%28organization%29#Interest_rates_2

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worldly
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December 30, 2011, 01:32:57 PM
 #6

Ok, well let's target all of them, here is another one.

http://ragm.rotaryglobal.net/p/home.asp

It's the concept that's important.

If you find dirt on these guys feel free to recommend another.

European Bitcoin Conference Prague 2011
worldly
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December 30, 2011, 01:38:12 PM
 #7

I won't support Kiva, heard too many bad things about their lending partners and their loan shark ways.  The wikipedia lists their interest rates and some are over 50%.  Yep, helping those poor third worlders all right.  

http://en.wikipedia.org/wiki/Kiva_%28organization%29#Interest_rates_2

Wholly crap you are right, maybe btc would allow kiva to bypass the field partners altogether and offer 0% interest rates.

That would be pretty cool.

European Bitcoin Conference Prague 2011
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December 30, 2011, 01:55:19 PM
 #8

I won't support Kiva, heard too many bad things about their lending partners and their loan shark ways.  The wikipedia lists their interest rates and some are over 50%.  Yep, helping those poor third worlders all right.  

http://en.wikipedia.org/wiki/Kiva_%28organization%29#Interest_rates_2

Wholly crap you are right, maybe btc would allow kiva to bypass the field partners altogether and offer 0% interest rates.

That would be pretty cool.

I didn't know about Kiva either until someone told me a few months ago, I was gonna donate until then. And yeah, that would be cool. Depends on whether or not they actually do any lending, looks like they are just a middleman doing the pr and organizing, outsourcing the actual lending to subcontractors. At least a couple have decent rates, but a lot are 30%+, with one as high as 62%.  Maybe the person who posted that thread can chime in on how they operate. 

A lot of good options there too, maybe start with the smaller ones.  It'll be easier to convince them if you are talking to the guy who can actually make decisions. 

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jago25_98
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December 30, 2011, 02:45:34 PM
 #9

How´s about Islamic nations where the fee for the lending is fixed and more clear
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December 30, 2011, 04:54:18 PM
 #10

When I think of "developing nations" and money, the first thing that comes to mind are money transfers. Walking around many immigrant neighborhoods in North America I see lots of small and big businesses offering service to "send money abroad."

This is not a trivial problem, as there would be an imbalance in money flow (most people sending money from developed countries to their families in the developing countries, albeit I heard that the trend was reversed for a while during the peak of the crisis in the US).

They're there, in their room.
Your mining rig is on fire, yet you're very calm.
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December 30, 2011, 05:11:21 PM
 #11

worldly, i think it would be better to focus on areas where bitcoin is vastly superior to the current solution and less things can go wrong. kiva has a multitude of issues, plus there is a massive currency risk borrowing bitcoins and then converting to fiat. if bitcoin rises 100% during the loan period, nobody will be able to pay back a loan.

i think concentrating efforts on richer countries is more promising. people who only convert their spare money to bitcoins are much more likely to risk fluctuations. plus we dont have the dilemma that the people to adopt bitcoin go broke when it is as successful as we hope.


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December 30, 2011, 05:59:38 PM
 #12

there is a massive currency risk borrowing bitcoins and then converting to fiat. if bitcoin rises 100% during the loan period, nobody will be able to pay back a loan.

someone talking sense on the forums and it isn't even April 1st!

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December 30, 2011, 07:11:08 PM
 #13

Mobile phone banking in Africa: http://www.youtube.com/watch?v=TNrDv4PQdCc
fornit
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December 30, 2011, 10:49:21 PM
 #14

Mobile phone banking in Africa: http://www.youtube.com/watch?v=TNrDv4PQdCc


you do know that only works if you have a ridiculous amount of agents?

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December 30, 2011, 11:08:18 PM
 #15

As noted by others, there is a lot of currency risk and other legal issues which makes Bitcoin a difficult proposition for Kiva.

For those worried about interest rates, I understand why you might initially find some of the high interest rates to be appalling at first glance, but a simple explanation should help you understand why they are that way in some places.

Let's take an imaginary field partner and say they are offering loans at 50% APR to borrowers in a rural village in Mexico. The average loan size is $400.

The administrative cost of setting up the loan can be significant, all the time for initial loan applications, putting people into the MIS, setting up repayment schedules, etc. Let's say that cost $75. Then, there is the cost to collect the loan repayments. Remember, we are talking about a remote village, somewhere that takes a 3 hour motorcycle ride to get to from a major city. This 3 hour ride to collect on loans happens every 2 weeks for 6-12 months. Thus, you have the loan maintenance cost, let's say $100. Finally, you get down to the actual rate the microfinance institution is charging just to stay afloat (if you look at the return our partners are getting, for the vast majority it's just enough to stay afloat), and say that interest is around $25. So $75 + $100 + $25 = $200 plus the original loan $200 + $400 = $600 and thus you have the 50% APR.

Compare this to the only alternative available in that area, a back alley loan from a loan shark for 250% APR, compounded daily. The loan shark has low overhead so it's mostly just cash in their pockets, unlike most of the MFI's who use their proceeds to expand loan offerings or offer other care (like health information) along with the loans they are giving out.

