Digital Money; End of Cash - Silvester Tsuma

in the world we are living right now is that we are actually getting off the cash part of it and going digitally where we now have to use currency that is you can't touch it. In other words, I will say you don't really own it. So, transhumanism is involved in digital money using like AI-powered financial systems. We have biometric payments. This involves using your fingerprints, smart contracts. We have our integration with wearable technology like watches or like uh bands heart bands or things like that that can uh make the transactions more easy and faster. We can say that each one of us uses digital money. No one will deny that. My name is Sylvester for those who do not know me. And luckily to those who know me, and I currently am the chapter president for Nairobi of Kenya. So, since we don't have other places. And the discussion for today it's going to be on digital money which is which will which probably leads to the end of cash. And if you guys hear of the top the topic digital money, the end of cash, you can actually relate to exactly what we are going to discuss about. And what that simply means it's how we are all of us are becoming familiar more with digital money than we are with physical cash. And you can actually count how many times you have had physical cash. And you can uh barely count how many times you have used digital money. And sometimes it gets it it doesn't bother us understanding how is our physical money now becoming more digital. How are these money we have in cash being turned into electronic codes that you can actually transfer from your device to someone else's device. It's something that has uh been on my mind thinking all through before even I had an opportunity to present here. It's something I've been curious about of how is it possible for us to send uh numbers on our phone and someone else receive the numbers and these numbers are actually accepted by everyone. It's something that makes uh cash to be more centralized for each individual to use it. You you will see that each one each person can work with cash and everywhere place they go to in Kenya when they use this money, people will still really accept it and in exchange of goods and services. But if you walked with the something else, let's say a phone and you went with it to any shop, there's those shop that will accept it and others will not accept it because its value is not uh its value is not permanent, but it's always changing and sometimes other people just don't accept it as a form of uh >> [clears throat] >> exchange or rate at which people can trust. And what makes money to be more uh dominant and worldwide you used, it's because it's accepted. So, each one of you understand that if everything is if one thing is accepted by everyone, then you can use that as currency. Earlier on prior to the money, there were things that were used like barter trade was an exchange of a good to a good. But now they had to come up with a model of something that each one each person can accept it to be used for a certain purpose and thus money was created. And money uh is a form of a paper as we know the cash money. But when it started, it was cash. Uh when we mean cash, it's something you can touch as a hard copy or something. Where you can present it to a shop and then they will exchange and give you something else with value. So, in the world we are living right now is that we are actually getting off the cash part of it and going digitally where we now have to use currency that is you can't touch it. In other words, I would say you don't really own it. >> [laughter] >> At least cash you can actually own it. But when it comes to digital money, platforms that own this money are different platforms, but you you kind of just have control over it. But in other words, sometimes you just don't own it because it's on someone else's platform. So, that's a basic overview of what we are going to discuss today and see how this can has helped human beings grow in their capabilities, which is the focus of transhumanism. We can say that each one of us uses digital money. No one will deny that. And what digital money is, it's money that exists electronically and it's used through computers, smartphones, and the internet. So, if I may ask a question to each one of us, we use M-Pesa, we use PayPal, we use uh uh this online brokers that when you're doing trading, Bitcoins, and all of that. Do we really understand how these things function or we just follow because actually other people also trust them? I would like to hear some views of each one of us because we use them every single day. Why do we use them? Is it because we understand how they function or because other people trust them, too? >> So, what I think for me it's cuz it's recognized as legal tender, as you said. But it derives its value probably cuz it's it's backed by something that is intrinsically uh of value or recognizable to to the people. That's a terrible explanation. Yes, legal tender is is the reason why. >> Okay, Scar is talking about it's being recognizable and legal. This will help us know if we really understand what we use or we just use it for the purpose of Eric. Do you just use M-Pesa money because you understand what it is or because it's it's accepted? Uh what what what drives you to use that? >> For me personally, the the main reason why I use it is because it makes things easier. Um it's it complicates stuff. Like let's say for example most of us know, let's say if you use um usually you remember the thing where if you use a matatu [clears throat] they used and you give them 1,000 shillings uh you'd have to be keeping an eye on the conductor the whole ride. So, for me that that is one of the reasons why it's just