The problem with the current worldwide financial system is that it doesn’t reach the most impoverished people who live a subsistence day-to-day-to-day life where there is no currency and no real monetary system. In late 2009 I sent many of my clients an article from the September 24, 2009 issue of The Economist titled The Power of Mobile Money. The article discussed how mobile phones had evolved in a few years to become tools of economic empowerment for the world’s poorest people. The “currency” in cell phones are prepaid minutes which are called “Top Ups.” The top ups are retained in the users account which means they will not be consumed by their phone use so that they can be stored away. I have attached a copy of the referenced article for your review. And don’t forget that the article itself was written in September 2009. You should also do a search on M-PESA or its parent Safricom, which will give you more information of how fast this unique financial system using prepaid call minutes has grown between 2009 and today. In addition it will convince you that Internet based currency is a really big innovation that is creating a huge investment opportunity. In the following Star Tribune article it says “In its fourth year of circulation now, the decentralized online-only form of money has evolved from a libertarian-styled geek curiosity to a contender for becoming the first digital currency to go truly mainstream. There are now more than 11 million “coins” created worth more than $1 billion. Lumpy and volatile as it is, the math-based cash is one of the fastest rising alternative currencies in a world filled with them.” In the attached Business Week article it says “A Bitcoin’s not so much a thing as an understanding, a balance in a decentralized general ledger, or ‘account log.’ Bitcoins are created as the side effect of a great deal of meaningless computational work. That is, the computer could be working on protein-folding, or processing images, or doing something else with its time, but instead it’s being used to ‘mine’ Bitcoins – searching for mathematical needles in a networked haystack. Once the needle is found, a ‘block’ of Bitcoins is born. Bitcoins live in a bit of software known as your ‘wallet.’” Later it says Bitcoin is no different than an exchange traded fund that has a mix of non-US currencies as a hedge against the entire global currency system and no exchange is needed, unless you want to convert your Bitcoin into an actual hard currency. What is extremely noteworthy to me is that virtual currencies will ultimately allow entrepreneurs to leverage themselves. For example a person who is a house painter could raise capital on their talent. That will also be the case for those who live in the developed world that have no access to capital. Virtual “cloud based” money is a huge evolution in the world of commerce and is an enlightening moment in history. These types of Internet based innovations are great for LocaLoop because they cannot work unless there is ubiquitous mobile, 4G, high-speed broadband Internet connectivity available all over the world and particularly in the underserved world.

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Paul Crawford is both a venture capitalist and an entrepreneur and has been working with developing business since the late 70's.