Episode 18 of Lets Talk Bitcoin

8/14/2019 Episode 18 of Lets Talk Bitcoin

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Host - Adam B. Levine

[Intro Music Plays]

Adam: Coming up on today's show. Bitcoin, MPESA,Bitcoin, MPESA and Kenya- Courtesy of

GenesisBlock.com. What is Microlending, and does it work? Its Not That Simple - Life as theLargest Canadian Exchange with Joseph David, CEO ofCAVirtex. 16 Bribes a monthIs

Corruption just Developing World tipping. Mutually Beneficial Mesh Networking on your

Smartphone with Stanislav Shalunov CTO of OpenGarden and the origins of M-Pesa, and what

are bitcoins chances in Kenya really?

Adam: If you're new to Bitcoin check out letstalkbitcoin.com/learn to be directed to the bitcoin

education project. If you like what we're doing please review us on iTunes or your preferred

podcast platform.

[Music Break]

Adam: This helps other find the show but just generally we really appreciate it, we do an hour

long show every week and it can be overwhelming to our new listeners. I'm excited to announce

a brand new tool to help share the show called, Givepodcast.com. Using your phone just take a

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[Music Fades]

Adam: Hi, and welcome to letstalkbitcoin a twice weekly show focused on the ideas, projects

and people building the new digital economy and the future of money, my name is Adam B.

Levine and I'm a writer and speaker who likes to talk about complicated topics in

understandable terms. Joining me in our twice weekly search for clarity Andreas M.

Antonopoulos is an expert in Distributed systems and decentralized networks.

Andreas: Hello

Adam: Dr. Stephanie Murphy is a scientist and syndicated radio host.

Stephanie: Hello

Andreas: The potential of cryptocurrencies such as Bitcoin in Africa is an issue we've talked

about on this show quite a bit and in fact I've coined the term, Bitcoin is for the other 6.5 billion

and it's something I fell strongly about. Recently, Noel Jones writing for one of our favorite

blogs, the genesis block wrote a great piece explaining how specifically Kenya would benefit
http://www.thegenesisblock.com/guest-post-kenya-primed-for-wide-scale-bitcoin-adoption/http://www.thegenesisblock.com/guest-post-kenya-primed-for-wide-scale-bitcoin-adoption/http://www.thegenesisblock.com/guest-post-kenya-primed-for-wide-scale-bitcoin-adoption/http://www.cavirtex.com/http://www.cavirtex.com/http://www.cavirtex.com/http://www.thegenesisblock.com/guest-post-kenya-primed-for-wide-scale-bitcoin-adoption/


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immensely from such adoption if only they knew. So, from the article "Africa today has one of

the fastest growing mobile phone markets in the world with 20% annual growth and 93% of

Kenyan households owning mobile phones. What makes Kenya a particularly unique case for

Bitcoin is that it is also a world leader in mobile payment usage. In 2007, Safaricom, one of

Kenyas leading telecommunications companies, launched a mobile payment service called M-

PESA." And that's something we've talked about quite a bit on this show. Back to the article"Today, two thirds of Kenyans use the service and more than 30% of Kenyas GDP flows

through it. The benefits to the Kenyan population are astounding as well, with M-PESAs rural

adopters often seeing dramatic income increases after adopting the program." What do you

guys think about M-PESA Kenya, and the opportunity of Bitcoin in those environments?

Stephanie: M-PESA seems to be working pretty well for a lot of people in Kenya, and other

parts of Africa and perhaps it's because a lot of people have mobile phones and they're using

basically this SMS based mechanism to send small payments around, I think that they've

already been used to this concept of using their phones to send money and to send small

amounts of money. So, perhaps Bitcoin would be excellent for them, you know microlending is

another thing that I think of when I think of the developing world and Bitcoin makes microlending

so super easy. It doesn't require these big websites and things to administrate. It's just like you

can make a fund, and it's really easy to send payments to people and pay it back.

Andreas: When you say microlending, let's actually talk about that for a second. What does that

mean in a nutshell.

Stephanie: Microlending is basically the issuance of small loans to individuals or groups of

borrowers in the developing world. Typically most beneficiaries of microlending are actually

women or groups of women that are looking to start their own small businesses, those loans

can be backed by. For instance people in the developed world, and there are many differentvariations and twists on it. Generally considered the first micro lending institution was this bank

called Grameen bank. And that was, Muhammad Yunus I wanna say. Got the nobel peace prize

for Grammen bank because they were doing these small loans and that's the thing in the

developing world because people don't usually have collateral they don't usually have ways to

get credit, they don't have a credit history. And so it's really challenging to think about issuing

them a loan, but microlending is specifically for those types of borrowers. And as far as having

those loans being paid back without credit history or without collatoral, which people often don't

have. Lending to groups enables sort of like a social pressure kind of incentive to pay it back, or

a group sort of assurance that the loan will be repaid. So, it's really helped a lot of people in the

developing world, I mean there's definitely critics of it too, who say things like abusive husbands

will use their wives to get credit essentially. Or like if they can't pay it back, sometimes people

will commit suicide and things like that. So, it's got a couple of critics but overall I think a lot of

people recognize it has actually helped spur economic development in some places in the world

were there weren't those options before micro lending came about.

Adam: Do you know if anybodies doing this in the bitcoin space yet? Because I mean you're

totally right it seems like a very natural venue.


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Andreas: I'm involved in micro lending quite a bit, I've used two services, one is more oriented

towards peer to peer lending which is more the western or developed world and you can find

services like that on lending club and prosper.com etc. In terms of micro lending one of the

services I use extensively for a big chunk of my savings is KIVA, K,I,V, A dot org.

Stephanie: Me too.

Andreas: You'll like this. I've started an effort to persuade KIVA to use Bitcoin and I've sent them

a number of emails, I haven't received a response back, I'm trying to create a little petition

perhaps on one of those petition sites. To persuade them to start accepting bitcoin. There's

some obviously significant advantages to using bitcoin in that environment including the fact that

a big chunk of their cost is the aggregation and transfer of the funds overseas with wire

transfers and things like that.

Stephanie: They have to partner with these local intermediaries basically, KIVA is not peer to

peer lending it's basically they broker, as I understand it. And loan that's given by a local bank

but is funded or guaranteed by donor's to KIVA.

Andreas: Yeah, exactly. It's not exactly about cutting out the intermediaries because these local

organizations, many of them charitable organizations as well are responsible for distribution for

finding the borrowers for helping the borrowers creating a profile and tell their story and

translating their story, etc. But also collecting the payments and being able to keep the system

sustainable. Here's one very interesting thing, on lending club I'm mostly lending to Americans,

on KIVA I'm mostly lending to people in developing countries who are much poorer. Guess who

defaults more?

