Monopolies, innovation and Kenya’s mobile payments success

Imagine needing to send part of your wages home to your parents, and not having time to take it to them yourself since they live five hours away. So you hand the envelope of cash to the driver of the bus that runs that route, and ask him to hand it over for you. Imagine needing to pay your electricity bill, and walking for an hour just to get to the office. Then you stand in line for two hours before being able to hand over the necessary amount of cash. Before 2007, Kenya’s financial payments infrastructure was dependent on low-level cash transactions, the liquidity-strapped post office and personal favours. Increasing urbanisation intensified the need for a secure and efficient way to send money back to families in rural areas, and it took a telephone operator to come up with a solution.

image via CoinTelegraph

image via CoinTelegraph

Kenya does not strike the casual visitor as being in the forefront of financial technology, nor a world leader in mobile innovation. With a population of 47 million, 45% of which lives on less than $1.50 a day, and with GDP per capita 157th in the world ranking, it is too easy to label the country an “emerging economy”, and condescendingly assume that corruption and lack of infrastructure will make true technological progress difficult. Which is why its breakout success in the complicated field of payments is both inspirational and humbling, and gives us insight into why mobile payments innovation does not work so well elsewhere.

M-Pesa is the world’s most successful mobile payments story. Launched by Kenyan telecom company Safaricom in 2007, it now has over 20 million accounts, and is used by 76% of the adult population. Approximately 66% of Kenya’s national payments volume passed through M-Pesa in 2014. In other words, it’s a very big part of the country’s economic infrastructure, and its success has inspired similar attempts in the developing and in the developed world.

Yet nowhere does it work as well as in Kenya. The GMSA mobile money tracker estimates that there are approximately 260 similar experiments going on, with another 100 in the pipeline, in 72 developing countries. In almost all cases, stricter regulation, more evenly distributed competition and relatively efficient alternatives – present in virtually all developed economies and with at least one factor present in most developing ones – are hampering growth. To put Kenya’s success into perspective, Japan has the highest mobile money use in the developed world, but still nowhere near that of Kenya in absolute terms, even though its GDP is 45 times larger. Half of all global mobile transactions take place in Kenya.

How does it work?

M-Pesa accounts can be set up by any one of Safaricom’s 85,000 agents around the country. All the agent needs to see for verification is an identity document, which makes it much easier to open than a bank account. Once the account is open, the customer can hand the agent cash, in exchange for which Safaricom issues electronic tokens in the same denomination as the national currency (the shilling).  These e-shillings can be wholly or partially transferred to other M-Pesa account holders via SMS to make payments, or can be sold back to Safaricom in exchange for cash. There are no charges for deposits, but a scaled fee is charged on withdrawals and a flat fee on transfers.

The beauty of this system is its simplicity. It can be used on even the most basic of mobile phones. The ability to make payments across the country by pushing a few buttons has not only made remittances much more efficient, but has also made paying bills easier, which reduces costs, increases transactions and improves the circulation of money. Those without a bank account have a reliable place to store money, which encourages savings. Rural families are finding it more worthwhile to invest in education, since graduates can now successfully work in the city and easily send money home. And for the first time women can manage their own money, investing it in their businesses, educating their children… One study found that in rural Kenyan households that adopted M-Pesa, incomes increased by 5-30%.

image via IT Web Africa

image via IT Web Africa

How did it get so big so fast?

After launching in March 2007, M-Pesa signed up 20,000 customers its first month, 2 million by the end of its first year, and within three years was servicing almost 50% of the country’s adult population. That percentage has now increased to almost 80%.

This explosive growth took even Safaricom by surprise. Although in retrospect, the cumbersome difficulty of making payments pointed to a definite need. Also, the infrastructure was in place. Setting up cell towers was more economical and practical than laying land lines in such a disperse and rugged terrain, so the telephone operators focussed on mobile communication coverage. In 2007 when M-Pesa launched, 33% of adult Kenyans had a mobile phone, while only 3% of households in Kenya have a landline connection. At mid- 2014, approximately 80% of Kenyan adults had a mobile phone.