the ease of it. >> So, something [clears throat] else that I realized especially when researching on this is that in Kenya, I will specifically talk about in Kenya is that most Kenyans do not really understand the what is behind the why behind the digital money. They don't ask themselves a question then what why why does it exist and how does it really function? Is it really important to me or not? Is it something sustainable? Is it something that is going to be there forever? Or uh is it something that's temporarily there? Is there something that I don't know that is behind all these codes? And sometimes you'll be like, "Why can't I just sit down and >> [clears throat] >> uh create and who also creates the codes [snorts] you see on your M-Pesa. Think of every individual person in Kenya, they have M-Pesa balances and balances here and there. How did that end into the How did it end being on the internet? Is it the real cash you have that went there or there's something that happened? But that can be a discussion I will have on a different day on how this money is really created cuz even though we create the real cash which is printed by the Central Bank, then the digital money needs to be created, too. And you might be asking yourself then if someone creates it, then how how how is it >> [clears throat] >> how is it monitored to ensure that there's no inflation that happens in a country just like it happened in Zimbabwe when it comes to printing cash. So, just to give you a preview of it is that the digital money, it's mostly created by banks as the private bank, the private sector bank that you you see. In other words, is that when you go to a bank and borrow money, the bank will automatically create create some money for you and then deposit it in your wallet and then the interest earned on that money is what the bank gets, but the original value of it when you paid back that goes to the Central Bank. So, that makes the banks the private they have the the the capability of creating money. Hopefully there's no questions on that, but it's just a preview of it is that that's how this digital money come to existence is that these codes that have been set and not that that's why you can't create your own app and put money in it and then to be used. There should be compatibility based on that. >> [clears throat] >> So, some of the examples of where we use the this money we have mobile money. That's like in pesos. Each one of you use M-Pesa. I'll say so. Online banking. This includes your bank that have those applications on your phone. We have digital wallets. We talked about PayPal and all those. There's so many. And then we have cryptocurrencies such as Bitcoin. So, all these are places where we we are able to interact with actually this digital money. Interacted with it as many times as as you you can count of on your own a day. So, there's actually few features that help us mostly use the digital money. >> [clears throat] >> Eric talked about fast transaction. That is one of the of the benefits of using digital money. There's no any time you'll have to ask someone for change unless you send more money than required. And then there's convenient of access. You can easily access your money anywhere than when you have cash and you left it home. You can't really access it. But when you have money digital money, you can actually log into your uh your wallet any place you are. And then you can be able to transact. Okay. So, >> [clears throat] >> we we will we will discuss on why is it taking over in the community because this is what we are using in most cases in most places. Everywhere you go. M-Pesa M-Pesa M-Pesa. M-Pesa M-Pesa M-Pesa. So, why do we think that this money this digital money is taking over the community? In Kenya, the first digital money introduction was M-Pesa and it has taken over every place, everywhere. Why do we think digital money it's really growing and blossoming every part of the community? Why do you think so? >> May I think cuz carrying cash is old school now. So now we've transitioned into the digital space and it's now more easier to you know, do transactions, have more access or at least see where your money is really going. You can keep proper track of where it's going, how it's coming in. >> Okay, good. I can see since we have digital money now we can say cash is analog or outdated. Okay, other thoughts, guys? We use this every single day, so we must be able to have reasons why it's becoming more efficient and very mostly used. >> So what's there? I think for me especially for the unbanked, like before the mama mboga on the street, it was a hassle like getting a bank account, but M-Pesa and other decentralized forms of payment have made it easier to be able to you know, have access to banking facilities and services without all the hassle. So it's convenient and it's more accessible, it's democratic. I think people gravitate towards that that kind of system. >> Yeah, I can see like they've already said it totally what I wanted to share. Like, you know, it's portable and the way technology is advancing like we don't expect it to be using the old way to do payments, you know? >> So one of the benefits we have that you guys have talked about is the ability to reach in places where cash might be a difficult thing. And think of the security part of it is that carrying cash is more insecure than carrying digital money. And definitely you don't carry digital money. You just I don't know if you carry it anyway. I don't But the the physical cash we carry there is a uh lower transaction costs. I just don't know, but uh in most cases you realize the the cash money, the transaction cost was low, right? Was it low or high or we forgot? >> Come again. Like the transaction cost for what? >> Transaction