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by IkmoIkmo
4100 days ago
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Except that poor people pay the most money for value transfer even using Hawala, just like paying the most for electricity or water or healthcare. When you can't make large infrastructure investments like most OECD countries can, ordinary utilities become massively expensive. And even clever systems like Hawala command a market price just like any other service. In a world without great alternatives, that price is high. Read some reports and you'll find the average cost of remittance for poorer countries averages around 10%, an absurd borderline criminal rate. You'll simultaneously find inflation rates of 10-30% not being uncommon. The ability then to access international derivative markets, i.e. the option to easily buy and hold dollars using bitcoin providing relief from crazy inflation, and the ability to transfer it to others at the cost of moving 500 bytes of data, is hugely interesting. Services like Bitpesa (cheaper remittance) or Bitreserve (hold money in different currencies using bitcoin) are the first such steps. In a few years I expect these things to massively undercut remittance costs and provide interesting relief from inflation. Some of the things the early Paypal founders were interested in, including Peter Thiel who spoke on the topic often in the early days. |
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"El Qorchi et al. (2003) state that the cost of a hawala transaction averages around 2 to 5 percent of the total amount of the funds involved, although Maimbo (2005) report that these fees averaged 1 to 2 percent in Afghanistan. Passas (1999) offers several examples where hawaladars offer free services to their compatriots, in the corridor Australia-Africa."
https://ideas.repec.org/p/una/unccee/wp0812.html
You make an interesting point about bitcoin being a potential hedge against inflation. Given the current volatility I don't see that being much use at the moment, but it certainly has potential if the volatility ever drops to a reasonable level.