Safaricom also had the intelligence to rapidly cultivate a network of agents trained to help people set up their M-Pesa accounts, and to load it up with money in exchange for cash. It now has over 85,000 agents, or 1 for every 500 Kenyans. This may seem like a high fixed-cost base, but the limited regulation of the agents enabled profitability – they were viewed as intermediaries rather than banking service providers. And pretty much anyone could become an agent: Safaricom airtime dealers, bank branches, gas stations, supermarket chains, dry cleaners, couriers…

Safaricom’s strong market position – it currently holds approximately 70% of mobile phone contracts – also helped the expansion of the M-Pesa program. Mobile payments business suffer from what is known as a “network effect” problem. The value of a payments system to the customer depends on the number of people actively using it. The more people on the network, the more useful it becomes, but how do you get people on the network until it’s useful? Unless you can send a payment to just about anyone you need to send a payment to, it’s probably not worth your while. Few will bother to open two mobile payment accounts just because some of the people or businesses you transact with are on another one, especially if it means extracting your SIM card and inserting a new one each time you want to switch networks.

The government’s relatively relaxed attitude to monopolies and its awareness of the need to increase the financial inclusion of the population led it to choose to not regulate Safaricom as a financial services provider. This kept costs down and gave the company considerable latitude in keeping the sign-up procedure simple. It also enabled speed. M-Pesa evolved from concept to country-wide launch in 4 years, and achieved scale less than 3 years later. M-Pesa has since launched in India and South Africa, but overzealous regulation has constrained growth and forced fundamental changes to the business model.

Innovation: sell more people more products

Once people are using M-Pesa, getting them to add other financial services is not that difficult. In November 2012 Safaricom teamed up with the Commercial Bank of Africa to launch M-Shwari, M-Pesa’s savings and loans cousin. M-Pesa users can get loans without even having a bank account, simply by filling out a form. Commercial Bank uses customers’ phone records as a credit history. Since launch M-Shwari has opened over 10 million accounts, and grants about 50,000 loans every day. One third of active M-Pesa accounts are also M-Shwari users.

In March of this year, Safaricom and Kenya Commercial Bank launched KCB M-Pesa, also offering mobile money loans but with higher limits, longer terms, and different rates and repayment structures. By June, it had managed to sign on 1.8 million users, and by October, the number had reached 3 million.

One of the limitations of the M-Pesa system has been its limited geographical reach, which will slow down its growth as market saturation approaches. Unless, of course, regional telecoms can find a way to work together. Earlier this month the leading Rwandan telecom operator and Safaricom announced a “corridor” that will allow mobile money transfers between the two services, boosting regional remittances and cross-border trade. We can assume that other similar agreements are in the pipeline.

Competition: friend or foe?

Yet few success stories go unregulated and with little competition for long.

Last year Safaricom’s competitor Airtel, which holds approximately 22% of the Kenyan mobile market (but only 3% of the mobile money market), filed an official complaint against Safaricom’s mobile money, demanding that M-Pesa’s agents also be allowed to set up competing mobile money accounts. The Communication Authority of Kenya ruled in its favour, and the over 85,000 M-Pesa agents can now also offer competing services.

In July of this year, Kenya’s Equity Bank launched Equitel, a mobile payment and banking platform. It hit almost 1 million subscribers almost instantly, by issuing free SIM cards to its 8.7 million bank account holders. Equitel also issues “thin SIMs” that can be used in conjunction with Safaricom SIMs, which allows users to switch between operators whenever they want. Safaricom has tried to block this innovation in the courts, citing data security risks.

In August a consortium of banks announced the impending launch of Switch, an interoperability service aimed at recovering some of the lost money transfer revenue.

Safaricom still has a dominant position, but the fight is just beginning.

So, will increased competition in mobile payments be good for the market and the economy as a whole? The question is more complicated than it seems. As we saw earlier, mobile payments platforms suffer from the “network effect”, in which without mass adoption, it’s not worth using, so you won’t get mass adoption. A monopolistic position helps. And the profitability that a monopoly guarantees encourages infrastructure investment, which spreads use even further.

But, monopolies tend to stifle innovation, not encourage it. High prices maintain networks, at the cost of the user. And eventually, a monopoly will reach market saturation, with users eager for better and cheaper alternatives.

Interestingly, the Competition Authority of Kenya has ruled that “market dominance does not a monopoly make”.

This fundamental conflict raises even more very important questions.

Is it possible to maintain simplicity while diversifying services? One of the main reasons for M-Pesa’s success has been its simplicity. An easy sign-up and loading process and an uncomplicated interface encouraged even the most technologically reticent to give it a try. The extra “user experience” barrier of having to choose between different mobile payment networks would almost certainly have put a speed bump in front of the rapid expansion. Network-switching, a cluttered menu and complicated fee structures for complex services could counteract the positive impact of broadening reach. Starting with one monopolistic provider encouraged a wider use than had several players tried to enter the market at the same time. Yet once the cultural barriers to initial adoption have been overcome, customers will look for better alternatives. And advances in technology and the use of data to identify needs and patterns make it ever more possible to design simple systems that offer complex solutions. It’s not easy, but it’s possible.

