The Shadow Superpower
foreignpolicy.com
foreignpolicy.com
Not really sure bitcoin could compete well in Systeme D. You are dealing with a lot of people who believe in cash or precious metals. These bring trust in Systeme D.
One thing the article doesn't mention is that the Somalis are actually making a pretty big impact as proprietors of a sort of 'banking' system for these kinds of transactions. If you give a Somali 'banker' ... say ... 2000 Euro in Norway, you can count on your cousin in St. Paul, MN getting 2000 Euro from one of the local Somalis. The same is true if you want money to go from Sao Paolo to Capetown. Or Shanghai to Dubai, etc.
Their system is robust, extremely trustworthy, and most important, quiet. It is DEEPLY lodged in shadow trans african trade, and rapidly growing in shadow global trade. It will be hard to displace a system like that. Unless the world's Governments decide to invade Somalia, which does seem to be the case lately.
One place bitcoin might be useful is in large transactions. The Somalis don't seem to be interested in facilitating these yet, and for obvious reasons, merchants do not want to use cash. If bitcoin builds a reputation for trust on large transactions, perhaps through the convenience of mobile phones it can work its way down the food chain so to speak.
But... yeah ... right now there are a lot of Africans for instance, who trust the Somali networks more than the banks in their own countries. Trust like that is hard to earn...and very expensive to buy. It could happen for bitcoin though if boosters put in the work.
The Somalis are good with that sort of thing. You just tell them how much and exactly who is supposed to get it. They can make it happen. What's crazy is that they can even make it happen in war zones. Even in a place like Goma with genocidal Hutus and lunatic Tutsis running around. I suspect it actually works better in places like that because the corrupt generals need some way to get their ill gotten gains out.
It also comes down to familiarity, ease of use, and functionality. Bitcoin wins on the latter, but is far behind on the other two dimensions. Paper currency and precious metals are currently far better known and easier to use, and this won't change in the near future.
Over the long run, if Bitcoin continues to gain credibility (and becomes easier to use for regular folk), I'm persuaded it can become a viable alternative to paper currency and precious metals for System D transactions.
That system is "hawala"[1]. The Somalian diaspora (caused by perpetual civil war) is spreading the institution into many countries where it's not been practiced historically.
This system is disrupted and imo should be. It's been used as the primary way to funnel 'black money' and criminal organizations.
system D is a sign that the market is not working, and in those situations, hawala and so on are useful tools to avoid getting stuck having to bribe someone.
This would be OK if your government was corrupt (say 60%) - the moment you start reforming though, and actually need things like running electricity, water, mass transit, Roads!, you need governmental income.
It ends up allowing people to dodge paying for basic taxes. - IT assessments are hard when you start with a non formal economy and then have untraceable money changing hands.
In short: hawala is pretty cool, but also an absurdly effective way to hide money and transfer it around the world. Hard to stamp out, and ends up being used by criminal systems.
In the long term, Bitcoin might be a viable alternative. It really hinges on the adoption of cellphone applications for exchanging them, I think.
In the short term, though, cash is king. If they stop printing paper kronor in Sweden, then the underground will start using somebody else's paper, be that NOK or USD.
As an example, I'd guess there are areas in Mexico where you can get by entirely in USD, because there's so much of it there.
EDIT: Nevermind my suggestion to post the single page view. It was my belief that readability ought to be valued more than double-submission-prevention mechanisms, but it seems like a lot of people disagree with that notion.
http://news.ycombinator.com/item?id=3571353
and let the user decide what page view or what display defaults to show. (On a well designed website, the user's user agent will be autodetected, and the default display will be a reasonable view that leads to options for single-page or other special display formats.) That lets the Hacker News duplicate submission detector do its best work. It is, of course, all right (but not strictly necessary) to mention a link to another view of the article, as you kindly did, in a comment.
You're posting this snark precisely because it does pose a significant challenge to the conventional worldview in which regulation is the answer to everything. Why not address the issues directly with some productive discussion instead of trying to cocoon yourself behind a snarky dismissal? For instance, a starter question from each ideological direction: If the regulatory state is so wonderful, why are so many people being forced to bypass it, or basically starve/stay poor? And how can we bring the benefits of a well-regulated state to these places that aren't exactly rolling in free-flowing cash and can't afford any sort of very expensive regulation? (Because while a small 4 page article may not have discussed it except for an off-hand comment, I'm sure there's rampant abuses and mafia-like organizations in this economy.)
The article is just describing an economic ecosystem that is in play today. It reads like someone's attempt to wrap his head around something new and different that needs to be understood.
If this economy is as large and successful as it's claimed to be, then we should be making an effort to understand it as well.
You'd need to be pretty heartless to decry it on face value when it does something so basic in our modern world as provide electrical power for people who have been denied it by their current economic system or government for one reason or another.
If you have a reason to counter the facts in the story, by all means speak up.
Have you ever been at a large campground with widespread portable generator use? There are >definite< externalities.
I would take steps to further lubricate commerce. Technology that can leapfrog the build-out of infrastructure like roads is one possibility.
No one is lubricating commerce for these people. Their current government and economic system is failing them miserably.
What they've done to better the lives of themselves and those around them, they've done for themselves in spite of their current government and its forced economics.
These people aren't trading in drugs or slaves. They're doing something quite remarkable and how they're doing it should be studied.
Yes, so imagine if we came in with technical solutions that leapfrog their failed government? For example, there's a program to replace mail service with small parcel delivery by quadcopter drone. No roads during the rainy season? No problem!
I've thought of a few legit business ideas that I cannot afford the legal costs of startup. I could, instead, do it without help and rely on system d with multiple payment options. It would most certainly include bitcoin as a payment option.
One of the ideas is effectively is what paypal does with money, but with people. They break state money transmitter laws, yet still stay in business. Mine would break labor laws, only because they are meant for the individual to work for X bigCo.
Then again, perhaps it's not. Is the US so resistant to "divide and conquer?" Can we still project concerted military or economic power over an extended period of time?
In Star Trek they live in a society with abundance and so the state can provide everything.