So MNOs don’t really need financial institutions to make it work
Last night GoMo News had the pleasure of attending one of the City of London’s finest eateries courtesy of Chaz [Brooks] & Dave [Birch]. The discussion centred on the future of mobile money – a subject close to the heart of Consult Hyperion’s Dave Birch who will be speaking about it today [March 18th 2014] @ Tomorrow’s Transactions Forum 2014. Dave definitely likes to think outside the box as he suggested that the future of mobile money may not only be unrelated to existing financial/banking models but also unrelated to currencies and transactions. In a nutshell, Mr Birch is a fan of bitcoin and cyrptocurrencies in particular. And he compared bitcoin to the rocks used as currency by the Yap Islanders.
The whole point about the Yap Island rock currency is that the rocks never move.
All that happens is that the Islanders agree that the ownership of specific rocks has been transferred. It works well for them.
Birch reckons that a bitcoin is like a Yap rock because you don’t need to know where the bitcoin is.
All you need to do agree who owns it at a particular point in time.
This whole concept works well for mobile money. There’s no necessity to keep track of every single ownership transference.
You just need know the current owner – say, just once a day.
This cuts out the expense of keeping track of each item of mobile money – which is particularly handy since mobile money is frequently synonymous with micro payments.
The only time a mobile money system needs to interface with currency is when someone has to buy the diesel to sell at the gas station, for example.
But cryptocurrencies are far smarter than mere money. They are entirely programmable. So a bitcoin – for example, could contain all the information about a contract between two parties for which it represents the payment.
This lack of a need for a multitude of currency converters with mobile money helps to explain why the M-Pesa mobile payment system is working so well in Kenya where not only does it carry about 40 per cent of the country’s GDP, it also works with a population where the vast majority are unbanked.
So in a nutshell, Birch was hinting that Mobile Network Operators [MNOs] don’t really need existing financial institutions to offer mobile money.
Plus – given that cyrptocurrencies like bitcoin can come with complete SDKs, the mobile ecosystem is ideally suited to take advantage of the money of the future.