Is it possible to achieve profitability without the network effect? Safaricom deserves to profit from its backing of this life-changing development. It has invested heavily in expanding its infrastructure, building cell towers in remote areas, increasing speed and improving the connectivity of the population as a whole. And let’s face it, it came up with a great idea, and executed it successfully. Yet the fees are relatively high, and 45% of Kenyans live below the poverty line. Without going into the social debate, that obviously leaves the field wide open to lower-priced competition. The cultural barriers to technology adoption are lower than just a few years ago. And technological advances bring costs down, and make interaction even easier. So, while 8 years ago the answer would most likely have been no, that’s not the case today.

And M-Pesa has indeed been profitable. M-Pesa accounted for 20% of Safaricom revenues and helped total profit jump 38% to 31m Kenyan shillings in the financial year 2014/2015. It achieved revenue growth of 23%. That growth is likely to slow down as competition enters the market, but as the economy as a whole has benefitted and will continue to benefit from enhanced efficiency, higher savings and improved circulation of money, it is safe to assume that telephone usage across the board will grow. More open competition will most likely foster even more innovation, both in technology and in business models.

Meanwhile, the success of M-Pesa will continue to serve as a useful case study of brilliant innovation, good management and luck. Eight years ago it would have been virtually impossible to reach such market penetration so fast without a dominant market position, low regulation and inefficient alternatives. Today the situation is different. Technology, infrastructure and customer needs have advanced. A large part of that advance is due to what M-Pesa achieved. Their profit margins on mobile money will almost certainly shrink as they lower prices to stay in the market. And innovative competitors will offer new services that customers will switch to. This will continue to benefit not only Safaricom and its competitors, but also Kenyan businesses and the economy as a whole. The ripple effects of the success of the M-Pesa launch will most likely be felt for a long time to come.

Friday five: groupthink, fintech and books

The dangers of groupthink – via Pymnts.com

When the press uniformly jumps on a certain bandwagon, we tend to not question it. We’d rather appear knowledgeable than accurate.

“Groupthink is actually a corollary of the “Wisdom of the Crowds” concept. But crowds include lots of different kinds of people  –  the wisdom comes from the diversity of opinion that each person brings to the decision or action. In a crowd, mistakes cancel out and the average opinion tends to be right.

In groupthink, people are all just alike. Same profession, same social status, same town (or Valley), same age, same …..you get the picture. In groupthink, the group tends to make the same mistakes so the mistakes don’t cancel out.

But it’s actually worse than that.”

Healthcare, on-demand food delivery, bitcoin… What other sectors are booming thanks to groupthink?

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This lovely video both pokes fun at the Silicon Valley innovation culture and at the same time highlights a simple but cool education initiative.

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Stop being a freak and just look at your phone – via Medium

The body language of mobile phone use… Brilliant.

“One afternoon I walked from the Mission to downtown to log the many different ways people use smartphones to communicate intentions without words. When people meet for coffee, their phones are out on the table. Phones are hidden for a proper lunch, at least until the check comes. Sitting on the grass in Union Square I watched a guy bump into an acquaintance that he clearly didn’t want to talk to. I could tell because as soon as the other guy called his name the first guy pulled his phone out of his pocket.”

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The future of money – from Virgin

There’s a lot to think about here. A lot. This selection of articles on where financial innovation is going is both exhilarating and overwhelming. Cashless society, obsolete wallets, biometric security, social media payments… Most of the changes they talk about are already happening, but we have yet to notice because we’re stuck in old habits.

Read all the articles, or even just one, and you’ll start getting excited about what’s coming. If, of course, we can dig ourselves out of old habits.

Some of my favourites:

How technology is changing our attitude to giving – “a powerful new social experience”

Will the death of the invoice lead to more ethical business? – solving the critical issue of late payments to small businesses

The future of money – fair and transparent? – “Traditional consumer finance has been unfair for decades.”

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Why being busy makes you less productive – via the World Economic Forum

I know that you know this, that we’re more productive when we’re calm, that we need to focus on health and pace, and that multitasking is not as efficient as we think. But if you’re like me, you need reminding every now and then. Because apparently we all suffer from “idleness aversion”. I’m going to try to work on that.

