If only there existed a peer-to-peer version of electronic cash that would allow online payments to be sent directly from one party to another without going through a financial institution . Maybe one of these days...

In my country most cell phones are on pre-paid plan. You can buy cell phone credits at a gas station, then that credit gets used up as you make calls and send messages.

When the cell phone companies came up with a service to transfer cell phone credits to other users, people started using that as currency. Only problem is each company runs its own proprietary system and there is no way to send credit to a someone who uses a different cell phone company.

If you think about it, phone companies have the best micro-transaction infrastructure on the planet. They are constantly charging people fractions of a penny per second per phone call.

In a few countries like Kenya and Tanzania, this concept is already in use and is extremely widespread. A LOT of people use this system instead of having a bank account. They even use it to pay bills and buy things at stores.

https://en.wikipedia.org/wiki/M-Pesa

Yeah - but they're not talking about mobile money - they're talking about bitcoin.

Yes, but unlike bitcoin, M-Pesa is actually used by average people.

I actually tried starting a company based on that, but when I went to talk to the cell phone providers, one of them candidly explained to them that SMS was their cash cow and that it was essentially free for them, and calls were very cheap related to what the person paid, so it makes no sense for them to enable people to use the credit for other stuff which might get them into trouble later - think lawsuits, regulations, and all the complications of becoming a payment provider.

The issue often isn't a financial institution to go through; it's the logistics challenge in using an electronic cash system in the first place.

yep.

debit cards are electronic cash.

You forgot the magic word non-volatile.

And forgot the year and a half long debate over scaling that has caused an increase in prioritization fees and delays.

Irrelevant. The sole criterion for viability of a currency is acceptance.

That's true, but non-volatility counts for something there. Money classically has three roles, as a medium of exchange, a measure of value, and a store of value; when something's value fluctuates dramatically over time, it's failing to fulfill the second and third roles. Measure of value is unimportant for day-to-day use (although vital for accounting), but store of value is indispensable.

I'm guessing that we're secretly talking about Bitcoin here; I think that what BTC needs is some organization that controls a lot of capital, and is willing to underwrite the value of the bitcoin. Fiat currencies work to the extent that their issuing countries can underwrite their value (by accepting the currency in payment of debts, primarily); precious metals work to the extent that there's non-monetary demand for them (so gold isn't actually very valuable in an apocalypse -- look at prices in the Siege of Sarajevo, discussed in a survivalist blog a few years back). Bitcoin doesn't really have either of these. It's a sort of fiscal hot potato -- good for exchange, certainly, but you wouldn't want to be the last person with all the world's bitcoin if everyone else lost interest in it.

Fiat currencies can also suffer from hyperinflation so the second and third problems are not unique to BTC at all.

Sure, but avoiding hyperinflation is Monetary Policy 101. Most currencies in developed countries have never experienced a hyperinflation and never will because money is created via the fractional reserve banking system as credit for which there is a definite future demand for repayment and taxes denominated in that currency create additional future demand[1]. People are prepared to accept currency because they have future debts and expected future debts denominated in it, and that confidence is boosted because whenever the central bank sees price rises above the level it's prepared to tolerate it steps in to adjust the supply.

The BTC mechanism for attempting price stability on the other hand does the opposite: the supply is designed to grow very steadily, but with no reason whatsoever to believe a stable and sustainable demand for that particular cryptocurrency exists in future.

[1]Hyperinflations occur when the supply of money grows steadily without even bigger growth in future demand obligations, which in practice invariably happens because the government has resorted to printing it to discharge debts and release people from future tax obligations. This actually looks more like a Bitcoin economy (albeit with more potential for the money supply to grow really, really quickly) in that what the government is doing is decoupling supply from demand.

On avoiding hyperinflation, it's certainly true that we know how to do it. For the infamous Weimar hyperinflation, I'd refer you to Adam Fergusson's When Money Dies; what drove the hyperinflation was two things, that the government was unwilling to control its spending (it risked France annexing the Saarland), and that the head of the national bank was poorly educated. When Schacht was brought in, in 1923 (10 years before Hitler; Schacht has a reputation as Hitler's banker, but had never heard of Hitler in '23), he was able to stabilize things pretty quickly: Britain had intervened to rule out a French annexation of the Saarland, and Schacht was more with-it on monetary theory than his predecessor had been.

The risk of Wiemar-like circumstances striking again in the West are basically zero, unless a Wiemar-like perfect storm of defeat and ignorance strikes again; and even then, hyperinflation never lasts long (no one can live under it for long). One woman weathered the Wiemar hyperinflation by selling one link of a gold Rosary chain a day to buy food; a quite modest amount of precious metal is enough to outlast this sort of disaster.

> hyperinflation never lasts long

How about Venezuela then ?

I call this false. Got proof?