Stephanie: The Americans?

Andreas: The default rate on my KIVA loans is about half of the rate on lending club by the way,

even the lending club default rate is quite low and still gives me a fantastic return. KIVA, I don't

get a return, it gets funneled back into charity. So you don't make money off it. But, it's really

interesting the default rate is much lower. That's an impressive testament to the fact that when

you give opportunities like this, to people who don't have the opportunities. Together with the

peer pressure of community loans and things like that it's actually a very effective way to

distribute and get money to where it's needed.

Stephanie: Could Ripple be a medium for Bitcoin microlending or, do you guys know of any

specific websites that are only for Bicoin microlending at this point and time?

Andreas: I've seen at least 3 different sites that do Bitcoin peer to peer lending but I think the big

challenge there is the matter of having infrastructure partners that are able to distribute these

loans. Which why I'm essentially trying to get KIVA.org to adopt bitcoin. Because they already


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have the infrastructure the connections and thousands and thousands of needy borrowers it's

much better to convert that.

Adam: I'm real curious here, I do not participate in micro lending, Andreas, what type of

amounts are you talking about on a per loan basis? When you're talking about KIVA are we

talking about 50 bucks, couple hundred dollars, couple thousand dollars?

Andreas: The loans range from about 200 dollars to about 3 or 4 thousand dollars, and usually

the larger loans involve groups of borrowers. The uses of the loans range, at first you may be a

bit surprised, people may think these are kind of investments loans. Like, "help hussein buy a

taxi so he can increase his taxi business" or "help Jimmy get a motorcycle so he can distribute

cell phones to his customers or whatever." But a lot of it is just plain old consumer loans right? If

you think about it consumer loans is just as important in this environment because it creates

liquidity. So sometimes it's "help so and so buy a new TV" and that's fine too.

Stephanie: Individual lenders or funders can contribute as low as I think $25 increments on

KIVA?

Andreas: Yeah, I do all of my loans, I have a limit of 25 is the maximum allotted to any one

lender and then it's basically crowd sourced, so you have enough people contributing 25 dollars

that the loans get funded pretty quickly in fact.

Stephanie: So I did some research on this real quick, and I searched for Bitcoin micro lending.

There's actually a website called BTCJam.com which is peer to peer bitcoin micro lending. And

so basically you can be a borrower or investor the borrowers can define like basically the

parameters of the loan, like the interest rate they're willing to pay, there's an optional soft credit

check and a peer to peer reputation system that goes along with this. Investors get some perksas well, so that might be something that's coming out, but I'm not aware of it yet.

Andreas: I've used it, I unfortunately have some bad news about it. I have used BTCJam and I

find that the concept and

Stephanie: Did you get your self in a Jam? (laughs)

Andreas: I got myself in a bit of a jam, I think the concept is brilliant, I think the execution is not

quite there yet. So, my default rate on BTCJam was 75%.

Stepahine: Wow

Andreas: That compares to 7% on lending club and about 3% on KIVA. Here's the problem it's

an anonymous currency, there's a soft credit check as you said, many of the accounts are

linked only by meager information. At the same time, here's the problem. When one of those

loans went default there was absolutely nothing in terms of recourse. BTCJam didn't even

respond to emails. In fact you can't put a negative review against one of the borrowers unless


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you have sufficient reviews yourself as a borrower, well I'm not a borrower, I was a lender. I had

no reviews against my account so I couldn't essentially put a negative review against the people

who had defaulted and they went out and took more loans. So, badly structured.

Stephanie: Well, thank you for sharing that experience, I think it's very important for people to

know.

Andreas: I think I didn't have the great experience because it's very much a beta attempt. And I

wish them all the luck in the world if they can learn from those experiences and improve them. I

was very much willing to lose that money, I probably put in 3 or 4 bitcoin, not a huge amount just

to try it out, I'm not upset about it. And in fact I hope they're able to improve the service because

it's a brilliant service that's absolutely needed in Bitcoin.

Stephanie: It's like when you make a loan to your cousin, don't loan them anything that you

wouldn't consider a gift.

Andreas: Well I can always track my cousin down and kick him in the nuts.

Stephanie: That's true you can't do that with a bitcoin address.

[Music Break]

Adam: Joining me this morning is Joseph David, CEO of CAVirtex, a Canadian exchange and

you're actually the largest player in the Canadian space these days right?

Joseph: Yes, we are the single largest in Canada with 20 million dollars traded since inception,

of course a majority of that has been in our second year when Bitcoin really started taking off.But yes, we're the only ones in Canada.

Adam: We talk a lot about the regulatory situation in the US, and I had a conversation with Zack

from the lamassu Bitcoin vending machine. They're kind of in the same situation where there

are different regulations in the United States than there are in Canada. He said it's actually

much better in Canada, they're taking a lighter touch with the regulatory side, paint us a picture

of what it's like operating an exchange in Canada these days.

Joseph: I'm glad you're getting this directly from me because it's a little bit inaccurate when

people make comments like that. What really hit us in the media lately has been the article that

has been circulating the web where they imply that Canada is a safe haven for Bitcoin

exchanges. And the Canadian regulatory authorities don't really view it the same way. And

what's really actually happening is FINTRACK the regulatory body in Canada that monitors

money transfers of any kinds and deals with anti money laundering regulations as well as KYC

Know your customer regulations. They have ruled that Bitcoin is a barter instrument and that

Bitcoin exchanges do not have to be registered as a money service business. However, the

banks do not take direction from FINTRACK. That's extremely important to understand. When


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we operate in Canada we have to satisfy the banking requirements and as far as the banks are

concerned and the world is concerned when it comes to Bitcoin, everyone is very new to it, they

don't know what it is, it's a big huge grey area. It's a big long story, there's not simple

explanations to give them of exactly what a Bitcoin is. So, what they see right away when you

look at bitcoin and Canadian dollars being deposited and withdrawn is they just see risk. They

just see unknown, and because of that unknown they say no, before the say yes. Basically wehave to approach the bank in a proactive stance, we have to approach the bank and build those

relationships from the beginning like we have, by saying things like. We have a legal team,

we're proactive with regulatory front. We actually want the Canadian government to recognize

us and tax us. Please tax us! GST is a big one for example. In Canada we have a Goods and

service tax and there's these big long investigations that go on. Does your business need to be

registered with the GST. Do you need to pay taxes to the government like a goods and services

tax. Instead of waiting for a ruling, we collect it and remit it now! So it's things like that we're

doing that's showing the bank that we are serious about being proactive. We're saying no to

customers by the way that want to deposit large amounts of cash and bypass all these

mechanisms, this is where it gets tricky. Even though FINTRACK says no problem you don't

need to follow these rules. We are following them and we're saying no to customers and

actually turning customers away that want to bypass the rules and regulations. So, explaining all

this to the banks gives us that edge and lets us operate and of course the main reason we're in

operation with the banks is because we actually have that money service business license

through our investor and business partner TAPE international, so they are a registered money

service business, they are collecting our payments and remitting our payments to customers

and satisfying all FINTRACK and AMF requirements.

