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296 sats \ 6 replies \ @KenyaCoin 22 Jan 2023 \ on: We've changed our mind about Custodial Wallets bitcoin
Firstly, sats are BTC. I am thinking by that though you are asking about methods to acquire bitcoin on Lightning network (LN) without having to provide identity/KYC? If so, then yes -- there are fewer options, which are usually more complicated. The options available vary greatly between countries/jurisdictions. In Africa, I can sum it up in one paragraph:
RoboSats app (or using Tor browser to access their site) for P2P trading is not something that would pass the "mom test". But it is available globally -- so it is an option for those with that level of interest. Otherwise, the methods are FastBitcoins (Uganda, and Kenya) and Azte.co (Botswana, Cameroon, Eswatini, Kenya, Lesotho, Namibia, Nigeria and South Africa). Azteco voucher codes are redeemable through Machankura, I believe. Otherwise, they can be redeemed using the Azteco web site by giving it an LN Invoice. Both methods incur a fee that is not insignificant though (e.g., I think in the range of 7% above spot for Azteco).
So that's it ... that's the extent of methods for going from fiat directly to bitcoin on LN, from within Africa, without needing to provide identity/KYC.
There are a couple other exchange methods where LN is supported, but they require identity/KYC: Bitnob (Nigeria, Ghana, Kenya, and I think support for a handful more countries was just added), Landifa (Namibia), and Paxful.
This is a temporary need though. When there's a circular economy and a shop has revenues in bitcoin, that can provide the liquidity needed by a trader locally who could then turn around and sell those bitcoin for cash (including mobile money transfer as a payment method). Or the shop could just sell the bitcoin to others themselves (albeit that might introduce other concerns for them, especially with current climate regarding bitcoin/cryptocurrencies in most African countries). But in Zimbabwe, for example, there are foreign currency exchange traders who also trade bitcoin (informally), and their job is made easier when they can find a local supply of bitcoin from merchants who are paid in bitcoin and others who have a continuous supply (e.g, bitcoin miners).
You may find this list to be of use:
Bitcoin Exchange Methods In Africa
https://kenyacoin.medium.com/bitcoin-exchange-methods-in-africa-39ec3bbb859b
First of all, thanks for all these tips, these are all really great. We'll skip all the kyc ones because they are limited to certain counties. It needs to be something that anyone can use, as long as you have an internet connection. There are also other reasons we're avoiding the kyc, but saving that for another post.
P2P trading is not actually that bad. There was a time when localbitcoins did not require kyc, then suddenly a few years back they changed. LB was pretty simple to use, so we were hoping someone would invent something similar for lightning. Yes, one btc is made up of 100M sats, but its different protocols on different networks, so the integration is not seamless and requires software to swap one for the other. So when discussing usability and how to onboard people its important to make the distinction to avoid confusion so they don't try to send bitcoin to a lightning address.
The reason why P2P "trading" would pass the mom test is because it doesn't have to be trading. Someone could use it just once a week, or whenever they need. There are a bunch of people selling btc and if you can find a trustworthy one, then you start re-using that one. We've already tested this in Africa and it worked quite well (but again, that was btc and we were looking for lightning).
The way we're using it in this context is that, the local villagers would only be using sats, because that solves all of their "daily needs". However, the shop owner would accumulate larger amounts over time and eventually has to go to fiat because they need to stock the shop from larger suppliers. They are more "capable" when it comes to phones, money and currency conversions and this action is only done a few times per month so that makes it doable. Whereas the daily shoppers just need something fast and quick.
Just had a look at your medium post, really awesome, thanks a lot. This is the type of material we've been looking for, great that stacker.news results in this. Your content together with the content provided by @DarthCoin is the combination that will make this successful.
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Yes, one btc is made up of 100M sats, but its different protocols on different networks, so the integration is not seamless and requires software to swap one for the other.
Am I following what you are saying there? If so, that's incorrect.
At the bitcoin (on-chain) protocol level, there is no such thing as a BTC. There are only sats. It is the client that can use a unit of "BTC" to represent 100,000,000 sats. But there are on-chain bitcoin clients that either let you choose which unit (sats, BTC, even some permit "bits").
So it's not "sats" for Lightning and "BTC" for on-chain. It's sats where they call it sats, and it is BTC where they refer to 100,000,000 sats as 1 BTC. And that applies the same whether that is for on-chain or Lightning network.
the shop owner
I haven't used it yet but you might find LNUrlPOS interesting. If you aren't already familiar with it, here's the link:
LNPoS - Free and open-source bitcoin point-of-sale
https://github.com/lnbits/LNPoS
the shop owner would accumulate larger amounts over time and eventually has to go to fiat because they need to stock the shop from larger suppliers.
For remaining free from having to provide identity/KYC, then currently on-chain P2P platforms are where the majority of that type of conversion to fiat occurs. It's trivially easy for a non-technical person though to swap sats on Lighting network for on-chain, using boltz.exchange, or to even use something like Wallet of Satoshi or CoinOS.io even. A small fee occurs. There are various methods that exist -- see the methods with the ⚡ emoji from the following list:
Instant Exchanges / Swap Services which do not require identity verification / KYC
https://github.com/cointastical/KYC-Free-Instant-Exchanges
Whereas the daily shoppers just need something fast and quick.
In that "need something fast and quick", is that "something" meaning some method of acquiring bitcoin? If so, why would a daily shopper want to acquire bitcoin with fiat only to then turn around and spend that bitcoin? Or am I misunderstanding that?
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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.
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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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