Over the last two decades, as many will know, I have been engaged in working out the ways to get some hundreds of millions of dollars in funds distributed out to some fairly remote and difficult parts of the world such as flood affected Pakistan above, or conflict rife Kosovo or Afghanistan and more recently across thousands of miles of ocean in Micronesia. I have just been made aware of how this might change enormously for the better in the future.
In the past, I have had to carry bags of cash, at times with more than $100,000 through parts of the world where the law didn’t exist. In Kosovo we lost a half million dollars held in our safe to pay contractors, In Afghanistan I had to drive for 8 hours along the 120 km of rough roads from Kabul to Jalalabad with a bag of of $100,000 cash and pray that we would not be ambushed by Taliban or militias along the way. In Kandahar we were paying workers using the Hawala system of cash transfer but it still meant we were picking up large bags of thousands of dollars in cash from the market.
The biggest exercise in terms of logistics was in Pakistan. We had 39,000 families each receiving 3 payments of $100 at a time to help them buy materials so they could build their small one room shelter. That is around 120,000 payments we had to manage across the length of Pakistan. It was a monumental administrative nightmare (we succeeded however) but the process was horrific.
We had set up small groups of 25 families with a single receiver of the funds for each group. They had to travel to the nearest bank and collect the transfer of $2500 and bring it back to the village and distribute it to each family which we then had to record with a thumbprint and a photo. With records in triplicate, we had a mountain of paperwork and the bank fees were blinding.
What I am excited about is a new trial taking place in Pakistan by World Food Program who are distributing cash in the form of Ethereum, a crypotocurrency similar to Bitcoins that has been established by a non profit in Switzerland instead of carting food to families in need. The families get a one time password sent to their mobile phone which they can then go to an accepted vendor who will provide approved goods simply by transferring the Ethereum. The Ethereum doesn’t even transfer to any middleman or bank with inherent fees, the beneficiary doesn’t even get the “coins”. Instead of making hundreds of thousands of payments, the only currency transfer are to a few hundred vendors who supply the goods and where the beneficiaries enter their password. There is no need for the agencies to even exchange the funds into the local currency, the cryptocurrency exchange will do that as required. We lost thousands in exchange rates over the years.
That perhaps simplifies the explanation so digging in a bit deeper and looking to investigate first hand, I recently opened my own account with Coinspot.com.au who have a very simple to understand platform to buy and sell some of the hundreds of variants of cryptocurrencies, Bitcoin being the most well known. The process is fairly simple but does require a strengthened process of verification to prove you are you. Once done, I have been able to stick my toe in and buy some part of bitcoins which I have now done.
What piqued my interest was a colleague who worked with me in Micronesia recently purchased some bitcoin in the middle of October when they were valued at $5700. I understand there is a set number of 21 million bitcoins. One month later they are now exchanging at around $11100 which means he has almost doubled his money in a month, an incredible increase.
There is some doubt about what end value they might have and as new currencies are established, currently around 1000 different ones all told, you can see many of them on the coinspot website, that bitcoin will peak if not fall over time. Understanding that, what I am looking at in particular is the stability that the use by UN will be if they all fall into line, to transfers tens of billions each year and what impact will it have on the cryptocurrencies they use, in this case Ethereum. The same will follow if non profit organisations join as they obviously will. The total market will be anything up to $300 billion globally per year that humanitarian agencies distribute.
It is early days yet and we haven’t had major currencies like the US or the Euro impose restrictions in order to protect the strength of their own currencies, which I also see being part of the future of cryptocurrency.
Anyway, my small account at Coinspot seems to be increasing as I watch it.. 5% this morning. Time will tell. I can only recommend that people take a look at cryptocurrencies, I believe they have gone well past use by kids on computers point in time, who incidentally, some are now multi-millionaires.