“The researchers also found that we use busyness to hide from our laziness and fear of failure. We burn valuable time doing things that aren’t necessary or important because this busyness makes us feel productive.”

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This is epic: the recreation with Lego of a Roman scene at Hadrian’s wall – via My Modern Met.

rome lego

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Yes, Australians are really petitioning to change their currency’s name to the Dollarydoo – via Quartz

You couldn’t make this stuff up…

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Have a fantastic weekend! If you live in Europe, remember that the clocks go back on Sunday…

Friday five: drones, whistle-blowers and literature

A selection of the articles that grabbed my attention this week:

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The Drone Papers – via The Intercept

This is going to be huge:

“The Intercept has obtained a cache of secret slides that provides a window into the inner workings of the U.S. military’s kill/capture operations at a key time in the evolution of the drone wars — between 2011 and 2013… The source said he decided to provide these documents to The Interceptbecause he believes the public has a right to understand the process by which people are placed on kill lists and ultimately assassinated on orders from the highest echelons of the U.S. government. “This outrageous explosion of watchlisting — of monitoring people and racking and stacking them on lists, assigning them numbers, assigning them ‘baseball cards,’ assigning them death sentences without notice, on a worldwide battlefield — it was, from the very first instance, wrong,” the source said.”

the drone papers

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The benefits of getting comfortable with uncertainty – via The Atlantic

“In our everyday lives, we might avoid a lot of anxiety and jumping to wrong conclusions by accepting that sometimes people do feel two ways at once. Things can be similar without being exactly the same. Some things we can never know.”

Certainty is not what we think it is. And it’s not even necessarily a good thing. Go figure. I’m relieved, I’ve always wondered how people can be so sure of things. You need an opinion (in my opinion), but it’s important to realize that you may be wrong.

“We always think we’ve settled into ourselves and we’re always wrong.”

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How the Internet is uniting the world – via Medium

A bit utopic perhaps, but with some good points about the massive impact that fast connections and public communication have had on our sense of humanity. I thoroughly agree that too much communication has its downsides, but the upsides are so much more important and are having a much greater impact on how we see ourselves in relation to our fellow humans.

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The first great works of digital literature are already being written – via The Guardian

image from the game Journey, via The Guardian

image from the game Journey, via The Guardian

“Your experimental technological literature is already here; it’s the noise you’re trying to get your children to turn down while you pen your thoughts about the future of location-based storytelling.”

Naomi Alderman of The Guardian gives us a brief overview of video games that verge on literature. Don’t roll your eyes, these games are works of art, not only visually but also in terms of story line. What lifts them to a new level is the interaction of the story with the visual, and the role that you, the player, have in the development and the overall effect.

And I say this as someone who does not particularly enjoy video games, with a couple of notable exceptions (I’ve raved written about The Stanley Parable and Monument Valley before), but who loves to try the new ones just to see where they fit into my particular spectrum of new media. We are re-inventing story telling, not to replace the old, traditional way, but to bring new possibilities into the mix, to stimulate mind-blowing creativity and to push the boundaries of what is considered art. In my mind, video games definitely are.

“To pick just 10 examples from recent years, it’s hard to imagine how you could opine on the future of literature without having played the brilliantly characterful and fourth-wall breaking Portal, the sombre and engrossing Papers, Please, or the dazzlingly surreal exploration of the American subconscious, Kentucky Route Zero. Are you interested in discussing experimental “read it in any order” literature? Then for goodness’ sake, play the mystery narratives of Her Story andGone Home and the hilarious and unsettling The Stanley Parable. If you want to talk about how writers can engage with politics, capitalism, or the environmental movement, you’ll be showing your ignorance if you haven’t played Oiligarchy.

Interested in how storytellers can engage with themes of mortality? You’ll want Spider: The Secret of Bryce Manor, or Jason Rohrer’s short, powerful gamePassage, or the sublime Journey. Each of these games could – and probably should – be taught in schools to inspire the next generation of creators.”

A similar article appeared in Quartz this week.

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You are not a brand, you are a person – via Medium

I gave a talk in Bilbao a couple of weeks ago about whether a personal brand was necessary for a leader, or for anyone, really. My message was “No, it isn’t.” Not everyone needs to be strong online to be employable. Often it’s enough to be good at their job and to have an excellent reputation. And let’s face it, not everyone is good at the whole social media thing. If you’re not good at it, it’s better to not do it than to subcontract it out. Find another way to cultivate your market. A personal brand is not obligatory, and the attempt to convince us that it is piles on unnecessary additional pressure, which we really don’t need.

