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10 sats \ 3 replies \ @BOLT11Village OP 23 Jan 2023 \ parent \ on: We've changed our mind about Custodial Wallets bitcoin
Regarding the on-chain / off-chain part, you're absolutely correct (thanks for the clarification). Agreed about btc and sats just being about units of measurement and you could even collect 21 btc together and call it a 'drop', which would mean there will only ever be '1M drops' created. So, the point was related more to the on/off-chain part and the integration. You still need to swap one for the other, right? On these clients that let you change how the balance is displayed to sats/btc, they would still be either on-chain or off-chain, not both, is that right? Meaning even if the client supports both, one balance will either be an on-chain balance or an off-chain one. Will keep it simple and use on-chain sats/off-chain sats in the future.
The LNPoS looks really cool. This is definitely a candidate for testing and will try to raise some funds to order the hardware.
CoinOS and boltz both look very interesting, 0.1% fee with an account vs 0.5% fee without one. Looks really simple, so thanks for those suggestions.
For your last question about the "daily shopper", let me explain the use case and hopefully the flow will make more sense. So, in a village, your average user previously used 100% cash for their transactions, which is now 20% cash and 80% mobile money. What mobile money allows them to do, is receive funds from their relatives who have moved out of the village and live in the city. They can then go and spend these funds locally in the village, because every market stall accepts mobile money. So, they are not necessarily earning anything, but mainly receiving help. In this case, they will not be acquiring sats with fiat. They will be receiving sats directly in their wallet from the breadwinner. Secondly, they will not be converting it to fiat. They will be spending it in the local shops or market stalls. The only people that will be converting to fiat would be the ones that need to trade with larger suppliers who are not integrated into the small local economy. So, there will be a small number of users that can get 70% of their needs met with transactions on the lightning network. So there is a flow of funds that go in to the local economy (both from cities in the same country, but also from relatives that live abroad). Then there is a flow of funds out of the local economy. All these other solutions will be used by those that also have to trade with both people and businesses / government institutions outside of the network.
Thanks again for the list of all the non-KYC instant exchanges. Will take a while to go though all of them.
They will be receiving sats directly in their wallet from the breadwinner.
I see. A remittance, just not a cross-border remittance. And where mobile money is available (and ubiquitous, which is not assured yet even where mobile money is available), the sender already has funds on their mobile money account, or can deposit cash at a mobile money agent location.
About the only edge bitcoin would have over that is the fees for the sender to transfer mobile money and the fee for the recipient to withdraw cash (when not spending using mobile money instead, in which case it's another fee for a transfer, unless it is for a merchant payment where the merchant pays).
So the kind of brings me back to my earlier question. Why would the breadwinner (remittance sender) buy bitcoin for this rather than just use mobile money? If the breadwinner were earning in bitcoin, then there's an obvious reason -- when you earn in bitcoin, you tend to want to spend (and send) in bitcoin. But there's still little reason for this breadwinner to go through the friction of acquiring bitcoin in order for it to be used for a payment essentially immediately thereafter, at least not when mobile money is available (and ubiquitous). That doesn't mean some bitcoin enthusiasts won't do it to try and help bitcoin adoption or whatever, but that's not enough to drive a circular economy into being.
Not everyone has mobile money though so there's places where this approach has a greater likelihood of success than others. And not every merchant (e.g., hawker, informal market participant) will accept mobile money -- cash is king (and maintains financial privacy), so that is one use case where bitcoin is a better alternative than the remittance recipient having to convert the funds received into cash before shopping.
One thing that is not uncommon in Kenya is these digital lending apps. So I could see the breadwinner borrowing in bitcoin, sending that bitcoin for the remittance, and then later needing to acquire bitcoin to repay the loan (plus interest and fee). In Kenya there was so much of this occurring and many unscrupulous players that they cracked down by causing Google and Apple to remove each app until they've been certified by the gov't agency overseeing that. I don't think a bitcoin lender would get approved, but who knows. Just thought I would share that though because that's one on-ramp into a bitcoin circular economy that doesn't seem to get discussed much, but probably could get considered further.
