Topic: Mobile money slowly turning East Africa into cashless society - page 2. (Read 8146 times)

could the problem be solved with cold storage? like a thumbdrive with a wallet.dat file and some level of encryption?  A thumb drive could make a great vault for someone store their wealth cheaply and with a relatively high level of security in a third world country. 

I know people in/from Nigeria, and this is definitely true. More people access the internet there with smart phones than with computers.


+ a million. You couldn't have hit the nail more on the head here.

I use CyanogenMod: www.cyanogenmod.com
There are probably others.

Would you mind sharing how you"nuked" your Android?

Read the page you linked to. It is not a key logger.

Iphones come pre-installed with the keylogger made by CarrierIQ
http://blog.chpwn.com/post/13572216737

Thanks for the links. If you buy an iPhone buy it directly from Apple and not for 1$ with a crazy plan and software pre-installed by your carrier. If you buy an android nuke it with your favorite open source package.

This is the type of threat I'm describing:
 - http://www.theverge.com/2012/5/18/3028207/zte-score-backdoor-vulnerability-confirmed-skate
 - http://security.stackexchange.com/questions/15076/i-found-that-the-company-i-work-for-is-putting-a-backdoor-into-mobile-phones

I don't know where you buy your phone and what deal you have with your carrier. Both my android and iPhone were purchased at full price and unlocked and my SIMs purchased independently. My carrier is in no position to snoop into or alter any apps on my phones.

Coinapult's service is limited to U.S. and Canada numbers for now. 

Plus, they rely on 1% fee from users of API, but they have to pay for each SMS.  i.e., they may need to make some adjustments in fees in order to expand or maintain current service even.

But when they do figure it out, ... this will definitely finally let Bitcoin permeate to developing nations.  SMS wallets are a big deal.

This is already possible. Coinapult allows controlling bitcoin funds via SMS

i think i'm going to go short this puppy first thing Monday:

NYT article on the international money transfer business atm, ie WU $10 fee to send $50 = 20% & a rip off exchange rate on top of that too

http://www.nytimes.com/2012/06/02/business/new-rules-for-money-transfers-but-few-limits.html?_r=1

Fairly short article in the Economist (well, short for the Economist):
 

 - http://www.economist.com/node/21553510?fsrc=scn/tw/te/ar/press1formodernity

Smartphones are now at 50% penetration in the U.S. (with 2/3rd of all new phones sold being smartphones as well):



 - http://www.businessinsider.com/chart-of-the-day-smartphone-penetration-2012-3


What I am concerned with is "the Linode problem".  All these mobiles are managed devices.   They can be fully controlled by someone other than the owner of the device.  Yes, they are managed by the carrier but possibly that carrier has people that cannot be trusted or, just as bad, has people who don't maintain secure systems themselves such as what reportedly is what happened at Linode.

The importance is thiis.  An attack that defrauds M-Pesa's customers en mass means Safaricom figures out at some point that there's a problem, halts all affected systems to prevent further losses, and in the end eats some, most or all of the customer's losses.  A similar attack through the managed services of the mobile network to steal bitcoins from mobiles means just that the individual mobile user alone loses out.  Just like how Linode disavowed any responsibility to Slush, Bitcoinica, etc. for the tens of thousands of bitcoins lost, Safaricom would likely maintain the same position.

So, this is a fundamental question -- is the practice of storing bitcoin private keys on the mobile something that exposes it to too much risk to where it shouldn't even be considered?  i.e., bitcoin apps for mobile need to be under the same model that mobile banking (like M-Pesa) uses?

Well, if they are android phones, that just gives them a free way to run a bitcoin app. Even though the phone will be free, I'll bet that the transaction fees won't be waived for WU payments. So now that they have a phone, load it up with bitcoin and start trading with close to zero fees. Win!

Its hard for Bitcoin to compete in Africa with free smart phones

http://pymnts.com/news/businesswire-feed/2012/march/28/western-union-mtn-announce-launch-of-mobile-money-transfer-service-in-uganda-provides-9000-branded-mobile-phones-20120328005318/

Thanks Mike - that's good to know.  The more I think about it, the concept of a STK+SMS based system, while possible, is too cumbersome to be readily adopted.

Perhaps the real problem with introducing Bitcoin in Africa (or any other developing economy) is to identify the killer application that will motivate people to give it a try.  The only really compelling application I've heard of would be remittances from abroad.  I have read that currently those with out bank accounts must rely on Western Union and pay up to a 20% transfer fee.

Brass tacks - how could Bitcoin compete with Western Union as a remittance service?  Using Kenya as an example, here is a standard business model:

- Establish a formal money transfer company that conforms to all legal requirements and pays required business fees (one time and ongoing). 
- Accept Bitcoins from Kenyan customers via a retail establishment in exchange for Kenyan Shillings. 
- Bitcoins that are received are exchanged for USD via international Bitcoin exchanges.
- Proceeds from the exchanges flow back to Kenya via standard interbank transfer and are converted to Kenyan Shillings to fund future payments.

The big question is whether or not that business model would result in reducing the 20% transfer fee that Western Union charges.

A non-standard business model might look something like this:

- Person A, who has a bank account, advertises their willingness to exchange Bitcoin for Kenyan Shillings.
- Person B, who does not have a bank account, receives Bitcoins from a relative abroad.
- Person A meets person B, face to face, and exchanges Kenyan Shillings for Bitcoins via an Android application.
- Person A exchanges Bitcoins that are received for USD via international Bitcoin exchanges.
- Proceeds from the exchanges flow back to Person A's bank account via standard interbank transfer and are converted to Kenyan Shillings to fund future payments.

If trust were established between Person A and person B, then the cash for Bitcoin exchange could also proceed via an exchange of SMS messages and an M-Pesa cash payment.   The smaller the amount of value that was exchanged, the less trust that would have to exist to facilitate remote exchanges.

One thing to note, inflation in Kenya (for example) was around 17% last year.   That means that holding Kenyan Shillings in a bank account that isn't paying at least 17% APR is a bad idea.  Hedging against inflation might explain why Western Union charges such a high fee to exchange dollars for Shillings. 

The killer application for Bitcoins in Kenya and other developing economies might ultimately be as a non-inflationary store of value.

Cheap Android phones are starting to take over even in Africa. I tried the Bitcoin Wallet app on a phone being sold in Kenya for about $80, it worked fine.

By the time Bitcoin has become big/interesting enough to make real headway in poorer countries the concept of a non-smart phone won't exist. As Apple is unlikely to ever make a real assault on the low end of the market, I think almost all of these devices will be cheap Chinese-manufactured Androids, which is perfect for us.

can u tell me how this works?  my son is travelling to Southeast Asia this summer but the only GSM old phones we have are Blackberry's.  is it possible to stick a prepaid local SIM card in it and have it function for him there?  the problem i'm thinking is that BB's require internet access don't they so how would that effect things?