Anyways, I could still see how some people would see that as excessive, despite how the APR jives with the cost, in that case one could just choose not to lend through Kiva or to only loan to borrowers who go through an MFI with a low interest rate. Personally, from the lenders I've talked to and borrowers I've heard from, they are happy with what is being offered to them. It's worth noting that none of this money goes to Kiva. We run off of donations, corporate grants, etc. There are of course, as mentioned, many other organizations now which lend as well and one could check them out. Paypal's offering (microplace I think it's called?) actually returns interest to lenders if you are in to that.

Alternatively, Kiva just launched a direct peer-to-peer lending system called Kiva Zip, https://zip.kiva.org/, however you'll have to wait a bit because it's still in beta, it's been really neat to participate in it so far.

I'd be happy to answer any questions about Kiva if anyone has any, or you can check a page I actually made for the website: http://www.kiva.org/about/how

Personally, I think we are doing amazing things, but my opinion is naturally skewed cause I work here and think it's the best job ever Tongue
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December 31, 2011, 03:55:28 AM
 #16

Things like this always look exorbitant when you're thousands of miles away, and aren't a party to the trade/contract. I'm sure there's plenty of risk.

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December 31, 2011, 04:31:24 AM
 #17

As noted by others, there is a lot of currency risk and other legal issues which makes Bitcoin a difficult proposition for Kiva.

For those worried about interest rates, I understand why you might initially find some of the high interest rates to be appalling at first glance, but a simple explanation should help you understand why they are that way in some places.

Let's take an imaginary field partner and say they are offering loans at 50% APR to borrowers in a rural village in Mexico. The average loan size is $400.

The administrative cost of setting up the loan can be significant, all the time for initial loan applications, putting people into the MIS, setting up repayment schedules, etc. Let's say that cost $75. Then, there is the cost to collect the loan repayments. Remember, we are talking about a remote village, somewhere that takes a 3 hour motorcycle ride to get to from a major city. This 3 hour ride to collect on loans happens every 2 weeks for 6-12 months. Thus, you have the loan maintenance cost, let's say $100. Finally, you get down to the actual rate the microfinance institution is charging just to stay afloat (if you look at the return our partners are getting, for the vast majority it's just enough to stay afloat), and say that interest is around $25. So $75 + $100 + $25 = $200 plus the original loan $200 + $400 = $600 and thus you have the 50% APR.

Compare this to the only alternative available in that area, a back alley loan from a loan shark for 250% APR, compounded daily. The loan shark has low overhead so it's mostly just cash in their pockets, unlike most of the MFI's who use their proceeds to expand loan offerings or offer other care (like health information) along with the loans they are giving out.

Anyways, I could still see how some people would see that as excessive, despite how the APR jives with the cost, in that case one could just choose not to lend through Kiva or to only loan to borrowers who go through an MFI with a low interest rate. Personally, from the lenders I've talked to and borrowers I've heard from, they are happy with what is being offered to them. It's worth noting that none of this money goes to Kiva. We run off of donations, corporate grants, etc. There are of course, as mentioned, many other organizations now which lend as well and one could check them out. Paypal's offering (microplace I think it's called?) actually returns interest to lenders if you are in to that.

Alternatively, Kiva just launched a direct peer-to-peer lending system called Kiva Zip, https://zip.kiva.org/, however you'll have to wait a bit because it's still in beta, it's been really neat to participate in it so far.

I'd be happy to answer any questions about Kiva if anyone has any, or you can check a page I actually made for the website: http://www.kiva.org/about/how

Personally, I think we are doing amazing things, but my opinion is naturally skewed cause I work here and think it's the best job ever Tongue

FYI: None of my posts are meant to diss KIVA. Only bring awareness. Just wanted to be clear. Currently, I have no strong opinions either way, with possibly only an applied opinion(s) by the content of my posting(s) to date.

~Bruno~
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May 01, 2013, 05:58:42 PM
 #18

Maybe it's time to talk to KIVA again.
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May 01, 2013, 06:48:09 PM
 #19

Interest rates are simply the price of money.

Poor people, pretty much by definition, ARE a greater risk. For poor people in poor countries, money is expensive, in every sense of the word.

But yeah, loans in BTC, considering the fluctuations, would be pretty crazy.






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May 01, 2013, 08:35:23 PM
 #20

I know some people who have availed of Kiva loans in Mindanao. most are grateful as

1 the only other sources to lend to the non creditworthy are far more expensive

2 If they don't pay they do not get harassed nor do they have a group of guys turn up and cart off their TV Ref or furniture

3 If they don't pay there are very few adverse consequences ( except you cant get another loan)

It should also be mentioned that there is a high default rate  not just for Kiva but for every lender in the Philippines and the interst rate reflects that.

A standard credit card /visa /mastercard has monthly interest rate of a MINIMUM 3% per MONTH that is something like 40% APR and that is for people with a job and documentation so 50% interest for Kiva clients who are frequently unemployed and without documentation or fixed abode nor credit or employment history is not that outrageous  unless you consider what the mainstream credit companies charge is outrageous ( which I do Smiley )

Regretfully it is all done with maths and if there were fewer defaults/frauds then lending would be less expensive
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