cost for cash. Was it low or high compared to the digital uh transaction costs? Imagine sending money from Ushago, like probably in Ukambani to Nairobi. Sending cash and sending the digital money. For me, I never experienced sending cash. So, it should have been expensive because think of it going to uh a delivery or a post parcel uh company and telling them I want to send 10,000 to Ushago. And then they will look at the what the what then 10,000 they will charge you a certain amount because of for se- security and if the money got lost. So, that they can be able to refund to you. And then you send that money digitally, uh it's the cost is low because the the risk uh attached to it is also low. >> [clears throat] >> We have faster payments. Uh This uh every one of us understands how this is is that when you're sending money from here to a different country or different place, it's faster. It's just numbers and it'll be done. Uh it's through seconds or minutes only. And that makes the use of digital money become uh something that can be accepted very fast. So, we we we are interacting with digital money for the purpose of uh the convenience and I'm sure most of us love things that uh have when our our processes are made easy or they are they are simplified. And if we are cost that so much to do those kind of things. So, we have uh the the increased smartphone usage. Actually, most people use devices. And this uh increases the rate at which people would use digital money. But if the devices were not there like uh some years back, then uh you can never send money to someone who doesn't have a digital device. But since most people right now have digital devices, it gets easier for them to interact with digital money. But if you if you don't have a digital device, then interacting with digital money becomes challenge, and you'll be left behind. The [clears throat] e-commerce uh sector, this involves the We talk about buying and selling stuff online and paying them. So, the that sector has grown so much to a point where uh by if there's no digital money, then it's it's becomes hard for transaction purpose transaction purposes. Assuming you bought items on Alibaba, uh a seller who doesn't know you, neither do you know the the buyer or something like that. So, how would you how would they trust you? Or how would the trust work? Is that's where digital money comes in. You can be able to pay uh digitally, and then they can be able to send you the product. Then, we are also looking at the internet connectivity. If there's no internet, then digital money won't flow. But right now in Kenya, we can say uh a number of percentage of people really have access to the internet. And that uh makes it that you even if you have your money digitally, you won't really uh you won't lack access to it because you lack internet. Assuming you have money on online, and then there's no internet, then you will still suffer when you still have the money. Unless unlike when you have cash. So, the government also has become support towards the cashless part of it, the digital money. Because if this government supports it, then the public also will support it. But if the government doesn't support it, then the government will definitely not support it. Uh so, when the government doesn't support it, the public will not support it. And now you can see some individuals who are have learned little knowledge to do with this technology and growth on digital payments, then they will have to fall with what the government says. >> [clears throat] >> We have track enhanced tracking and and security. This will mostly involve people who will trust the platform. That's why the question I asked earlier, why do you use it? Because of its security and tracking how the transaction can be tracked than when you have cash. Recording it down down every time it's not something everyone loves. But when you transact digitally, the records are kept for you. And now it becomes >> [clears throat] >> it becomes easier for you to use it because it's simplified. So, when we look at the digital money and transhumanism, we are trying to connect the two. How is digital money enhancing human capabilities? So, I'll just pose a question to each one of us, how has the digital money enhanced your capabilities? Unless we look let's look at from that angle. How has it made your your life more better? Unless it has made it worse. >> [laughter] >> Um for me, I'll say digital money has made my life more easier because I can send my money and receive it instantly using my phone. >> Instantly, that's your work has been made easy. Okay, Faith Bonareri, has digital money made your life better? >> Uh I'll say for me it's 50/50. I'll explain what happened today. So, I was 15 minutes uh late to the meeting because I was my phone was having trouble doing transactions with the boda boda guy, so um if I had cash, I know that would make it easier. >> Wow. So, sometimes it can be negative or positive depending on the situation. Try to try to send money and it doesn't work. Sometimes the messages will never come back. And sometimes you send two times, okay? Godfrey, what do you think? Has it become more better? >> Yeah, so for me, I'd say it's both 50/50, like the whole of this year, I think the only physical cash I've dealt with is around 250 shillings, and that was yesterday. So, it's easier on the transaction cuz it's just convenient. But then on the transaction cost, I wouldn't be having that when I use physical cash, you know? When you give someone 100 or 1,000, that would be it. But then I transact, there's the fees they cut, and since I've been transacting a lot, my transaction fees have actually gone up. So, I'd say it's 50/50. It has its merits and demerits. >> Assuming your phone