Is undeniable the success of mobile money M-Pesa in Kenya, with reports of over 30% GDP flowing through this system and user base of over half the population. Less clear is why this success has not been replicated in other countries even with smilarities with Kenya. Maybe we just need to accept that not everything can be copy-pasted and look at other alternatives
Me too e-money
The three major Indonesian telco operators Telkomsel, Indosat and XL have their own propietary e-money solution. Additionally, some Indonesian banks like CIMB offer “mobile banking account” to allow payments and transfers using a mobile phone without a formal bank account. This proliferation of e-money solution is making it harder for a “winning” solution to emerge. The Indonesian Telcos have tried to interoperate among each other to revive ther e-money efforts, but it doesn’t seem to be enough.
What if instead of just interoperating, they would take a step further and agree on a single infrastructure ? the challange here, would be in deciding which platform as each will push for their own. The challange is more complicated if they were to also include non-telcos like CIMB or similar mobile banking entities. SWIFT had the advantage that no participant can protest that the protocol favors any specific participants. Distributed Ledger Platforms (DLP) may provide similar neutrality. Everybody would ‘own’ the platform but nodbody individually could control it.
Distributed ledger platforms Menu
Which of the available DLP would better fit this use case? The fact that all participants are known and willing to cooperate makes permissionless ledging systems like Ethereum or Bitcoin less attractive as these inherit costs and delays to allow for anonymous validators which would not apply for this scenario.
From the subset of permissioned platforms we can further divide between single ledgering systems like Ripple and multi-ledger systems like Hyperledger. An advantage that multi-ledger presents is to allow for more flexibility for the participants. Maybe a ledger could be for purely telcos and another one to include banks each managing different types of values e.g airtime, fiat, etc. New entrants might be more incentivized if new ledgers coul be added customized for their priorities.
Would you like a token with your ledger?
Another key difference between a Ripple and HyperLedger based legers is the existance of a native currency. Ripple introduces XRP as a native cryptocurrency, HyperLedger does not require similar native token. This would give an edge to HyperLedger, as XRP introduces complications, such as volatility and regulatory risk, without any major benefits for our specific user case. The justification for XRP is presented as a way to control spamming misbehavior form participants as well as to bridge trust gaps. In a scenario where all participants have agreed to cooperate, with a reputation to protect and misbehaviour punishable by an external legal system, XRP justifications have limited applicability.
Alternatives to HyperLedger
Other DLP sharing similaries with HyperLedger exists, one example is Eris, it can also support multiple ledgers and does not require an external cryptocurrency to operate. The differences and trade offs of these two will be a topic for another post