And I say that as someone who does have an online brand, and who enjoys it. I just don’t see why we should expect everyone to spend valuable time communicating to a vague market on channels that they don’t have the time to understand.

“But maybe I wanted to tweet a picture of my cat. Or maybe I wanted to rant about some political thing I had an opinion about. And maybe I wanted to use the word “fuck” in a blog post. How does that fit in? Wouldn’t that muddy my personal brand?

“… Maybe. But I think inconsistency is part of human nature, and what are social media users but human? Heck, even brands on Twitter and Facebook are run by humans.”

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A choreagraphed dance of 100 Sphero balls

This isn’t an ad for Sphero, the programmable robot ball. Ok, maybe it is, sort of, but I want to show it to you anyway because it’s quite charming, and it involves the programming of 100 Sphero balls! 100! I have one at home, I love it, and having to program a hundred of them sounds like so much fun.

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Have an amazing, stimulating but at the same time relaxing weekend! Do something new, surprise yourself.

How Bitcoin Will Change the World… Bit by Bit

For the first time in our history, we can send money around the world in a secure manner, with virtually no transaction fees. That in itself is huge, but is only one of the many facets of Bitcoin that has the potential to change the world as we know it. From the underlying technology to the potential uses, we are at the beginning of the deepest societal shift since the roll-out of the Internet. The way we do business, the way we pay for things, even the way we exchange ideas and create… This is a shift that will over the next decade or so change the lives of everyone, from financial sectors to emerging economies, from musicians to farmers, from start-ups to big banks.

The Bitcoin technology is based on advanced cryptography – which means that transactions are virtually impregnable – and rapid information distribution – which means that the whole network knows what the rest of the network is doing, almost instantaneously. The network is run by all the participating “mining nodes”, which verify transactions and transmit updates to other nodes. Anyone with the right computer hardware can become a “mining node”, which means that Bitcoin is run by anyone who wants to participate. Which brings us to the first world-changing idea:

Decentralized money

The concept is mind-blowing. The money that we’re used to – euros, dollars, yen, whatever – is issued by a Central Bank and/or controlled by a government. We have absolutely no control over the value of the money that we use. The value of the cash in our pocket or the money in our bank account is decided by hundreds of factors including our local interest rates, the interest rates of other currencies, the economic growth expectations of our economy, and of other economies, and supposedly of the amount of money in supply. I say “supposedly”, because no-one actually knows what that is. Governments (or Central Banks) can print money when they want to, but once they’ve done that, that money then generates more money through bank lending (they take your deposit and lend part if it out, which then becomes another deposit, part of which is lent out, etc.). And as we saw with Greece, governments can decide to restrict your access to your money. They can, as with Argentina and more recently China, say that your money is worth a lot less today than it was yesterday. They can restrict how much you can take out of your country. There is nothing you can do about this. You don’t have nearly as much control over your money as you think you do.

Bitcoin is decentralized money. It is not controlled by any one group. No-one can decide to change the value, no-one can decide how many there are in circulation, no-one can decide whether it’s legal or not. The value of the bitcoins that you hold is purely decided by the market, which is virtually impossible to manipulate. True, not everyone is obliged to accept bitcoins, as with local currencies. But it is getting easier and easier to swap bitcoins for local currencies as and when you need them.

by Alessandro Desantis for Unsplash

by Alessandro Desantis for Unsplash

Remittances

That makes Bitcoin increasingly valuable as a way to transfer remittances, or payments foreign workers send home to their families. Remittances are estimated to be a $600bn market. But of that money that workers in the US, UK, Germany, etc. send home to their families in emerging economies, about $60bn gets taken out in fees. Imagine if more of that money could actually reach them. Think of what that extra amount could do. It could feed, clothe, educate, instead of ending up as financial profit for the money transfer institutions.

True, turning bitcoins into kwacha, dirhams, etc. is not always easy. But exchanges, both international and local, are spreading, regulation is evolving, and more and more local merchants understand that Bitcoin is a convenient way to accept payments. This situation will improve.

Independence

The potential of Bitcoin used for remittances has an even bigger impact when you consider that 64% of the adults in sub-Saharan Africa, 54% in South Asia, 49% of Europe, Central Asia, Latin America and the Caribbean do not have a bank account. Several countries have developed mobile banking networks that use phone minutes as a currency, bringing efficiency and a method of saving to those who previously relied exclusively on cash. Yet these networks are local, which limits their use, especially in times of increased migration. Mobile money users already have a phone, and are used to the concept of digital payments. Bitcoin will allow them to broaden their scope to include cross-border transfers, international purchases, downloads, access to educational content, and much more. More importantly, they will have exclusive control of their bitcoin balances.

