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The Invisible Bank: How Kenya Has Beaten the World in Mobile Money
by Eugen Leitl 04 Jul '12

04 Jul '12

http://newswatch.nationalgeographic.com/2012/07/04/the-invisible-bank-how-k… The Invisible Bank: How Kenya Has Beaten the World in Mobile Money Posted by Ken Banks of National Geographic Emerging Explorer on July 4, 2012 Click a few keys, exchange a few numbers, and itbs done. With just a mobile phone and a registration with Safaricom, Kenyabs mobile service giant, you can pay for anything in seconds b no cash, no long journeys to towns to reach a bank, and no long lines when you get there. This is m-Pesa, the revolutionary approach to banking which is changing economies across Africa. The service allows customers and businesses to pay for anything without needing cash, a bank account, or even a permanent address. In todaybs Digital Diversity, in honour of its recent fifth birthday, we present a beginnerbs guide to m-Pesa and examine its implications for financial access in developing economies. Digital Diversity is a series of blog posts from kiwanja.net about the way mobile phones and other appropriate technologies are being used throughout the world to improve, enrich, and empower billions of lives. By Olivia ObSullivan In the developed world, we are used to the idea that we created the model of industrial and economic progress which other countries must follow. Many of our big ideas about development rest on the assumption that the West cracked the formula for economic progress sometime in the 19th century, and what we need now is for the developing world to bcatch upb. Even the language we use encapsulates this idea, in the division between bdevelopedb and bdevelopingb. But new innovations are challenging the idea that development requires handing ideas down from developed to developing. In banking and finance, the big ideas in cashless transfers and mobile, flexible exchanges are not to be found in Geneva or London or New York. A revolution in mobile money transfer has occurred, but not in these financial centres. Instead, itbs happened in Kenya, with m-Pesa. The service was developed between Safaricom and Vodafone, and launched in 2007. And itbs not just something used in cities or by big commercial interests. By 2010, over 50% of Kenyabs population had used it b this means rural villagers haggling over produce, then using their Nokias to make the final deal. It means Masai herdsmen bringing their phones to market along with their cattle, ready to stock up on essentials to bring back to their homes. The widespread use of mobile phones in Africa provides huge potential for innovation. (Photo: Kiwanja) For people who live in isolated areas, the service means no longer having to carry lots of cash to markets or towns, risking losing huge amounts to banditry and theft. For people without permanent addresses or bank accounts, the service means they can pay what cash they have to m-Pesa in exchange for mobile credit, making payments and transfers and building up savings b becoming participants in an economy from which they had previously been locked out. For migrants, the service allows them to send money home to their families and villages safely and simply. Safaricombs international money transfer service uses a similar system for international immigrants, coordinating great webs of remittances and payments across the world. For Kenyan businesses, the service means payments for stock or repairs can happen almost instantaneously, wiping out the need to rely on bank clearances and flawed infrastructure which had clogged the economy with inefficiencies and delays. So how does it work? m-Pesa relies on a network of small shop-front retailers, who register to be m-Pesa agents. Customers come to these retailers and pay them cash in exchange for loading virtual credit onto their phone, known as e-float. E-float can be swapped and transferred between mobile users with a simple text message and a system of codes. The recipient of e-float takes her mobile phone into her nearest retailer when she wants to cash in, and swaps her text message code back for physical money. There are already more m-Pesa agents in Kenya than there are bank branches. An mPesa agent. (Photo: Laxman Rajagopalan) Such a system also requires intermediaries, to get the cash to m-Pesa agents, and ensure cash movement keeps up with e-float exchanges. In this way, the system has created new jobs, with some intermediaries and retailers earning $1000 a month in commission from m-Pesa transactions. As of m-Pesabs fifth birthday b March 6 2012 b it had been used by a staggering 15 million people. The system was employed by the bKenyans for Kenyab campaign to raise money for Kenyans suffering from the Horn of Africa drought b just one way in which it has contributed to independence and innovation in Kenyabs economy. In response to m-Pesabs success, the model has been imitated in other countries. Africabs biggest mobile operator MTN has rolled out schemes elsewhere, the most ambitious in Kenyabs neighbour Uganda. Central banks in some countries, such as Brazil, have now created financial inclusion teams, with a vision for using similar systems to bring financial access to the poor and isolated. The Indian government has also shown determination to achieve this aim, and analysts predict, with its strong IT infrastructure and dense population, India too could be on the road to becoming a cash-light, financially inclusive economy in the near future. m-Pesa is a triumph of thinking locally but dreaming big. (Photo: Kiwanja) m-Pesa has big things to say about the future of African economies. It demonstrates the potential in the huge and rapid dissemination of mobile phones and other flexible, adaptable technologies on the continent. But it also shows the value of dreaming big but thinking locally. M-Pesa is not an attempt to recreate developed countriesb banking systems in Africa. Instead, itbs an idea which has been tailored to the Kenyan environment. Rather than giving up on poor, isolated communities as unbankable, it has extended financial services to their most apparently unlikely customers. Rather than giving up on sophisticated economic transactions in countries with poor infrastructure, it has found a way to circumvent that infrastructure, creating a virtual, mobile one of its own. Olivia ObSullivan has worked for the Guardian newspaper, the Sudan team of the UN Peacekeeping Department and with the London NGO Waging Peace. She is an MPhil in International Relations at Cambridge University. She previously studied History at Cambridge University and Diplomacy and World Affairs at Occidental College, California. She is currently the Research and Media Assistant for kiwanja.net/FrontlineSMS. Digital Diversity is produced by Ken Banks, innovator, mentor, anthropologist, National Geographic Emerging Explorer and Founder of kiwanja.net / FrontlineSMS. He shares exciting stories in b Digital Diversityb about how mobile phones and appropriate technologies are being used throughout the world to improve, enrich, and empower billions of lives. You can read all the posts in this series, visit his website, or follow him on Twitter.