Adam: Essentially you're complying with regulations with regulations you don't need to comply

to

Joseph: That's correct.

Adam: Not to satisfy the regulators but to satisfy the banks because otherwise they don't want

to do business with you is that right?

Joseph: That's exactly what is happening here in Canada.

Adam: See that's really interesting because that actually strikes me as almost being a complete,

like its' the same situation in the US. I had a conversation with Jared Kenna of trade hill which

kind of takes it the other way, they say. Okay since we're so concerned with compliance and

that we're so concerned the rules are going to change further out we're turning away customers

that have less than 10 thousand dollars that they want to spend on this. So, you're actually

taking the opposite approach, and again, their concern isn't the bank but their concern is the

regulatory structure where they're concerned the regulations are going to change and become

harsher in a later point and in doing so, essentially retroactively make their actions in their past

not work. Unless they do this proactive, are you concerned about the regulatory system

changing, or is this just about the banks for you?


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Joseph: Well again because we're proactive we want the regulatory system to change, we want

the regulatory body to be formed in Canada, we have the ambitious goal of being part of that

movement, I would like nothing better than to be on the board of directors of the new regulatory

agency in Canada that governs and regulates digital currencies. We have a really interesting

development on that front if I may tell you about it, this is very groundbreaking stuff in Canada,is the Canadian government has something called the Mint Chip project, and the Mint Chip is

actually digital currency in Canada created with a crown corporation, which just means

government corporation here in Canada, and run by the Canadian government. Endorsed by

the royal Canadian mind, and it's being used as the testing the waters type sample project right

now, so it's not just a currency you can buy right now and use in circulation in Canada, they're

on the beginning stages of introducing this as a testing digital currency in Canada. So you'll be

able to go to any Canadian bank for example and change Canadian dollars into mint chips. And

to follow that even further Mint Chips into Bitcoins. Wouldn't that be amazing?

Adam: Yeah, when you talk about wanting to be part of the regulatory structure that you're trying

to incentivize the creation of basically. In your mind is this an industry group that is self

regulating exchanges and self regulating, or is this a government regulatory body that you would

want to be a part of, to actually be a part of the government in that way?

Joseph: In your first scenario of some kind of self regulating industry group that would

eventually merge into a government body. So, I don't know what steps it's going to take. I forsee

starting with an industry self regulation group, and then going toward government. But I don't

think you can stop the government noticing this. As Bitcoin gets bigger in Canada, and more

and more people start using it, the government is going to notice. For example one of my

ambitious plans of restarting very shortlier than next month is to sign up every single, or try to

sign up every online Canadian merchant that excepts online payments to add a Bitcoinshopping card checkout button to their web page. This I think is the best way to educate the

public. Because we have to remember something here about Bitcoin we both know, we're both

following this. But I estimate that a large majority of the population doesn't even know what a

Bitcoin is, so. There's a lot of people who don't know what's going on in the whole Bitcoin

revolution, so the best way I think to get the word out there is to get on that shopping card

checkout sites. All these customers that are going on their daily activities of purchasing goods

online. See this thing called a Bitcoin checkout, beside Visa, Master Card and Paypal then they

see the price difference okay, $100 on Visa, MasterCard and Paypal. $95 on Bitcoin checkout,

and then they ask themselves a question, why is it cheaper in Bitcoin and what is a bitcoin? And

that's where I think we're going to start spreading like wildfire, that's going to ignite the

government a little bit when they start seeing a majority of online Canadian business add this

alternate currency for checkout.

Adam: You mentioned the Mint Chip earlier in our conversation the Mint Chip is something that

popped up a couple of years ago and I wasn't aware it was getting and traction. With the Mint

Chip is this a crypto currency or is it just a digital currency? I mean, does it have and of the

advantages Bitcoin does?


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Joseph: Yes it does, I don't know too much about it but I know enough to know that even if it is a

cryptocurrency or digital currency or however they want to do this. It is controlled there is a

server somewhere with a balance of Mint Chips on it. You could change the balance very easily,

of course you can't do that with Bitcoin. So, it has similarities to Bitcoin in that it can be

transmitted digitally online. But I think that's where the similarities end.

Adam: Paint me a picture here, what's the winning scenario, you know if you're successful with

your ambitious plans, what does the landscape look like in a year or two years?

Joseph: The winning scenario is to be officially recognized by the Canadian government to have

a license to operate, to require a license to have operation because right now we have a lot of

Wild West cowboy type operations that think they could just start a Bitcoin exchange. Open up

corporate accounts, don't even worry about money service business licenses. And accept

payments through all types of forms. That actually make the industry and make the exchange

space in Canada look bad, ideally I'd want an operating environment where a license is required

to operate, guidelines have to be followed, government regulations are satisfied when it comes

to money in and money out, official recognition and a license would be ideal operating status.

Adam: In this winning scenario what this gives you is, the willingness then and the trust of not

only banks but of big business to participate in the system and to accept this system because

this type of scenario where you have a regulatory structure and a licensing structure lends

legitimacy to it in the eyes of the government, is that right?

Joseph: It does, and it also makes our banking relationships a lot easier. Another big headline

news and big development in Canada here has been the bank shutdown, everyone's focusing

on bank shutdowns. The banking network in Canada is very different then in the states, we have6 major, major banks, then we have credit unions that are part of one major network. But we

don't have these private banks and these third party banks like the US does. So in Canda when

we started your only choices for major banks are TD, Scotia Bank, Bank of Montreal, CIBC,

Royal bank. So I just listed to you some of the major banks. We have HSBC, and ING and other

ones, but those 5 ones are pretty much the major banks. So, the thing with those banks were,

when we started with them we started accepting cash deposits at those banks. Then those

banks started shutting us down one by one. Every single bank I just listed to you had shut us

down for cash deposits. Okay?

Adam: Right.