With Bitcoin, you are your own bank.

Efficiency

And your own notary. Today, when you buy a house or a car or a share of a company, you have to wade through piles of paperwork, incurring costs and delays along the way. The paperwork is necessary to ensure that you are who you say you are, and that you’re buying from the rightful owner. Bitcoin, or rather, the underlying technology, condenses all that into a single piece of code. Not only transfers of money become almost instantaneous and cost-free. Transfers of ownership can also be done the same way.

Which brings us to a brief explanation of why Bitcoin is so secure. Using very high-level cryptography, transactions are made with a combination of secret and public keys, which together serve as bitcoin address and encrypter. These transactions are then verified by the entire network, and grouped into relatively small blocks. Once a block is accepted by everyone, it gets added on to the previous block. Each block contains a special code that refers to the previous block – this leads to what they call the “blockchain”. No previous block can be changed or altered without changing or altering every block that comes after, which would be impossibly difficult to do.

Because the technology is so secure, if the blockchain says that you are the rightful owner of that building or that work of art, then you are. And just as you transfer ownership of bitcoins when you make a payment, you can also transfer ownership of other assets that you have wedged into your Bitcoin code. This is the main reason that banks and governments are so interested in Bitcoin, for the potential efficiencies in asset transfer. Even NASDAQ will start trading private company shares using blockchain technology later this year, and the New York Stock Exchange has invested in Bitcoin company Coinbase. Just a few weeks ago we saw the first blockchain share offering. This is all new, but it’s evolving quickly.

Innovation

The scale of innovation in the financial sector due to the creation of Bitcoin is staggering, and we’re only just getting started. There will be stumbles along the way, many Bitcoin startups have failed, but even more are re-thinking the way we do businesses, the way we transact and the way we store value. Bitcoin has limitations, but bright minds are finding ways around these, and in the process are coming up with solutions to problems that we thought unsolvable. Virtually every week we read about a big step forward in what Bitcoin can do, and we are starting to see crazy-sounding ideas become not-so-crazy reality. Just as we had no idea of what the Internet would become back in 1995, it’s difficult to imagine today what Bitcoin and the blockchain will become 10 years from now. But it’s fun trying.

Risks

There are always risks associated with new technologies and uses. The increasing use of Bitcoin for money transfers could increase financial instability (although I would say that we have that anyway). Bitcoin as a currency may become marginalised (although now that we have the technology, something else will spring up to take its place). Increased and/or fragmented regulation to control money laundering may well dampen some impressive initiatives (which we hope will work to find a way to comply and innovate at the same time). Hacking and subsequent loss of bitcoins will always be a threat (although security is improving all the time, and the threat of hacking is not unique to Bitcoin or the blockchain). An increasing dependence on bits and bytes leaves us more vulnerable to cyber-terrorism and energy shortages (which is why all technology sectors are working on developing offline backups and redundancies). And risks will materialize that we haven’t even thought of yet.

The important thing to realise is this: the development of Bitcoin and its blockchain technology has given us a tool that can improve profits, efficiency and distribution of wealth. As with any new tool, the obvious applications have huge potential, and they alone will change the world, for the reasons discussed above. The not-so-obvious applications are even more exciting, as they will take the initial effects and extend them beyond the limits of our imagination. Just as our kids don’t remember a world pre-Internet, our grand-kids will gawp at how inefficient the early 2000s were in comparison to their world. By then the blockchain technology will be so mainstream that they’ll have a hard time imagining a world without it.

(I also write about Bitcoin and related trends at fintechblue.com.)

Friday five: comments, co-working and cute

Annotation, from the Washington Post

One of the things I like best about Medium and Quartz (apart from the excellent writing, of course) is the possibility of annotating or commenting on individual paragraphs, individual sentences, even. In the Washington Post, Chris Cillizza claims that annotation is the future of journalism (not all journalism, but a good chunk of it), as it allows depth, clarification and engagement.

“It gives us the chance to play a role as tour guide through a chosen field (politics, music, art, etc.) while simultaneously listening to the questions and insights from our tour group. It’s journalism as a collective community effort where people other than the reporters feel invested in (a) getting it right and (b) making it as smart, thoughtful and approachable as possible.”