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Brainwallet: The Ultimate in Mobile Money
by Eugen Leitl 04 Jul '12

04 Jul '12

(this is actually easier than you think! it works, try it out) http://www.forbes.com/sites/jonmatonis/2012/03/12/brainwallet-the-ultimate-… Brainwallet: The Ultimate in Mobile Money For as much as I am fascinated by the societal and political implications of bitcoin, I must admit that I am equally fascinated by the implications of Brainwallet. Quite simply, a brainwallet, or thoughtcoin, refers to the concept of storing bitcoin in onebs own mind by memorization of a special and unpredictable phrase. No, you are not actually storing the bitcoin in your mind but you are storing the access mechanism, or seed, to your stashbs private key. For example, the phrase must be sufficiently long (12 words or more) to prevent a brute force guessing attack, such as b I went seeking freedom, but all the worldbs islands were already taken.b It is further suggested not to use a simple phrase or a phrase taken from existing literature because it is more likely to be hacked by a computer that systematically attempts all phrases, similar to a dictionary attack. You want a high level of word entropy. Seemingly random modifications of the phrase would aid in strengthening brainwallet, such as b I went seeking freeeedom, but all the worldbs issslands were alreaDy taken.b These simple changes make the entire phrase very difficult to predict. Next, the phrase itself without the quotation marks is turned into a 256-bit private key with a hashing or key derivation algorithm. Completing this process turns my secret phrase into the 64-character hexadecimal key shown below (this should be kept secret also): 8E66837DDD412A72007571BF05977C7005324B285B918AB0DBC9A2BA9B86F849 You are basically creating your own public Bitcoin address by personally determining the private key and that single instance is sufficient for our brainwallet. With larger deterministic wallets, multiple public/private key pairs are generated using a broot keyb derived from a starting seed and a bchaincodeb, thus allowing a continual creation of different key pairs based on the same root node. So the final step in our process is to use this hexadecimal key to compute a standard bitcoin address with a utility such as one provided by Casascius or Electrum. Additionally, you can perform this function on bitaddress, a JavaScript client-side bitcoin wallet generator, and even run a stored version locally on an offline computer for security. The testing-only site is Bitcoin Tools. I add the serious disclaimers that hashing/address generation should not be performed online and, although possible, the importation of private keys is not yet standard functionality on most bitcoin clients. Given that, my hexadecimal key computes into the following base58 Bitcoin address: 1BgciYijPjVWvnpChmBNwB3isZUFKCJSox Now, you are ready to receive bitcoin from anywhere in the world and have the peace of mind that the corresponding private key to unlock, access, and transfer those bitcoin resides solely in your brain. If you forget the phrase or if you die suddenly, the bitcoin is lost and unrecoverable just like if you had burned cash. You can even memorize multiple phrases for multiple accounts, like casual spending and nest egg savings. Why is this so profound? For starters, it represents the ultimate in mobile money. You have complete financial privacy and asset protection combined with the ability to have those assets fully accessible from anywhere in the world provided there is Internet connectivity or a telephone. You are also protected from theft or confiscation unless a legal jurisdiction can force you to reveal your bitcoin private key that isnbt even known to exist. Possible applications include revealing the secret phrase to a loved one for inheritance reasons or even splitting the phrase into segments with each family member possessing a portion of the total phrase. Off-grid transactions are also possible by simply conveying the phrase via voice or encrypted email. It would also be possible to send bitcoin immediately to someone without an existing address because one could easily be created based on a selected phrase. It may be awhile before this practice is commonplace since most people do not use bitcoin on a regular basis and most of those do not generate deterministic keys holding $1 million. But, it sure beats lugging around 17 kilos of gold bullion.

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by Sunni Sheridan 04 Jul '12

04 Jul '12

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[drone-list] AUVSI publish 'Unmanned Aircraft System Operations,Industry “Code of Conduct”'
by Eugen Leitl 04 Jul '12

04 Jul '12

----- Forwarded message from "Spike (Chris Foote)" <spike(a)tenbus.co.uk> -----

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by MacyNikole 04 Jul '12

04 Jul '12

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[tahoe-dev] Announcing Tahoe-LAFS v1.9.2
by Eugen Leitl 03 Jul '12

03 Jul '12

----- Forwarded message from David-Sarah Hopwood <david-sarah(a)jacaranda.org> -----

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[drone-list] EFF and MuckRock partner to find out about US drone use
by Eugen Leitl 03 Jul '12

03 Jul '12

----- Forwarded message from Trevor Timm <trevor(a)eff.org> -----

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Re: [tahoe-dev] switching from introducers to gossip?
by Eugen Leitl 03 Jul '12

03 Jul '12

----- Forwarded message from Greg Troxel <gdt(a)ir.bbn.com> -----

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Re: [tahoe-dev] switching from introducers to gossip?
by Eugen Leitl 03 Jul '12

03 Jul '12

----- Forwarded message from Brian <warner(a)lothar.com> -----

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Re: [tahoe-dev] switching from introducers to gossip?
by Eugen Leitl 03 Jul '12

03 Jul '12

----- Forwarded message from Zooko O'Whielacronx <zookog(a)gmail.com> -----

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