Pelle Braendgaard is the co-founder of Kipochi, a UK-based, globally focused bitcoin wallet service started in March 2013.Kipochi notably integrated with Kenya-based mobile payments provider M-Pesa in July 2013, allowing its users to send and receive bitcoins before converting them to local currency.Braendgaard recently spoke at Inside Bitcoins NYC as part of the a keynote panel called “Bitcoin, Remittances and the Developing World”. The panel included Epiphyte CEO Edan Yago and Let’s Talk Bitcoin! co-host Stephanie Murphy, among others. After the session, CoinDesk spoke to Braendgaard in a candid conversation about the challenges bitcoin faces in the developing world.
CoinDesk: Since Kipochi is mostly focused on developing markets, some readers may be unfamiliar with your service and its mission. Can you start by briefing us a bit on the big-picture vision for the company? Pelle Braendgaard: What we’re trying to do is, first of all, create a wallet that allows you to send and receive bitcoins. I think that most current wallets are just not very easy to use for your average user.We do that by modeling it very much on how mobile money systems work in Africa. There, you can send money with your mobile number, if you send money to someone, a wallet gets created in the background and you can just access it. So, there’s no sign-up. You spoke at length today about the challenges bitcoin faces in the remittance market. Should consumers view Kipochi as a wallet provider or a remittance service? Remittance is really an old-fashioned way of looking at it. You’d go into the Western Union office and send an amount of money to Senora Gonzalez, or whoever, in some country, and she could go to an office down there and pick it up. Yes, it’s electronic, but the end user doesn’t do anything electronic. They deal person-to-person.So, that model doesn’t really work with bitcoin. It could work with bitcoin as a back-end, but bitcoin itself doesn’t have a way of providing an identifiable person behind it, so you need to send money to a bitcoin address somehow.[With] that model, unless it’s just Western Union and they change from using whatever electronic system they use now to use bitcoin as a back-end, things may be a little cheaper, but the savings is not really big.I see remittances being more like mobile money, where you load money onto the phone and send it to someone, who can then go and cash that money out. Given that the international market is so large, do you view Kipochi as a company that has competitors in the bitcoin wallet or remittance space? Our primary competitors are existing remittance systems.I mean, you could say that other bitcoin wallets like Blockchain are our competitors, but they’re really only our competitors in the established technical user space. People will argue that non-technical users can use bitcoin and download an Android wallet, but most of them are really, really complicated.Your average user starts getting scared if he sees all kinds of crazy code, which is what a bitcoin address is, it’s just a bunch of letters and numbers and it freaks people out.Maybe a phone number used to freak people out, but at least there was a period where you’d call your operator and say ‘I’d like to call Mr Smith in number 12′, they would do that. So, there was this period where people got used to the numbers.I think it’s actually the biggest stumbling block in the bitcoin community. When you think of remittance providers, you think of companies that need licensing to operate in different countries. Do bitcoin wallets need licensing if they’re used for international money sending? No jurisdiction so far has not come out with any rules regarding wallets. The exchange is what you have to go in and license. The exchange is the equivalent of the Western Union office. Here in the US, at Coinbase, we can get money in and out using our bank accounts.Developing countries and immigrants, they would prefer to go into an agent of some sort and do it in person. We’re working with banks and operators to make an easy way for people to exchange bitcoin for Kenyan shilling in their bank account. It’ll take time before that deal is confirmed, but we’re working with them.In the meantime, LocalBitcoins and similar kinds of services are where people are going to start using these systems. If you look at M-Pesa, you could go to a local agent and someone you trust, so they were able to grow quickly.It will be very easy for those businesses to offer bitcoin services, so I see a lot of new business coming from there. How does Kipochi plan to adapt its wallet offering to serve a remittance function?The wallet doesn’t handle the translation into the local currency [...] We’ll be announcing a South African exchange soon – it will be the first one where you can move money between your Kipochi wallet and the exchange.So, we’re looking at it in a way where we are helping exchanges. Whether those exchanges are online or not, it’s all the same for us, we provide an easy way for them to get money in and out of wallets so they can build their own business. Given that you’re casting such a wide net by focusing on the developing world, how differently are you approaching different markets? Our base wallet is going to be the same, but each exchange will be determined by the regulatory culture of each country.For example, in Kenya, people are a lot more used to dealing with mobile money, so I see Kenya being small agents first, then fairly quickly banks will offer a service where you can get money in and out of your wallet.We’re already talking with banks to do that down there. So, there will be a button where – I won’t mention the banks that we’re working with – but you’ll be able to move money in and out of your bank account. Let’s talk about Kenya. Its consumers are the most experienced with digital money, and therefore it would seem, most likely to understand your solution. Are you worried about not being able to replace solutions like M-Pesa for this reason? [Bitcoin]‘s cheaper, it’s international. The international part is the important part. For people sending money in Kenya, there’s no way we can compete with M-Pesa within the next year or so, probably in the longer-term, yes.But, there are a lot of problems with M-Pesa. They are very, very happy with themselves and trying to cut competitors out as much as possible. One of the pain points that comes up when talking about international markets is that those who might benefit the most from solutions like bitcoin might not have the technical knowledge to understand them or be worried about its volatility. How big is this issue?Initially it will be an issue, and for mass adoption it will need to be solved. But, there are enough people that can use the technology now. It won’t reach the grandmas just yet, until that volatility issue is solved.Education is a big issue. Most of our users are pretty much young well-educated tech-savvy guys in their twenties. I don’t have definite numbers on that, but that’s everyone I talk to.This interview was edited for clarity.Smartphone user image via Shutterstock. Pelle Braendgaard image via KipochiAfricaInside BitcoinskenyaKipochiremittanceSouth Africa