Joseph: And that's because again of their concern over AML. Not over fraud because you can't

commit fraud by depositing cash. And that five minutes later and going to the teller and saying I

didn't deposit that cash. So their concern was not the fraud aspect it was the AML aspect and

the KYC, know your customer aspect. Now in the US, look at the landscape. It's much much

different you have a company like Bitinstant that allows cash deposits across the US at

something like 7000 different banks. So that's very surprising and shocking to me that that kind


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of activity is allowed in the US. But not allowed in Canada. And the reason it's not allowed in

Canada again back to my original point, is Banks think it's big grey area, they don't have an

easy answer to cash, so they shut cash down. So the point to my whole statement here is that

you don't have to deal with us in Cash, there are other ways to deal with us. The major way right

now is online bill payments and direct deposit and direct withdraw to your own Canadian bank

account. Now that is something the bank does allow under a money service business license,so that is what we're doing now. We have multiple ways that we're going to increase that. We

might even actually get back into cash, but the key message here of course is you need to

satisfy regulations on one hand but at the same time you have to educate the banks and not

push it too far. They're letting us do online bill payments and direct deposit, direct withdraw but

they're cutting us off with cash.

Adam: You said AML, anti money laundering right?

Joseph: Yeah

Adam: The question we keep coming back to with the banks is whether or not it's ignorance you

know they just don't understand this and so therefore there's no incentive for them to take it, or

fear. Because a lot of people feel like the fundamental technologies and some of the

fundamental does and enables sort of obsoletes banking Do you think this is something that's

going to change banking and therefore there's resistance to it from that angle, or do you think

it's simply a knowledge gap.

Joseph: Lets first understand again that the banks back to a questionable fear. The banks don't

know what this is, so it's not knowing plus a combination of fear. Banks are very risk averse

right? They're extremely risk averse especially here in Canada when we have the government

they're called CROWN corporations. Corporations run by the government of Canada. They'reunder specific mandates to not take on any risky business whatsoever. When you walk into a

Canadian bank there's actually a sheet they give you that says if you're this type of business,

and they actually list them, don't even bother applying for a bank account. They're really risk

averse. It's going to take a lot of time I think to have the banks in Canada to come around and

educate on the payment method of cash. But lets not forget here what they're doing, they're

already allowing current state, and current state is as long as the money flows through a money

service business that is licensed and as long as proper due diligence is performed, and as long

as the relationship, the personal relationship they have with me and my legal team and my

lawyers and that is all solid and in tact. They allow us to operate. So it's going to take the

government of Canada I think to step in and say, you know we're going to recognize the Bitcoin

and we're going to give them a license and then I can take that license to the bank, and with this

license I can add on cash and I want to add on this and I want to add on that. It's going to take

the government and the licensing agencies to make the banks change their minds I think. The

Canadian Revenue Agency, CRA did actually rule that any capital gains on Bitcoin transactions

must be reported and that is a ruling and we're following that internally as a company and we're

answering that to any customer that asks that question.


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Adam: It seems like the ability to control and exert regulatory force over cryptocurrency is kind

of difficult just because of the way it's built. Outside of these limited exchanges, because you're

one of the major exchanges, you are the major exchange left, and there are a few other small

ones and you can count them on 2 hands. I'm trying to figure out how possible it is to regulate

Bitcoin outside of the exchanges, because the exchanges are the choke points.

Joseph: I think it's very possible, I think it's very possible because this actually relates perfectly

to the comments I want to make here, this is an extremely important point in any country and

that's why I'm very interested in what happened in Italy. I really should read up back on that but

from what I remember on what happened, either Italy or France, but I think it was Italy tried to

shut down Bitcoin exchanges. Very early in Bitcoin world, were you aware of this?

Adam: I was not, no.

Joseph: This is just from my memory long ago back in year one, actually probably in month

seven of when Bitcoin passed around the 20 bucks area. So the Italian government tried to shut

Bitcoin exchanges down, they succeeded, a couple months went by something got appealed,

the exchange owners went to the supreme court and appealed the decision. And then that got

overturned and they were allowed to operate. That was a long time ago though so things may

have changed now. But that brings me to my point, they could very simply and very easily

decide that they just want to shut the exchanges down. They can simply phone up the banks

and say whoever is doing the bitcoin exchange shut them down. It's illegal, we're going to just

make it illegal, the government can do that. That's one avenue the government can go. The

second of course is everything we have just been discussing, legalizing it, getting regulated,

recognizing it, taxing it. That's avenue 2. But if we just talk about avenue one here for a second.

The government can just step in and pull the plug. If that does happen Canadians would have

no choice then to go offshore and go deal with different countries, take their money offshoresomehow, what would our action plan be? That's something I struggle with every day. Would we

take our servers off shore as well and continue with our customer base and try to service

Canadians? Well of course we can't do that, the government makes it illegal and the

government begins seizing physical locations, that's really how the government could step in

here, and that really is a concern for me in the bitcoin space. Not just for Canada but for the

world, you have US politicians and senators that are against it and are on record publicly saying

this is not good. Bitcoin has an image problem. And that's another thing I want to address is

Bitcoin's image problem. And how you can buy drugs and guns and sex and all this stuff with

Bitcoins. You can do the same thing with cash by the way. That's what people leave out, is that

just like Bitcoin has an image problem it has the exact same issue that cash does that's why to

a lot of people I explain that Bitcoin's are like digital cash. That's a very easy explanation of what

a Bitcoin is, it's like digital cash. So that's sort of my ongoing concern, the government could just

say we're shutting you down. That's where it could go.

Adam: You're actually kind of in the mix with this so what do you think the chances are relative, I

mean obviously this is totally off the cuff. What do you think the chances are of avenue a vs

avenue b?


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Joseph: Right now today because we're so early, because we're so early in Bitcoin the evolution

is just beginning here. We're very early in it. The chance of avenue A. The government shutting

us down I think is very very low. Again, very few people even know we're out there. But as

things progress here in the next year as we get the merchant sign ups happening and we start

educating business owners about how Bitcoin is really a way better payment method thatthey've really ever seen. That's when the government might take notice. But, if you want my

personal prediction, I really hesitate to give predictions, especially being CEO and everyone

being able to go back in time and listening to my comments and saying he's making all these

predictions, I'm always cautioned by my advisors not to make predictions but, I may make an

exception and make a prediction in this case. What do you think?

Adam: I think that if you want to that's fine. The reality of this is, this is such a complicated topic.

I think that predictions are just guesses. So you know that's how we treat em. We make

predictions all the time.

Joseph: Exactly they're just hunches and guesses. I'll give you mine if you want it. So, I think we

are going to go to avenue b. I think the governments are going to recognize that we need to be

taxed we need to be regulated, that if they try to make it illegal that it'll just create a lot more

problems then it'll solve. If one world government steps down and puts the gavel down and says

Bitcoins are illegal in this country, other countries may either follow suit, they may have their

own rules. So then of course citizens will flock to the other country. But long story short my

hunch and my personal guess is that governments aren't going to make it illegal, but are simply

going to tax it heavily and try to regulate it heavily.

Adam: I'm on record for saying that by the year we're going to see congressional hearings on

this within the United States talking about specifically Bitcoin and cryptocurrencies as well. Doyou think there's a timeline like that in Canada, or do you think that it's just unpredictable at this

point?