died, you'll sleep hungry without uh uh when you have money on your your on your >> [clears throat] >> on your mobile. And think of it if you forgot passwords and encryptions, you'll still suffer. So, there's the positive part of it and there's the negative part of it. But in on the most side is that it's it has made our life more better. Whereby it's making giving us access to things that we could never have access to without with cash. Is that true? Yes, it's true. Here we we looking at the digital money and transhumanism. We as I said earlier, transhumanism is uh how technology it's making a human it's enhancing human capabilities which means we can access things more easily or be able to make our lives more easier. >> [clears throat] >> So transhumanism is involved in digital money using like AI-powered financial systems. We have biometric payments. This involves using your fingerprints, smart contracts. We have integration with wearable technology like watches or like uh bands, heart bands, or things like that that can uh make the transactions more easy and faster. We have there's a potential of brain computer interface in the future in regards to uh the payments whereby you can have to authorize it just using whatever a thought. And that will it's going to make >> [clears throat] >> the financial sector to be more advanced. And the good thing about technology is that it's crossing both sides and when you see any advancements on a given in a given sector, it's always to make uh life more better. But even if it's making life better, there's things that it brings that are negative. So uh now I can invite thoughts on uh the entire section we have talked about. What what are your thoughts in regards to the digital digital currency that we are talking about? Uh assuming every one of us interacts with the >> So my question is, Sylvester, can uh uh digital money be affected by the inflation? >> Yes, that makes sense. Class, that's a question. You guys understand what inflation is. Can digital money be influenced by can can can it can it can there be inflation due to digital currency? Whether you have no knowledge about finances, this is the time you can share out and then that's how we we >> Mhm. >> Inflation, let me just make it inflation is when there is uh it's mostly happens when there's too much money in the economy whereby now purchasing items becomes the money becomes useless. Where you have 100 million, may I have 100 million, you have 100 million, so life becomes boring. So, that's inflation. So, she's asking if the digital money can also cause that. Okay? Matlodi? >> So, with inflation, it's not caused by a specific aspect of like the specific Did I say money in use? It's caused by entire the entire economy in general. So, when inflation happens, it will definitely affect digital currency, whereby transaction costs might become higher and all that. But but that that that doesn't mean that it's the digital currency that caused the inflation. >> So, what you're saying if I understand it correctly, I mean digital currency was meant to be like a hedge against inflation, right? Cuz it's there's only a cap like for instance, if you look at like Bitcoin, right? There's a limit to the number of Bitcoins in circulation, so it's almost like really hard for there to be uh in- inflation of of the magnitude that we've seen in in countries like Zimbabwe and other countries where they had crazy amounts of inflation. But that's just my lame understanding of decentralized currency. >> Okay, so as we talked earlier when in the beginning is that you will only understand you will only have knowledge on how inflation happens when you understand how this money is created. And as I said earlier, the cash money was uh was printed. And if it's printed more, then it brings inflation. We get that, okay? And when it comes to digital money, it's also created somewhere. It's created in a computer where they just put in codes and say 500 million, let's create it. And that money goes into the supply on the digital side of of currency. That That definitely happens if the central bank allowed the if the banks were able to create this more money without moderation, it would definitely cause inflation, that which means will cause prices of things to rise up. And that's why you realize when things go up in prices, it's because the money supply of money is higher. And when it goes the supply is lower, then things their prices goes down. So, I'll say for sister sister sister Screven, okay. Sister Uzi, that yes, digital money can can can They can be inflation based on digital money, depending on if the central bank allows more creation of money than the economy that that is not based on the economy growth. So, that is true. >> Yeah, personally I think I think yeah, digital money is affected by inflation. And that's because it is just a representation of cash. Like for example, if you are if you are employed and you are paid and you are paid using M-Pesa, you draw the same cash. It's just the same amount. So, you get the representation of the cash that you have. And I think it's the same way that your cash will be affected by inflation, it's just the same way your money on M-Pesa will be affected. So, I think it's just a representation of the same thing. It's only made it easier for this and that and all that. >> Yes, thank you for that because that is just a digital representation of the physical money. So, if it's too much then then inflation might occur. >> Oh, yeah, it was me. I just wanted to say you see in that question cuz like there's different types of digital money just you've been discussing. So, there's like the physical the digital form of a country's currency there's the Bitcoins and then there's the stable coins or I think that's