[bilbo0s]

Hmm...

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.

[286c8cb04bda]

> 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.

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.

[1] http://en.wikipedia.org/wiki/Hawala

[intended]

Isn't that just the hawala system? That's been there in the Arab world, India, Pakistan and Bangladesh from what I remember.

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.

[cs702]

Yeah, it comes down to trust, which Bitcoin currently is lacking compared to "hard" paper currencies like the US dollar or precious metals like gold. It could take Bitcoin years or even decades to gain similar credibility.

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.

[solson]

Agreed, but if there is no paper or coin cash like Sweden is proposing, how would the "Somali Banker" get digital currency to a party in the jurisdiction without paper currency? I assume it is all done in paper cash today. Barter seems impractical.

[bilbo0s]

You might have noticed I used the example of inputting Euro into the Somali system in Norway. The fact that Norway uses the Krone does not mean that Euro are not readily available. Likewise, Sweden may switch to digital, but Euro and dollars, and certainly silver and gold will be readily available. Doesn't matter that a person gives the Somali CFA in Cameroon, Euro will come out in Paris.

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.