Joseph: No where near it, I wouldn't even venture to say within the year again, because it's so

new, because they hardly know about it, I don't think it's even a topic of conversation, there

might be a couple of MLA's in Canada, members of legislative assembly that even know that

Bitcoin exists, and we actually contacted them. And their response has been, wow this sounds

like a new interesting thing, and then they just take weeks to get their head wrapped around it

and don't return our phone calls. It's so new here I don't think it'll happen this year.

Adam: Joseph David, CAVertex thank you very much.

Joseph: Thank you for the interview.

Adam: Letstalkbitcoin is heard each week by thousands of people who are participating in the

new digital economy. Our listener base of Bitcoin owners, miners, investors, technologists and

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[Music Fades]

Adam: Lets get back to the article, Despite having a robust mobile payment network with M-

PESA, Kenya is still subject to a slew of economic issues such as corruption, inflation, and

remittance costs. Kenya faces high corruption costing more than $1 billion dollars per year

(approximately 3% of GDP), with individual Kenyans paying an estimated16 bribes per month.

M-PESA has not avoided this trend, with114 casesof fraud in 2011 alone, resulting in millions

lost. A protocol like Bitcoin, which removes vulnerability to human corruption, would likely be a

welcome entrant into the world of mobile payments. M-PESA is also comes at a cost to its

users. With Safaricoms feesranging from 1-10%for money transfers, users are losing value to

a centralized entity with every transaction. On top of that, the Kenyan government recently

began taxing M-PESAtransfers, which will further increase costs by 10%. Another substantial

benefit that bitcoin has over M-PESA is with regards to inflation. Only in the last year has Kenya

somewhat stemmed inflation after reaching peak rates above 30% in 2008. Though concerns

linger with regards to bitcoins volatility compared to developed market currencies, the relative

consistency of bitcoin could be a welcomed change in less stable regions.

Andreas: I think there's a dangerous tendency for geeks to try to assume technological solutions

to social problems, corruption is not a technology issue it's an institutional and political issue

and it occurs because of widespread problems in a society and the lack of institutional control to

solve those problems, I've lived in corrupt societies, I know what it's like to pay bribes. And, the

problem is that when it becomes so entrenched into the culture it's very difficult to resist even if

you want to, you can't get your driver's license even if you can pass the test and can drive well,

because the bribe is required. So you know, you have to, you can't get a doctor's appointment

unless you bribe the doctor, you can't get your paperwork done unless you bribe the bureaucrat.

So, essentially you succumb to this pressure, technology won't change that. You'll just bribe

people with Bitcoin and in fact if anything it might make it easier because frictionless commerce

means frictionless bribes right? I'm not necessarily convinced that technology is the solution

here, but at the same time I think that Bitcoin would be a fantastic fit in many developing

countries. Just like M-PESA it offers immediate person to person transactions with very little

technology perhaps especially if we can adapt it to using SMS, the standard should be, can it

work on a Nokia 2100? A phone from 10 years ago. Because that's really the technology base

in these countries.
http://lcweb2.loc.gov/frd/cs/profiles/Kenya.pdfhttp://lcweb2.loc.gov/frd/cs/profiles/Kenya.pdfhttp://lcweb2.loc.gov/frd/cs/profiles/Kenya.pdfhttp://www.itwebafrica.com/telecommunications/153-kenya/229957-safaricom-kenya-fires-70-employees-for-fraudhttp://www.itwebafrica.com/telecommunications/153-kenya/229957-safaricom-kenya-fires-70-employees-for-fraudhttp://www.itwebafrica.com/telecommunications/153-kenya/229957-safaricom-kenya-fires-70-employees-for-fraudhttp://www.safaricom.co.ke/personal/m-pesa/m-pesa-services-tariffs/tariffshttp://www.safaricom.co.ke/personal/m-pesa/m-pesa-services-tariffs/tariffshttp://www.safaricom.co.ke/personal/m-pesa/m-pesa-services-tariffs/tariffshttp://www.businessdailyafrica.com/Corporate-News/Safaricom-raises-tariffs-for-mobile-money-users/-/539550/1681630/-/yudapg/-/index.htmlhttp://www.businessdailyafrica.com/Corporate-News/Safaricom-raises-tariffs-for-mobile-money-users/-/539550/1681630/-/yudapg/-/index.htmlhttp://www.businessdailyafrica.com/Corporate-News/Safaricom-raises-tariffs-for-mobile-money-users/-/539550/1681630/-/yudapg/-/index.htmlhttp://www.safaricom.co.ke/personal/m-pesa/m-pesa-services-tariffs/tariffshttp://www.itwebafrica.com/telecommunications/153-kenya/229957-safaricom-kenya-fires-70-employees-for-fraudhttp://lcweb2.loc.gov/frd/cs/profiles/Kenya.pdf


13/22

Adam: 16 bribes per month though per person, I mean that's like. That small? I have no concept

of this, I'm California born and raised, this is not something I have any experience with, that's a

small amount for a country like this?

Andreas: Oh yeah absolutely, 16 bribes a month is nothing, if you go to India it's probably 16

bribes a day, seriously this is the norm for the rest of the world. It's very easy to see things froma different perspective if you're born and raised in the states. This is the norm for the rest of the

world, this is what oils the machine, this is how buarocracy works and this is how most people in

the developing world who have any measurable authority this is how they get paid, this is their

salary. The don't make much getting paid by the government or by the fees they collect so

essentially you have this whole shadow economy. It's almost like tipping so the way that tipping

works in the US, and most foreigners don't get it. Oh wait you have to pay 20% on top of every

payment for this service? Well that's not corruption but in other countries, corruption works in

the exact same way. You assume the people are not making much on the government salary

and therefore it's normal for them to collect a small extra fee, it's almost like a tip, and it's in the

form of a bribe.

Stephanie: It's not like a tip, it's not, a tip is way more voluntary than something like a bribe, I

mean especially when it's backed my political force and pressure and the authority that these

people have to make you pay for it in some way if you don't pay them a bribe. You can't easily

just leave a country, especially if you're born in the developing world and go to somewhere

where there's not rampant bribery. However, you don't have to eat at a restaurant and pay a

server a tip.

Adam: Yes that's true except where it's not. Maybe this is different in other parts of the country,

but here, most of the time, if you have more than 6 people in your party there is a mandatory tip

that is put on your bill, so it might feel like it's voluntary because, hey you get to choose to pay it.But, the option besides that is not paying your bill. So I don't see it as a voluntary thing in that

case.

Stephanie: Nobody's holding a gun up to your head and saying eat at this restaurant or eat at

any restaurant right? You have options for that but, they are holding a gun to your head and

saying fill out this paperwork and you're subject to my rules, and you have to give me a bribe as

well.