Annotation has its downside, too, as Chris points out. Inane comments, trolls, the “cesspool” that the comments sections ended up becoming. He believes that this can be solved by upvoting the best annotations, Reddit-style. It might work.

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Reimagining a classic, from The Verge

Speaking of annotations, Apple is launching enhanced, digital versions of the Harry Potter books, with animated illustrations and annotations by J. K. Rowling herself.

potter_ibooks.0

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A brief history of the demise of comments, via Wired.

And continuing on the theme, a timeline of the death of the comments section.

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Passwords are dying. Let them – from PYMNTS.com

Passwords are dying? Thank God. With hundreds of sign-ins under our belt, it’s logical that we end up duplicating passwords, because how is someone supposed to remember so many? Lastpass helps, a lot, but it doesn’t cover all situations, and for some inexplicable reasons I have three or four different entries on LastPass for the same IP.

So if passwords are out, what’s in? Biometrics. Touch, eyes, facial recognition. Yes. Bring it on.

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Coworking, from Shareable

I work from home, and I love doing so. I’m never lonely, since my husband also works from home for half of the day (we occasionally meet in the kitchen for coffee), and two of my immediate neighbours with whom I’m on very good terms also work from home, so we sometimes nip down to the bar on the corner for more coffee. And I love the comfort, convenience, and being here when my daughter comes home from school.

But I love the idea of co-working spaces. I’ve visited several here in Madrid, with neutral but quirky decoration and a creative atmosphere of concentration.

This article about the origins and growth of the movement (can you believe it’s 10 years old?) sheds light on several aspects that I hadn’t considered. One, that it’s considered a movement. Two, that it’s global. Even in Antarctica, the few huts the scientists share can be considered co-working spaces.

Coworking seems to bring about a sense of community and human connection, so at odd with the “isolation” and “breakdown of empathy” that we were assured greater online dependence would bring.

I really liked this description, by Ashley Proctor, Executive Producer of GCUC Canada:

“Coworking is absolutely not about desks or wi-fi or coffee—most of us have access to a desk and wifi and coffee at home. Coworking is truly about being surrounded by a diverse group of peers. Many of our coworking members, myself included, are independent by nature and we are extremely passionate and dedicated to our work. It’s so easy to become isolated when we work long hours for ourselves, and it’s important to find balance. Coworking helps us to balance personal and professional, work and play, independence and collaboration.

By working together, we build a strong vibrant community, and a network of support. We share resources and we share contacts. We make friends and important connections. We are leading by example—we are building a workspace that we want to be a part of and we are shaping the future of work.”

It’s not actually a work thing. As Tony Bacigalupo, co-founder of New Work City, says:

“The irony of all this is that most of us don’t need an office at all. The vast majority of work being done now can get done from anywhere with a signal. We don’t go to these new workplaces because we need an office; we go because we need what happens in the office.”

For some it’s the added productivity of not having the TV, the fridge or the bed to distract us. For most, it’s the social connection and the friendships that develop. I personally love how it’s changing the nature of work into something more collaborative – individuals working together, independents incorporating the suggestions of others, freelancers helping out peers for free. Gone is the tribal and competitive atmosphere of the office. In comes a new system that emphasises collaboration and curiosity. Will it still be tribal? Will we “band” with our co-working peers? Or are we ushering in a whole new mentality of open-minded acceptance?

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The new Pixar film

Really, tell me you not just a little bit excited about this:

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Have an amazing weekend!!

Apps to solve home-grown poverty

The world of apps is often accused of frivolity and superficiality. There are a few services that will let you hire a private jet with only a few hours’ notice. You can enjoy on-demand butler services and beauty treatments. There’s even a delivery service that can get you condoms within the hour (with discrete delivery, whatever that means).

apps that deliver condoms

Thinking that this is what apps focus on, though, is in itself superficial. There is nothing wrong with making apps for people with money. And apps that focus on the frivolous do serve a valuable function in improving efficiency and developing culture. Some will do well, others won’t.

Beneath the frivolous surface is a sea of apps that do social good, redistributing wealth, helping people connect, opening up opportunities… Most aim to help individuals in developing nations survive disasters or start businesses. Apps for crowdfunding, microloans, healthcare advice or financial management for those without bank accounts aim at bringing scale to phones (smart or regular) in remote places, opening up access to services and information that emerging economies have little experience with.