There's another couple of approaches to this as well. "Trusted Agent Network" is doing this with their BMT shitcoin -- essentially creating a network of agents similar to a mobile money agent network. Beyond their announcement several years ago partnering with Akon (promiting his Akoin shitcoin), I haven't hear anything about them since. I have no idea if the users can do this free of identity verification/KYC.
https://my.tanagent.com/nigeria
And similar to that is FonBnk, which lets a person top up airtime on their phone, then use that airtime as payment method to buy FonBnk's MIN 'stablecoin", and from there exchanged for a USD stablecoin. Once again, this is total shitcoinery, but I share it simply to explain other methods of on-ramp / off-ramp friction that have been attempted. FonBnk does require identity verification/KYC though.
Maybe your use case is a use case for a Lightning ATM?
https://twitter.com/thelightningatm
I don't know how that could work with paper currency, but again -- just sharing an approach for an on-ramp that can be free of identity verification/KYC.
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Lightning ATM
Nice solution, but needs hard physical cash. If someone could build one that is digital and coverts layer 2 sats to mobile money that would be far better for this environment.
announcement several years ago partnering with Akon
Haha, yeah whatever happened to Akoin City? That thing just disappeared into thin air, much like most other tokens do. He should have just launched it with bitcoin, with all that investment probably would have got more traction. Haven't heard about "Trusted Agent Network", but it looks like a closed solution.
use that airtime as payment method to buy FonBnk's MIN 'stablecoin", and from there exchanged for a USD stablecoin this is total shitcoinery, but I share it simply to explain other methods of on-ramp / off-ramp friction that have been attempted
Yup, understood. It's worth looking at what they're doing with getting in and out of fiat, although the P2P bitcoin trading platforms might be best option we've got. Since transfers are done with Mobile Money which also requires kyc, this will probably be OK for the user that has already gone through that process when they got their sim card. There will be lower amount users that can spend their sats to 0 until they get more (without kyc) and higher amount users on the edge of the circle that need to convert to fiat every now and then, probably travel frequently to cities and have the necessary paper work.
One thing that is not uncommon in Kenya is these digital lending apps
Interesting use case. Did a quick search and read "CBK announces that only 10 digital loan companies have been licensed". Does this mean they are still operational? What is the CBK's current stance on bitcoin? Have they taken a position for/against or are they neutral?
Why would the breadwinner (remittance sender) buy bitcoin for this rather than just use mobile money?
Great question. This means that it is more likely to succeed internationally than within a specific region, apart from those cases where there is friction. There are a few cases locally, for example, one is when they are dealing with larger amounts. There is a lot of fraud on Mobile Money, because people that work for the mobile network operators see the messages being transmitted and the mobile numbers and get paid to share this information. The privacy offered by Lightning is a great use case to bypass that fiat system here. Essentially mobile money is just a fiat system, but the banks are being replaced by MNOs.
First question is how does bitcoin get in to the ecosystem in the first place?
a) Earn (very rare)
b) Buy (most of cases, but mainly done by traders for a profit or bitcoiners holding for the long-term)
c) Donations (quite rare using bitcoin, but there is an existing $30B market in international remittances that is ripe for disruption)
Second question is, once it's in the system, does the recipient (d) keep it in their wallet, (e) spend it, or (f) convert it to fiat?
The only way the recipient does not convert it to fiat is if they can spend it the same way they spend their cash or mobile money. That's why we want to onboard the merchant/informal market participant first. Anyway, it's still early stages so we'll see how it goes and write a new post after the first trial.
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only 10 digital loan companies have been licensed". Does this mean they are still operational?
I don't know whether Google and Apple have yet kicked the "unlicensed" apps off yet. Not sure. But those 10 so far will be permitted to continue operating in Kenya.
What is the CBK's current stance on bitcoin? Have they taken a position for/against or are they neutral?
They have a "circular" / memo from 2015 that prohibits the banks from servicing exchanges, traders, and pretty much any business that does anything related to bitcoin ("virtual currency"). The central bank governor that implemented that is gone in a few months (term limit), so it will depend on who is chosen to replace him and what their position on bitcoin will be. Kenya is heavily in debt so it will not diverge much from what the IMF's wants them to say. But they've been hands-off for the most part with mobile money. P2P traders using mobile money have only gotten in trouble when they were receiving funds for bitcoin where the buyer had fraudulent/stolen funds. Ya, that happens. I think the charges against the sellers that got caught up in that were eventually dismissed.
a) Earn (very rare)
That's really where the problem lies -- globally, for circular economies to form and grow organically.
Anywhoo ... check out this Telegram group (from Galoy), if you aren't already in it.
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