That situation is part of the reason for the early success in Africa of mobile-phone payment systems such as Kenya’s M-Pesa, which allows users to send each other money using text messages. Koch believes that mobile payments built around Bitcoin could be even more useful. “It’s interesting to see how creative Africans can be about transferring money,” says Koch. “They really think seriously about a cashless society.”
Open-source technology created by the Bitcoin community could be used to create simple mobile apps for payments accessible to almost any phone with a camera, says Koch. Use of smart phones is now growing rapidly in some African countries, particularly Kenya, as prices for models using Google’s Android software have dropped rapidly. He imagines a design similar to the Bitcoin for Android app, which allows one person to transfer bitcoins to another by using a phone to snap a photo of a 2-D bar code or QR code on the screen of another phone. “People could exchange money when they meet on the street,” says Koch.
The decentralized design of Bitcoin means a payment system that uses the currency would easily span national borders and could avoid system-wide outages like those suffered by M-Pesa in December, which left users unable to do business. “All centralized systems have the same problem,” says Koch. “If you rely on it and you don’t have a way to pay, then you are in trouble.”
Tonny Omwansa, an academic at the University Of Nairobi, Kenya, studies payment systems and recently published a book on M-Pesa. “The low financial inclusion, low penetration of formal financial services, and uptake and penetration of mobile phones make mobile payments very valuable,” he says. However, he notes, users currently run the risk of “dependence on a supplier which is monopolistic.”
Mobile payments built on top of Bitcoin’s decentralized design could avoid that risk. But Omwansa says that although he is familiar with Bitcoin, most in Africa are not. “Hardly anyone I know has heard about it,” he says.