AZERBAIJAN MANAT

ZAMBIAN KWACHA

BELARUSIAN RUBLE

All currencies, all are as volatile as can be.

Those currencies you list might be volatile vis-a-vis some foreign currency (and thus vis-a-vis "foreign products"), but they're presumably somewhat stable vis-a-vis "domestic products" (you might have inflation, but that typically goes up only, so it's drift, not volatility).

Bitcoin doesn't really have "domestic products", that is things that are denominated in it.

So, low volatility is a quality criterion for money, and those currencies fulfil it (domestically).

In time of war or hyper inflation, domestic currency might get too volatile, and that's when people switch to other money, such a cigarettes or foreign currency.

Hyperinflation needs to go really off the charts for people to switch to other currency.

Source: lived under a hyperinflation of 1900%/year and people did not switch currencies.

And those three markets also accept (and even more highly value) stable currencies. Bring a Euro to any store in Belarus and it'll be accepted at a greater value than the listed exchange rate.

> it'll be accepted at a greater value than the listed exchange rate.

Didn't realize how dire the listing situation was there

:-p

It's simpler than that, currency exchanging costs money. If you're using a foreign currency, then you don't have to pay those fees. If, that currency is even available in your country (in some, using certain countries is prohibited)

yeah, i do expect to see one come up in a few years. i'm guessing it'll catch on in africa or asia first, where there are fewer entrenched players.

m-pesa is a good start, at the least.

Seriously, if these people don't have credit cards, and are paid mostly in cash, how do you expect them to have "magic internet money"?

They have smartphones with apps; the step to having an online payment provider is a small one.

This correlation is not always true, an in emerging markets, this correlation is almost always wrong. Access to Smart phones unfortunately doesn't always mean the availability of banking infrastructure OR the presence of a cashless economy . For example -

- Android phones are dominant in this market, since local manufacturers are able to sell cheap phones without incurring any software development cost.

- Telecommunication sector is heavily privatized in these markets & generally have multiple players offering low cost "pre-paid" services. Recharge stations and mobile stores are pretty ubiquitous - small mom & pop shops double up as resellers of these services , providing last mile coverage.

- On the contrary, Banking infrastructure is so heavily state run. And they don't have the same level of 'ease of access'. So, a lot of people working in the "unorganized sector"(Note: This is an official terminology that governments recognize and use) don't have formal accounts in financial institutions.

- Even if they did, a good number of banks run decade old tools and softwares. Making it all the more difficult to do mobile & online banking .

- And also, most of these economies are not cashless. Culturally and for other reasons,there is more trust on "Paper Cash".

- Finally , just because a person owns a cheap smart phone & ,one cannot assume banking literacy.

Too naive an assumption. I know of certain online payment platforms that have to blacklist certain regions of the world because of fraud detection and the like..

If only Bitcon had a high enough block size limit to allow more than 1.67 KB/s of transaction data per second. It could be a cryptocurrency, but it can't be Bitcoin.

Sounds like a terrible solution for a place lacking something as financially basic as credit/debit cards.

I think it's more because Grab (Uber's competitor in Singapore) has always had the cash option from the start (Grab introduced GrabPay — their credit card option — after) [1], and Uber was trying to match the "feature".

[1] https://vulcanpost.com/171862/grabtaxi-uber-challenge-cashle...

In the Philippines, Uber accepts cash. It has the options UberX, Uber Black, UberPool and UberHop (point-to-point)

In India, Uber accepts cash as well as PayTM, and this has helped adoption.

In Pakistan, Uber and it's winning competitor (Careem) take Cash. Which is the preferred method here since banking/card is still not so common.

Wouldn't it be worthwhile to have an Uber membership card or something so they don't have to carry cash.

Most people dont mind caring cash. Personally i prefer it to digitalized closed systems whenever possible.

The same thing happens in Guadalajara, Mexico.

One interesting thing an Uber driver told me is that, depending on the area of the city, the majority of people pay with cash or with card. So when he needs cash he drives to a certain area to catch a service.

The same is true in Argentina. Average citizens don't (can't) have credit cards, but Uber has started accepting cash recently.

In Argentina, the main problem for Uber is that the court ordered the credit card companies to block payments made by local clients to Uber, because of the company not adjusting to local regulations. So, if you don't have a credit card from another country, you can't use the app, and that makes it hard if not impossible for them to build the necessary economy of scale that their kind of operation needs.

Yup, that's also an issue. Mastercard does work though, but considering how few people have credit cards (and even fewer have Mastercard specifically), they're having problems hitting critical mass.

Cash is also accepted in Mexico ... TJ at least.

I have the option of cash payments here in New Zealand. I think I had that option in the US, too.

I think Uber accepts cash in Argetina too. At least in Buenos Aires.

Uber Egypt has cash