what they call yeah, stable coins. So, with Bitcoins they have measures taken to prevent them from experiencing inflation like that just as we had mentioned. With stable coins they inherit the inflation of the currency they track and then with a country's digital money just like us with M-Pesa it'll basically match the level of what the physical currency is going through in terms of inflation. So, combining them in this aspect of inflation is not necessarily like correct cuz you just need to understand the different types of digital currencies and how they're affected. >> Thank you for sharing that. >> Okay, so >> I'll add something. >> Okay. >> So, of late it has been on Twitter but the it's for the current KRA directive. Yeah. So, um by the new KRA directives that they'll be tracking businesses using the the M-Pesa till numbers and all that their digital money that they've started tracking. Uh if you've been on Twitter uh people people are starting opting for going back to to the cash. And if if you've been to Eastleigh they mostly use cash. They they they they don't use the emphasize. Either you withdraw or go with cash. So, do you think uh you might actually go back to to the old ways of using the paper cash? >> Wow, that's a good question. So, if the KRA is coming to digital side of currency, are we going to run back to cash? Okay, guys, uh share your thoughts. >> From my perspective, I usually think like it's pointless people saying that you only use cash, you can't be taxed and all that, but they forget that every money that is printed out in the system has a serial number, and the government knows it exists, and it can track its movement. So, it's just that they've not bothered to do it yet to those East Leigh's traders who think they're getting away with it when the government actually decide decides like Kering this instance, decides to work together with Central Bank and the DCI to track how that money has flown in the economy even in cash, they're able to do it. And in that way, they can still track how much these businesses have been making in terms of profits and all that, and how much they owe Kering and the government in general. >> Okay. That's that's a good thought, because the government can track because it's the one which creates money, then whether you go to cash or go digitally, you'll still be tracked. Okay, other thoughts? You are still invited. Victor, I want to hear your thought on this. Okay, also just to add on that and that just as our sister said is that this money it's created the government is the one which authorizes it. And when it goes back to even the the World Bank where it has to also create and then send it giving bonds and then bonds the government uses it which is kind of data not be paid. But remember all this money it's created under the government's direction, and it's hard for you to run away. If KRA decides, "I want to tax this." Now you are in it because it's the one which created so it knows how much it's in the economy. Okay? Uh hopefully that a little bit answers your question unless you still have a thought to I can see your hand is still raised up. So as we talk about the digital money, there's challenges that are that are that are growing so much in that sector. And each one of us have uh have known of them when it regards to the digital money. Probably have been scammed sometimes. Probably on calls and it becomes easy for someone to steal your money uh on a on a on a phone call. And sometimes when they know your password, they can actually log into your wallet and steal your money as fast as they can. And if you compare that with cash, you'll be like, "Cash will be in the in my home or maybe under the bed or in a drawer. It's probably secure." So when you look at those kind of things, we can see that there's actually challenges that are there when we use a digital currency. Cybersecurity threats. I know most of us have been part have been able to suffer from this. >> [clears throat] >> Where people will probably impersonate themselves and try to uh play around with you so that you can be able to give uh credentials and they can steal your money. We have privacy concerns. This involves uh how safe are your records, your information, your banking information which is used which might be used uh wrongly by when in the hands of those people who have bad intentions. We have the digital exclusion for some population. This is uh some people who who who do not uh who are not literate when it comes to technology, it it might be hard for them to use uh the digital currency because probably they don't have knowledge about it and now it becomes hard. So, it excludes them. So, which means it needs people with expertise. They are dependent on technology and electricity. So, in places where there's no technology, improved technology that can handle digital money and electricity that will power on those technologies systems, it becomes hard for such people to be uh to use the money. >> [clears throat and cough] >> So, these are just a few challenges that uh are there based on using digital currency that actually the biggest we have frauds and all that that is happening scams on the internet all the time. So, I have a food for thought questions. Do you use digital money? If yes, what should be improved in in your sector? So, this is based on you. What do you think should be improved on the use of digital money? I'll invite everyone to share a thought because I'm sure there's something that can noise you so much when you're using this digital money and you want it improved. >> Yes, I actually have the the most annoying thing for me is Okay, so so suppose you send your money you're paying uh for your bus fare, okay? through the matatu. Uh in a mat. And the conductor asks