Yet here comes a new segment: apps aimed at alleviating poverty in the first world. Poverty is always a complex issue, even more so in the developed world, where measuring standards are confusing and sometimes non-existent. Unicef recently published a report estimating the number of children living in poverty in rich countries to be over a staggering 76 million. The 2011 US Census found that 15% of adults and 22% of children live in poverty. Take a look at this eye-opening report by National Geographic.

While in no way implying that helping out with poverty in our comfortable back yard is more worthy than feeding an entire family far away, below-subsistence incomes in first world economies is a big problem that we can’t ignore, especially when we see so much waste around us all the time. Tackling third world poverty through technology is vital to the world economy. And being poor in the US is very different, for example, from being poor in Zimbabwe. Yet the homeless people on the corner, the kids whose parents are working four jobs just to pay for groceries, the handicapped or ill whose benefits have run out, they deserve efficient and useful help, beyond the coins that we hand over when we see them on the street and we’re in the right mood. It has often been the case is that it is simply easier to donate to people far away, with a few taps and a swipe on our screen. But more and more apps are working on changing that, with a simple concept and a good interface.

A few ingenious solutions:

Handup uses crowdfunding to fight urban poverty by connecting the homeless with those who want to help. The beneficiaries don’t even need to own a phone or have access to a computer. A network of partners such as grocery stores, clothing retailers, shelters, etc., will help them create their “project” (such as a week’s groceries, clothing to go back to school, baby supplies, medical treatment, a laptop), and will allow them to redeem donations for food or services. Handup has also launched a gift card service, actual physical cards that can be redeemed at participating retailers, that you can hand to someone you want to help. A plus: Google is matching the cards dollar for dollar.

Food re-distribution has huge potential. Restaurants and retailers throw away tons of food every day, and truckers are often left with pallets of produce that they can’t deliver. The Food Cowboy app alerts a network of food banks and charities when a restaurant, retailer, wholesaler or catered event has surplus food to donate. The charities organize pickup, sometimes for a small fee to cover costs. Feeding Forward will send a “food hero” to pick up surplus food to distribute to San Francisco’s food banks. ZeroPercent does something similar in Chicago. Hundreds of similar initiatives operate around the world with similar intentions – on an app, the distribution and tracking gets more efficient and transparent.

apps that help distribute food

Benevolent is a crowdfunding platform aimed at helping low-income US-based individuals fund an item or a project, such as bus passes, a computer, a refrigerator, a business course… Youcaring helps with medical expenses. KhanAcademy gives free educational videos to anyone with access to a tablet, smartphone or PC.

Even the Collaborative Economy plays an important part. Platforms like TaskRabbit, Handy, Instacart and NeedTo allow those with virtually no assets or training to help out in exchange for cash. While not exactly on the same level of poverty alleviation as donations, they are anti-poverty apps in that anyone who wants to work, can get paid for doing something. Dog walking, photo labelling, house cleaning, grocery delivery… Notice that I haven’t mentioned Uber, the “sharing economy” star, since you apparently have to actually have a car. Or Airbnb, since you apparently have to have a room to let. For many in the sector, though, you just need hands, legs, eyes and a brain. The catch is that you do need to have a smartphone, preferably also a computer, not always accessible to those below the poverty line.

The app Even will turn your uneven (and presumably low) stream of freelance or by-the-hour earnings into a steady income. Even calculates your average pay based on the last few months’ data, and pays you that amount each month. If you make more, it saves it for you. And if you make less, it’ll make up the difference. The app’s objective is to take some of the stress out of money management, and to help those with uneven incomes establish a “regular” lifestyle and to live within their means. Does this help with poverty? It certainly can make income fluctuations a bit less terrifying. Volatility is not limited to those near or below the poverty line, but that is where it hits hardest.

apps that help with financial stability

Poverty is a huge subject and one that humanity needs to work on solutions for. In no way do I pretend to be able to even scratch the surface of the problem by talking about apps, and in no way do I expect to be able to do justice to the many apps out there that are tackling hard problems. I do want to point out that innovation is paying attention to helping others, and that with technology, we can reduce barriers to development, donations and decisions. It’s a slow process, unfortunately, as we struggle to develop solutions and then to achieve reach and impact, none of which are easy. We make mistakes along the way, we sometimes hit insurmountable barriers, and we sometimes need to withdraw and re-think. But we are thinking about this, and while apps for the rich will continue to flood the app stores, we are seeing more and more apps that want to change the economic balance in the world, spreading wealth, education and opportunity to new areas, full of hope and potential.