Andreas: So I think the only comparison you have with a tip of course, coercion is an issue. But

the comparison you have with a tip is that it's embedded in the culture and all economic

transactions. And you have to realize that these bribes are not just paid to the police or to the

bureaucrat that's approving your application, they're paid to every person involved in any

transaction you make. You get your refrigerator repair person to come in, your meat supplier,

your ophthalmologist, your kid's teacher, your kid's soccer coach. Whatever, it might be. And

they all take bribes and in fact bribes are how you do it. It's almost inevitable because people

aren't getting paid any other way. The bottom line here is that wallet is completely corrosive by

perverting all of the economic incentives and feedback loops for price and it's also so embedded


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in culture you can't really solve it with technology. People have tried certainly there's entire

movements in countries like India to fight corruption and it's so difficult. That even the people

who want to fight it and are very much against it and are committed to not paying bribes, wears

you down eventually. You know, you can't just function in that society without succumbing.

Adam: So another thing is of course the fees, there's the 1 to 10% fee that's applied bySafaricom. Which owns the technology and that enabled M-PESA and that enabled M-PESA

and basically is M-PESA. In addition to that there's a 10% tax that's been put on these

transactions by the Kenyan government and also the Kenyan government routinely inflates their

currency because if I'm correct here, M-PESA is not a currency onto itself but it's rather a

transmission mechanism and a kind of wallet for the local currency is that right?

Andreas: Yeah, that's my understanding.

Stephanie: If I understand where you're going with that, Bitcoin would at least provide a

technological solution to the issue of inflation.

Adam: Well, yeah there's that part of it but actually I'm looking at it from a different perspective.

On this show we spend a lot of time focusing on what the US government is going to do about

Bitcoin but looking at a situation like Kenya doesn't it seem like the Kenyan government is going

to really, really, really, hate Bitcoin. Because it provides competition, it's very difficult for them to

tax, again it goes back to the competition thing, because by offering an alternative to a currency

that's inflating at a substantial rate it means people are more likely to switch to a currency that's

losing value to the currency that's gaining value and is cheaper to use overall? Don't you think

there'd be some aggression from the Kenyan government, if a chance like this were made?

Andreas: Absolutely I don't think that change would be very easy, there's another issue we'vekind of skirted. Which is M-PESA or systems like that could be implemented throughout sub-

saharan Africa, throughout south east asia. There's certainly a need for them. So why haven't

they been? That's an interesting question. Why isn't M-PESA being used more broadly, why

aren't similar systems being used more broadly throughout Sub-Saharan Africa and south east

asia. And the answer I think is rather instructive here, it has to do with two factors. One is that

Safaricom had a very massive deployed base of users and therefore was able to introduce this

simultaneously to a volume of users that were sufficient to sustain a parallel economy from the

get go. So you have mass adoption at a level that creates simultaneously enough buyers and

sellers to launch a market. It's very difficult to do that chicken and egg solution where you

simultaneously have enough buyers and sellers within the locality to make the currency viable.

And that's one of the reasons why M-PESA hasn't taken off in other countries, or as similar

systems haven't taken off despite efforts to do so. And it's also one of the reasons why I think

Bitcoin adoption is not that easy or will happen that fast in some of these countries. So there's a

lot of pre-requisites that go into Bitcoin adoption. Beyond just hey, it's useful and I can put it on

my cell phone.


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Adam: It's almost like you need mass awareness before you can even approach the question of

adoption because if people don't know about it, then it almost doesn't matter for the initial users

because it's not useful to them, just like a language isn't useful if you're the only one that speaks

it in your country.

Andreas: The network in fact cuts both ways, which is if the network is too small there's no valuethat's added when you join it, and especially in the case of currency. The value of the currency

is only based on the expectation that someone else will be willing to accept it in a transaction,

that requires two things. It either requires a mass adoption where you're almost guaranteed that

other parties will accept your transaction or it requires you to adopt the currency for reasons

other than transacting. And so with Bitcoin what we saw is the first three years the people who

adopted Bitcoin were not really into it for transactions per se, or for the value per se, but more

for the ideological reasons. And that created sufficient volume and sufficient market growth so

then it could start attracting people who are interested in using it as a currency, it's essentially

an ideological political movement that turned into a currency. Can't really bootstrap it like that in

a developing country, because there are much more programmatic considerations.

[Music Plays] [43:02]

Stanislav: Good afternoon Stanislav Shalunov, you can call me stats. I'm the CEO of

OpenGarden. A few of the things I've done in the past was transport protocol work and QS work

at Internet to and the design of a new congestion control in Bittorrent. Which currently is

responsible for somewhere about 1 in 6 bytes on the Internet, about 15% maybe.

Adam: So you're background is really all about decentralized systems then?

Stanislav: Well, you could say that yes.

Adam: So how did you find yourself going into mesh networks created my cell phones?

Stanislav: I was interested in creating mesh networks before there was the term mesh network, I

was interested in making better, but there was not really get a technology that would allow to

connect devices in an Ad-hoc manner. In say to seldom one. What you need are devices are

heterogeneous wireless capabilities and smart phones are the platform that allows to do that.

Adam: When you say heterogenous wireless capabilities, can you explain that?

Stanislav: On a phone, you have multiple wireless technologies. You have your 3G or 4G you

have WIFI, you have maybe WIFI Direct, Blutooth, you have maybe a FC. And all of these

things can be used to interconnect devices and you can be using simultaneously multiple

networks at the same time. And that's what allows to build this additional capability that the

phone may be on 4G but if there is another phone nearby that's also on it's own carrier's

network you might connect them locally using WIFI direct and create new capacity. These are

our phones and I am perhaps using my phone less than 1% of the time for data transmission.


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Same for you. So when I'm getting something from the internet I can get it fast if I can get it from

both exits and more reliably.

Adam: You're saying that even though you might be connected in one capacity with one of

those technologies, since each phone has multiple communication means and has the ability to

use each one independently you can have interconnections that are completely separate fromthe upstream or downstream to the internet in that case, is that right?

Stanislav: Exactly, so what OpenGarden does, we create all sorts of wireless connections we

support bluetooth, Wifi direct, we're particularly concerned with the specific underlying

technologies. So, we're creating those connections with those devices. Whenever they're

nearby, wirelessly, seamlessly for the user. The user don't need to worry about establishing

them, the user doesn't need to open the app. Once connected devices will access the internet

connectively using whatever internet capacity they together have, this produces better statistical

multiplex. This gives everyone faster speed, better coverage.

Adam: That's really interesting, have you touched the router space at all, or is it entirely about

phones?

