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Bitcoin Nordic: Buy CashU Vouchers with Bitcoins

Op-ed - Bitcoin Nordic: Buy CashU Vouchers with Bitcoins

Bitcoin Nordic’s Lasse Birk Olesen has announced that the company is now offering a way for Bitcoin users to purchase CashU coupons, an online payment mechanism accepted at hundreds of online locations including iTunes, Amazon, Skype and Xbox Live. CashU coupons are offered in denominations of $10, $30, $50, $100 and $300, and are set to the buyer’s email address within 24 hours of purchase.

From the average Bitcoin user’s perspective, the fees are high; Bitcoin Nordic charges a transaction fee of 10 on every purchase. Thus, the service is not likely to be significantly used by anyone with the option of simply paying for iTunes or Amazon products with a credit card; among the North American and European Bitcoin communities, its only users are likely to be those Bitcoin users that have Bitcoin-paying jobs and almost no fiat currency income at all. However, there is one place where the service is likely to be of great value: North Africa and the Middle East. In North Africa and the Middle East, many people do not have credit cards, and a considerable number do not even have bank accounts, and CashU has become an extremely popular alternative. However, that is not because of its low fees; for purchasing CashU vouchers with a credit card, for example, CashU charges 5 in addition to an implicit fee from currency conversion on the part of your bank. Other purchase mechanisms, like Fawry and Ukash, have even higher fees, in some cases up to 9. Thus, compared to these alternatives, Bitcoin Nordic’s fee is only slightly higher, and Olesen intends to lower it over there is enough volume to do so.

But ultimately even a 10 fee does not matter all that much, because the combination of Bitcoin and Bitcoin Nordic’s service provides North African and Middle Eastern residents with a unique service that no other payment system comes close to offering: access to the North American and European online labor markets. Using Bitcoin, writers, graphic designers, developers and translators in North Africa or the Middle East can earn relatively high salaries doing freelance work for various individuals and businesses in the United States, Canada and the EU, and with Bitcoin Nordic’s service they can quickly convert the money into a form that they can immediately spend on their own needs. Normally, under such circumstances PayPal comes to mind, but in this case PayPal proves to be of very limited value; the reason is that PayPal transactions are reversible, whereas CashU transactions are irreversible, preventing CashU from accepting PayPal as a funding option – if it did, fraudulent buyers would purchase CashU units with PayPal, quickly spend them on goods, and then cancel the PayPal transaction. UKash is also irreversible and international, so it is CashU compatible, but it suffers from high fees and obscurity; as mentioned above, conversion fees are over 9, and right now, at least according to Google Trends, Bitcoin appears to be about five times as popular as UKash is.

Situations like these are perfect examples of where Bitcoin can truly shine. Even in environments where banking infrastructure is scant or nonexistent, the economy is often ravaged by political turmoil or war, and financial institutions from Europe or the US see no profit (or too much risk) in participating, as long as someone, somewhere can put up an internet connection everyone is potentially within reach of help. When making one of the three first ever large-scale “massive open online courses” in late 2011, Stanford University professor Sebastian Thrun received the following email from one of his students in Afghanistan:

I spent the last few days under incoming mortar and rocket attacks, then dodging checkpoints under questionable legal status to exfiltrate a war zone to a third world air field until things settled down. I had about an hour of fairly solid internet connectivity to be able to get the assignments done, and still managed a respectable score. This is a typical week here for me.

Despite the cultural barriers, despite the hardship and despite the war, stories like these show the sheer determination and will of the local people to lift themselves out of their predicament – and in this case, the internet allowed a university professor in California to help this man take one step toward perhaps, eventually, actually doing so. Now, imagine this man getting a programming job with bitcoins, and eventually buying his family plane tickets out to Europe. At least one Arabian airline accepts CashU; if Udacity succeeded in inspiring the student to further develop his programming talents to a reasonable level, it would not even be particularly hard.

The above is certainly not meant to promote the unfortunate stereotype that the Middle East and North Africa are in their entirety war-torn hellholes; in reality, most of the countries in the region are fairly mundane and stable places, suffering mainly from lack of infrastructure and development and perhaps a moderate level of political oppression. In those environments, Bitcoin and CashU also play a massive role in providing a form of “banking for the unbanked”. Anyone earning bitcoins can use BitStamp as an ad-hoc bank account, converting out to CashU coupons when needed, and even this setup provides much more financial safety than, for example, holding large quantities of cash. In harsher environments, however, Bitcoin becomes even more necessary, and this fast and easy cashout method has just made using Bitcoin much more practical.