CoinDesk: Since Kipochi is mostly focused on developing markets, some readers may be unfamiliar with your service and its mission. Can you start by briefing us a bit on the big-picture vision for the company? Pelle Braendgaard: What we’re trying to do is, first of all, create a wallet that allows you to send and receive bitcoins. I think that most current wallets are just not very easy to use for your average user.We do that by modeling it very much on how mobile money systems work in Africa. There, you can send money with your mobile number, if you send money to someone, a wallet gets created in the background and you can just access it. So, there’s no sign-up. You spoke at length today about the challenges bitcoin faces in the remittance market. Should consumers view Kipochi as a wallet provider or a remittance service? Remittance is really an old-fashioned way of looking at it. You’d go into the Western Union office and send an amount of money to Senora Gonzalez, or whoever, in some country, and she could go to an office down there and pick it up. Yes, it’s electronic, but the end user doesn’t do anything electronic. They deal person-to-person.So, that model doesn’t really work with bitcoin. It could work with bitcoin as a back-end, but bitcoin itself doesn’t have a way of providing an identifiable person behind it, so you need to send money to a bitcoin address somehow.[With] that model, unless it’s just Western Union and they change from using whatever electronic system they use now to use bitcoin as a back-end, things may be a little cheaper, but the savings is not really big.I see remittances being more like mobile money, where you load money onto the phone and send it to someone, who can then go and cash that money out. Given that the international market is so large, do you view Kipochi as a company that has competitors in the bitcoin wallet or remittance space? Our primary competitors are existing remittance systems.I mean, you could say that other bitcoin wallets like Blockchain are our competitors, but they’re really only our competitors in the established technical user space. People will argue that non-technical users can use bitcoin and download an Android wallet, but most of them are really, really complicated.Your average user starts getting scared if he sees all kinds of crazy code, which is what a bitcoin address is, it’s just a bunch of letters and numbers and it freaks people out.Maybe a phone number used to freak people out, but at least there was a period where you’d call your operator and say ‘I’d like to call Mr Smith in number 12′, they would do that. So, there was this period where people got used to the numbers.I think it’s actually the biggest stumbling block in the bitcoin community. When you think of remittance providers, you think of companies that need licensing to operate in different countries. Do bitcoin wallets need licensing if they’re used for international money sending? No jurisdiction so far has not come out with any rules regarding wallets. The exchange is what you have to go in and license. The exchange is the equivalent of the Western Union office. Here in the US, at Coinbase, we can get money in and out using our bank accounts.Developing countries and immigrants, they would prefer to go into an agent of some sort and do it in person. We’re working with banks and operators to make an easy way for people to exchange bitcoin for Kenyan shilling in their bank account. It’ll take time before that deal is confirmed, but we’re working with them.In the meantime, LocalBitcoins and similar kinds of services are where people are going to start using these systems. If you look at M-Pesa, you could go to a local agent and someone you trust, so they were able to grow quickly.It will be very easy for those businesses to offer bitcoin services, so I see a lot of new business coming from there. How does Kipochi plan to adapt its wallet offering to serve a remittance function?The wallet doesn’t handle the translation into the local currency [...] We’ll be announcing a South African exchange soon – it will be the first one where you can move money between your Kipochi wallet and the exchange.So, we’re looking at it in a way where we are helping exchanges. Whether those exchanges are online or not, it’s all the same for us, we provide an easy way for them to get money in and out of wallets so they can build their own business. Given that you’re casting such a wide net by focusing on the developing world, how differently are you approaching different markets? Our base wallet is going to be the same, but each exchange will be determined by the regulatory culture of each country.For example, in Kenya, people are a lot more used to dealing with mobile money, so I see Kenya being small agents first, then fairly quickly banks will offer a service where you can get money in and out of your wallet.We’re already talking with banks to do that down there. So, there will be a button where – I won’t mention the banks that we’re working with – but you’ll be able to move money in and out of your bank account. Let’s talk about Kenya. Its consumers are the most experienced with digital money, and therefore it would seem, most likely to understand your solution. Are you worried about not being able to replace solutions like M-Pesa for this reason? [Bitcoin]‘s cheaper, it’s international. The international part is the important part. For people sending money in Kenya, there’s no way we can compete with M-Pesa within the next year or so, probably in the longer-term, yes.But, there are a lot of problems with M-Pesa. They are very, very happy with themselves and trying to cut competitors out as much as possible. One of the pain points that comes up when talking about international markets is that those who might benefit the most from solutions like bitcoin might not have the technical knowledge to understand them or be worried about its volatility. How big is this issue?Initially it will be an issue, and for mass adoption it will need to be solved. But, there are enough people that can use the technology now. It won’t reach the grandmas just yet, until that volatility issue is solved.Education is a big issue. Most of our users are pretty much young well-educated tech-savvy guys in their twenties. I don’t have definite numbers on that, but that’s everyone I talk to.This interview was edited for clarity.Smartphone user image via Shutterstock. Pelle Braendgaard image via KipochiAfricaInside BitcoinskenyaKipochiremittanceSouth AfricaOriginal author: Pete Rizzo