Stanislav: We leverage existing infrastructure and things that already exist and can be used. We

address the mass market. So we want the kind of adoption that successful peer to peer

applications have. Not just addressing small audiences of people who are willing to flash a new

ROM to their Linksys. But people who can install a mobile app, and there are a lot more people

who can install a mobile app. We currently support Android, Windows and Mac. The computers

also have ability to use multiple networks at once these days. We have dual WIFI radios in

many computers and additionally we have bluetooth.

Adam: Lets take a step back for a second, OpenGarden how did this come about? You said

you've been interested in mesh networks before they were called mesh networks and before the

technology was there to do it. What occurred to insight the creation of opengarden?

Stanislav: Micha and I got together about 2010 and the enabling technology for open garden is

the smart phone, the computer inside everybody's pocket with multiple radio interfaces that

makes OpenGarden possible and interesting. Before the smartphone the density of mobile

laptops for example was not sufficient to make a difference for internet access, for other

devices. And when you are at home or at the office and you're laptop is on local WIFI, the need

for internet access is less Acute. The need for internet access is the most acute the worst your

internet connection is. And generally mobile situations travel, being on mobile networks is where

your need for better internet access, faster and in more places is the most visible.

Adam: So you started in 2010, what has the journey been, are you out in the wild with this right

now?


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Stanislav: When we started up, we wanted to first test the waters as a minimal viable product.

What we did was released an app that simply provided tethering. Just let you turn your phone

into a mobile hotspot. We wanted to see what would be the uptake, we didn't do anything to

promote this app. And the it required you to root your android phone so it was addressed to a

small audience of people capable of rooting their phone and there was no market then. By the

time we had the half million we knew that we were onto something. We thought that peoplewant this. So, we started full time work with Greg Hazel and Micha Benoliel. On making this

current app. The real OpenGarden mesh network and app. We launched in New York in 2012,

the first three weeks we got a hundred thousand downloads, by now the two apps together have

more than 2 and a half million downloads. We like to release our software early so that we can

see how it behaves in the wild in general development for android is made difficult by the

diversity of the android ecosystem. Our software runs on devices that we've never seen and

never will, so it's important to have a user base to even develop this software.

Adam: You've got two and a half million downloads, what does the use look like, I mean, is this

working, is this being used, are there any geographies specifically where it's used or is it more

of like an AD-HOC as needed people will get it, and then they'll throw up the temporary net

wherever they are. Or is it something people walk around with on their phones and are just

using in day to day events. Are we to that point?

Stanislav: Particular situation where opengarden today makes probably the biggest difference is

tablets. Particularly 7 inch tablets. People on Nexus 7 or a Samsung Galaxy Tab without a 3G

connection and a highly portable tablet. Are in a strange position, you have this device, it can go

in your coat pocket, it can go if you carry a purse, it's very portable. But it's practically useless

without an internet connection, and it doesn't have a 3G modem. And even if it did, it would cost

$120 probably extra and you'd need to pay $20 per month to be able to use the internet from it,

what OpenGarden does is basically give you the benefit of having a 3G connection on yourTablet for free. Because if you have an android tablet, chances are you also have an android

phone, and you probably carry it with you at least as much as you carry your tablet.

Adam: The android phone provides the connectivity to the tablet, and you only need to carry

one internet connected device to benefit on both.

Stanislav: Correct

Adam: So, even though this is a mesh network building tool what it's being used for now, is to

build little personal, it's not even really mesh, it's more like a wireless tether or something.

Stanislav: The experience is far better than using Wireless tethering, the experience of using

wireless tethering requires you to take out your phone, go into settings, tap more, go into

tethering, turn it on, go to your tablet now, connect to the right network then when you're done

remember to turn off the tethering hotspot on your phone otherwise your battery will be dead in

two hours. With OpenGarden you use the internet like you usually do. You take your tablet and


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you use it for whatever it was you were going to use it, instead of fiddling with settings on your

phone.

Adam: Does it have an impact on battery life in the same way a wireless tether would?

Stanislav: Lower than wireless tethering.

Adam: The name OpenGarden, you guys are not an open source software project are you?

Stanislav: Our main app is currently not open source, but I see where you.

Adam: Well, yeah it was confusing to me when I first started talking to paige about OpenGarden

I assumed it was OpenSource. Do you have intentions to make it open source, or is this aimed

to be a proprietary platform?

Stanislav: Greg and I have created open source software currently used by a quarter billion

people in the form of the BitTorrent transport library. Interested in making open source software

widely available and successful, we've also created open protocols, several between the two of

us, by now standardized. The application OpenGarden is not open source, it's open in the

sense of anyone being able to join the network, it's a garden anybody can walk into. Hopefully

open windows don't confuse people similarly, and expect them to be able to get the source for

the window. But we are interested in open source in general and how we can make open

garden more successful using it. We're not yet prepared to discuss anything about our future

moves on open source and open garden.

Adam: Fair enough, on the show we have a focus on Bitcoin and Cryptocurrencies. Not just

Bitcoin but it's cryptocurrencies and kind of the things they enable. And one of the things we'vebeen talking about on and off with regards to mesh networks or Tor nodes, or there's a variety

of situations, in your tablet phone scenario. That's one person who's gaining benefit from

utilizing one service that would normally be available on one device, on two devices. I see the

value of it there. But, with cryptocurrencies and automated contracts basically, you can set it up

so that individual nodes that provide internet connection, or service within one of these mesh

networks are compensated on a, as used basis. And I'm wondering have you looked into

cryptocurrencies and Bitcoin into doing things like this, or is it outside the scope of your project?

Stanislav: We are interested in exploring ways to limit free riding on the system. The system is

most efficient when it doesn't deny people it's service. It creates the maximum amount of value,

that's generally good, that's generally how things should be. If you look at the design of

Bittorrent, partly is successful because you can download even before you've uploaded. If there

were more steps to using the system then fewer people would benefit from it. The problem to

the extent that it exists here is preventing people who perpetually free ride from doing so, and

for now the main mechanism by how that is accomplished is by need of physical proximity. If

you install OpenGarden to be able to get connectivity from others, you also contribute by nature

of the software if you're internet connected at all, so there's a contract of mutual help by virtue of


19/22

installing open garden, we've also thought about making credit ecosystem, it might convert to

real currency or might not, and whether real currency is a cryptocurrency or another form of

distributive currency or dollars is not really the interest in part. Conversion to real currency is

however different from simply bite account, and bite account can well be sufficient, so we're not

yet sure how we'd approach this problem in the future. Right now in practice we don't have that

problem. If you install open garden today nobody will follow you around trying to use yourinternet constantly.

Adam: So if someone wants to get involved with open garden or download the application, do

you have a website?

