Digital Hawala For The Poor

Former Netscape director Bill Barhydt has decided to enter the remittance market using Bitcoin as the underlying technology of his platform Abra. Migrant workers who are employed seasonally will send earnings to their family back home through services the likes of Western Union and MoneyGram. These brokers tend to charge upwards of $15 for a $100 or more cash transfer. Abra believes these fees on remittances can be reduced by using Bitcoin and what they noted as their own version of a hawala network.

Abra’s goal is to cheapen remittance fees by using Bitcoin. The service functions around a mobile app, in which participants may opt in as a “teller”. Users may deposit funds into the system by using a debit or credit card, or by giving cash to a teller which may be located via a map from within the app. The recipient of the funds may withdraw cash from any Abra teller available for business.

It is well accepted Bitcoin is not for the poor, and remittances should be of no exception. Abra wants to be the exception of bringing Bitcoin to the masses, in the familiar way consumers have come to expect, by utilizing some of the principles behind hawala which allows for the exchange of money between two regions without the need of physically moving money. A large degree of trust is involved – Hawala brokers must trust one another to settle the debts created by a transaction at a later time. These are scenarios where the web of trust will significantly minimize risk if used properly.

Abra attempts to construct the hawala framework but with a centralized model despite claiming decentralization and independence of a third party for operation:

There is no bank or other third party involved in managing, storing, remitting or accepting your money.

However this serves as false marketing as all Abra Tellers are essentially certified by Abra, a third party:

Our Tellers are local members of the communities around the world, and are highly trained and committed to serving customers.

Abra background checks all Tellers who sign up, making them a central certifying authority.

Additionally Abra’s Teller network is dependent on the company’s proprietary app having uptime. If Abra goes offline for any reason, there is no way for Tellers and customers to continue their business. This makes Abra Tellers more like MoneyGram agents than hawala brokers, the very system they are trying to disrupt.

A screenshot of the Abra app show that Tellers have map listings, which could make them targets for less than reputable characters, opening them to the same dangers a trap star may face.

Hawala ultimately relies on trust, and while Abra may have a rating system, this aggregate number assigned to a Teller is meaningless without a trust graph. The Web of Trust provides these tools for the user to determine risk when transacting with a peer, which provides a strong foundation upon which a true crypto hawala could operate. However using this powerful financial network specifically for the sole purpose of remittances is a waste. As stated by pete_dushesnki on his blog:

It’s not that hard to imagine a syndicate of well connected Bitcoin players stretching out to the four corners of the globe, creating a blood-bound financial network. What’s harder to imagine is that anyone with Rothschildsesque connections and means would focus their attention on remittances rather than financing the wars and industrial growth of the future.

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