you for proof of payment. When you show him the message, okay? Uh depending on how like if you show him the full message or not, he might see information that is not relevant for him. He might see your private information. So, I think a feature that M-Pesa was floating around was masking your balance and other information that is not relevant. So, for me it the the part of digital sovereignty where they only share what is needed. It is is crucial cuz I think a lot of times our personal information falls in the hands of bad actors and they can use that to exploit us. >> So, you you feel like these things that needs to be masked so that other people cannot see them and they are private >> Yeah. And you know how like in cryptocurrency like in the blockchain um if we had a verification system where it's kind of like crypto like it can be verified by multiple um computers and then stored in the blockchain and it you only release what you need to release. Uh that way you have more control over your your personal information as opposed to where there's just this central authority that decides what information of yours to reveal or not and there's no recourse to uh to justice, you know. Yeah. Cuz I feel it's unjust if someone just shares my information without me asking them like why. >> Okay, so we can probably trust cryptocurrency sometimes more than our local currencies because of the security based on it. And what do you think should be improved? Are there things you think can be improved? >> Maybe something else that I think can be improved is the reducing fees for transfers and also with withdrawals. Sometimes you might uh for example you are sending money and abroad, but the transaction cost is two-way. And then you there is this I'm giving an example whereby maybe there's this bank I was transferring money whereby uh maybe for example I was transferring around 20,000 Kenyan shillings. Then it's the transaction cost it's around 5,000. So, I think that's something that can be improved because you'll find that the transaction cost of that 20,000 and also if you're transacting also 40,000, it's still costing you or transacting 5,000 as well. So, that even if you transact small amount of money still like the transaction cost is two-way. more >> Okay. So, but the mainly things the improvement should be on the transaction cost. But recently like today I just saw I don't even remember its name, but there's this like wallet where they they told you the transaction fee is zero. So, I'm sure that's how those platforms get funds to maintain and pay their staff, which is the transaction fees. But if it's the way you see it, if it's uh the fee is reduced to as minimum as it possible, we can it will be something we can adapt as much. Cuz when you think about giving cash, sometimes you you realize there's places you really don't have to spend. I like today in a bus I was I was paying transport and I I had to pay like 110 shillings and it costed me seven bob. And if I used cash, I would have saved I would have saved seven bob. So when you look at it from that perspective, you realize that and there's sometimes where we lose much that we don't need to depending on how much we actually transacting. Okay. And for me, I think something I want to be improved so much when it comes to digital currency, digital money, is that for me I always feel like the process of sending money is always too long. I know that some might sound a little bit crazy to some of you, but for me I feel like sending money takes me too much of my time. And I always want to relax and I don't want to worry about it. So if there was a better way the the the there's if there's a better way and the those wallets can improve on how I can just send money instantly without uh without having to press buttons buttons and names and that all over that will make my work a little bit more easier. But that will be crazy if I if that happened and I send money to the wrong person, then I suffer. So the longer the process, sometimes you can't remember, oh, I'm not supposed to send this person. So Faith, you're trying to say something, but you're lowering a hand. Say it bona fide. >> Me? Okay. >> Yes. >> Uh So I'll I'll say um security. Security should be stronger, especially um M-Pesa. All we need is just your Safaricom number and just two codes in. That's all you need. So it's easy for people to scam you. If they put like passwords or something else, it will be hard for hackers to like steal your money. >> [laughter] >> So, Faith, you uh you're on Safaricom here. Instead of using the PIN, they should improve it by probably having a password. What if you forget your password? Have to call them, eh? >> [clears throat] >> That might be an option for them to secure it. And I also think the other best option to help people uh be secure with digital money is training. In Kenya, we lack so much when it comes to that. I've never had where people are being trained on how to use digital currency, how to be safe online, and how not to be scammed. So, that's something that can be improved. When people have knowledge, it gets easier. So, that's all I had today and regards to the digital currency and digital money, and hopefully each one of us has been able to grasp a little bit and understanding of what digital money is. Whether you're in business, wherever you always deal with this money, and it's important to understand how it came into existence. How can you be What is How How is it making your life better? And how can it be improved? And uh and hopefully that you guys have been able to be enlightened and you can be think uh dig deeper so that you can understand more on how this digital currency works. But, thank you guys for your time, and that marks the end of my discussion today.