Stanislav: Yes, of course, we are available fromhttp://opengarden.com/and the app is also

available in the Google Play store where it's called OpenGarden just like you'd expect.

Adam: Do you have any intentions to rolling out to iOS devices or will this be a strictly an

android project

Stanislav: We don't have current plans that we can disclose about iOS, obviously we're

interested in all platforms, not just android and we already have support for two desktop

operating systems, but we have to focus our efforts somewhere, and that's where we've chosen

to focus for now.

Adam: Stas, thank you for your time.

Stanislav: Thank you.

[Music Cues]

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Stephanie: You're listening to letstalkbitcoin the premier audio cast providing news and insights

that cover the rapidly evolving world of digital money, our twice weekly shows include analysis

of late breaking news, updates on key technical, business and regulatory issues and in depth

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[email protected]

Adam: So to finish up, we return to the genesis block article. Should widescale adoption actually

occur within Kenya the effects could be tremendousnot just for Kenyans, but for the bitcoin

market as well. In 2011, Kenyas GDP climbed over $33B with mobile payments comprising
http://opengarden.com/http://opengarden.com/http://opengarden.com/http://opengarden.com/


20/22

some $10B of that figure. Bitcoins current transaction volume is roughly $20M per day, or just

over $7B per year. If bitcoin were to replace Kenyas mobile transactions, BTC market liquidity

would more than double. To date, Kenyas bitcoin adoption has been muted, with approximately

1,300 downloads in a country with 41 million people, but with all the pieces set align over the

next few years, it is only a matter of time before Bitcoin and Kenya find one another. So, do we

think this is inevitable? Pretty clearly there are advantages here, there are hurdles here, and theconclusion here is this is gonna happen, what do you think about that?

Andreas: I doubt it very much, while Kenya is very promising. I've often expressed the fact that

there are multiple preconditions for burstly adoption of bitcoin ,you need technology, electricity,

you need utility of the currency over local currency. And you also have to not have fear,

arrested, or shot for holding Bitcoin. And all of those things really become a big equation where

at some point it reaches a tipping point and you have mass adoption. I think it's far more likely

that you might see localities within places like Cyprus and Argentina having burstly adoption,

where the technology infrastructure is more developed, there's more consistent electricity and

it's more compatible with people's adoption of technology in general. So, I don't see Kenya

being the first place to do it despite M-PESA. The model I think is right.

Stephanie: Did anyone see M-PESA coming out in Kenya? That sounds like something that sort

of came out of the blue perhaps, so maybe it could happen in Kenya, I'm not sure. I think it's

interesting to think about what would happen if Bitcoin's market liquidity doubled, I mean that's

pretty huge and it really puts it in perspective just how many people are transacting and trading

bitcoins, or could be potentially in Kenya every day. I think that would increase the value of

Bitcoin quite a bit, perhaps enrich people in the developing world if they had gotten them early

enough

Andreas: I think that's a great suggestion but the actual adoption of M-PESA was anything butorganic or grass roots. It was a planned adoption from the carrier that already had 75% of the

market of mobile telephony of the country, they were able to essentially turn on a 75% market

share into a currency in one move. I think that would be a great model for adoption for other

places or even Kenya if some corporation already has an established user base creates a

Bitcoin derived currency or bitcoin itself as either a rewards card or an in app currency or an in

store currency or a loyalty card or something like that. Then from that basis bootstraps it as a

general transactional currency, I think that's a good chance of happening I really don't see how

that kind of planned introduction compares to the grassroots of organic adoption we've seen of

Bitcoin.

Adam: The number I keep looking at is this 93% of Kenyan households owning mobile phones, I

think that you're right about it being a planned roll out and about the people who have the ability

to implement and roll out something similar in Bitcoin have almost no incentives to do it, and I

think that's kind of the core problem we're going to come to in most of these places. Anywhere

there's a monopoly on technology like there is here where a vast majority of people are on this

same Safaricom network then that basically means that until there's an actual reason to change


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that it increases the profitability or offers some advantage to the company rather than the users

it's very unlikely it'll actually happen.

Andreas: That's the other big advantage for Safaricom is they can charge a transactional fee so

why would they go to Bitcoin which would essentially remove their ability to tap into that flow of

money?

Stephanie: There is potentially a profit incentive for somebody if they can encourage people to

adopt this technology that could really work out for them as well, not only would it provide an

alternative to M-PESA which sounds kind of monopolistic actually. But it would also increase the

market liquidity and therefore I think the value of Bitcoin, so Bitcoiners have an incentive to help

this happen whether it's going to Africa and doing some activism or trying to get people

interested in it, or make some kind of app that can run on older phones, I'm not exactly sure.

But, maybe someone will take up the mantle on that.

Adam: Well there are apps that run on older phones, there are a couple of services out there,

one of them I believe is phone coin, and there have been a few more that have come out, that

basically leverage SMS messaging, text messaging.

Stephanie: Coinapult does that too, can send Coin by SMS.

Adam: Yeah, exactly so I think you're right if we lived in a perfect world, but because we live in a

world, I mean clearly Safaricom doesn't have this monopoly there on these technologies

because the government hates them right? They have it because they've partnered with the

government and they've enabled them to essentially tax these transactions in a way. It doesn't

really matter what you call it, the point is, anytime you go into a situation where there's an

entrenched power structure like for example monopolies, be the government, be the technology.You say, hey what you're doing is great, but wouldn't it be better for your customers if you

charged them less by using this more efficient technology? I bet you'd get major push back, in

some types of cultures there may be violent repercussions for you. So, it's just something to

keep in mind, that change is great if it's change that benefits you but a lot of times if it's

benefiting you it's at the expense of someone else that's higher up in the food chain and that's

not something that's too popular. So there's hope.

[Music Plays]

Adam: Thanks for tuning into episode 18 of letstalkbitcoin, whether you liked, loved, or hated the

show we want to know what you think, please send all listener mail to [email protected].

Content for this episode was provided by Stephanie Murphy, Andreas M. Antonopoulos,

Stanislav Shalunov, and Joseph David. Music for this episode was provided my Jared Rubins,

for links to his work visit letstalkbitcoin.com/music if you're an open source musician and think

your work would fit in well with the show, please email [email protected] if you like

what we're doing and want to support us with bitcoin or litecoin donations please visit

letstalkbitcoin.com for episode specific addresses. If you have questions you'd like answered on


22/22

air, call us at 1-855-WeTalkBitcoin. By the way if you're still listening, you should know that

letstalkbitcoin is growing up and I'm quietly looking for potential partners who are on the same

page with about truth and media and education, if you like what we're doing, or looking for a

project and have skills on the technical or business side of things, you may contact me at

[email protected] Stay tuned.

Documents

Episode 18 of Lets Talk Bitcoin