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Kenyan Payments Startup Wins $100,000 from Gates Foundation

The Bill and Melinda Gates Foundation has awarded a hefty prize to Kenyan Startup BitSoko, for their mobile money platform that includes a bitcoin wallet and merchant Point of Sale interface.

On June 8, the Grand Challenges Explorations (GCE) website posted the winners list of their twice-yearly contest for the “most innovative ideas to fight our greatest health challenges.” In it they’ve awarded 52 research teams new GCE grants worth at least $100,000 US each. This year one of those grants was awarded to a project built around Bitcoin.

The GCE competition was chartered and funded by the Bill & Melinda Gates Foundation. Launched in October 2007, the Foundation has awarded more than 1140 Grand Challenge Explorations grants in more than 60 countries. The Foundations website explains that it “has committed $100 million to encourage scientists worldwide to expand the pipeline of ideas to fight our greatest health challenges.”

The bitcoin-using winner was a Kenyan startup named Bitsoko, a mobile wallet that uses bitcoin’s blockchain to both lower the cost of transferring money between two individuals, and to increase access to payment services.

Bitsoko’s approach is to integrate bitcoin into the current mobile money platforms in Africa, starting with the local service providers. The service allows users from any country to send funds, in the form of bitcoin, which will supplied to the recipient as mobile money, an increasingly popular option in African nations.

“The financial structure in Kenya and throughout Africa has changed rapidly since the birth of mobile money by MPesa. We believe that this  will only continue to grow  and tools such as Bitsoko that leverage Blockchain technology to lower transaction costs will be at the forefront of this boom.”
— – Allan Juma, Bitsoko Co-Founder and Lead Developer

To date, Bitsoko is only available in a Beta version in Nairobi, Kenya. With the support of the GCE funds, Bitsoko plans to expand its services to Ghana, Zimbabwe, and Sierra Leone the following year.

It may sound unlikely to many Bitcoiners that the Bill Gates foundation is awarding such a large grant to a Bitcoin startup. Gates is no stranger to Bitcoin, having had an infamous and ongoing relationship with the digital currency. Over the years Gates has alternately praised the technology, and then downplayed it.

On Fox Business news in May 2013, the Microsoft founder remarked that Bitcoin is “a technical tour de force, but that’s an area where governments are gonna maintain a dominant role.” Earlier this year he addressed bitcoin for use moving money to and from developing countries, during an interview with Bloomberg, where he described Bitcoin as “exciting, because it shows how cheap it can be,” going as far as stating it’s “better than currency” for accomplishing that task. Without missing a beat, however, he managed to work in the words “terrorism” and “money laundering” into the same statement.

Some have speculated that Gates doesn’t yet understand bitcoin, but is playing it safe. Perhaps he is making these statements to give himself room to maneuver later. Many others, however, have taken his answers as a careful anti-Bitcoin stance, specifically the way he never fails to mention the most alarmist talking points each time the subject is raised. In the final chapter of Nathaniel Popper’s book, “Digital Gold: The Untold Story of Bitcoin,” it appears that we have been given the answer to which camp is correct.

At the very end of this book, the author describes a meeting between Xapo CEO Wences Casares and Bill Gates, at the exclusive Allen & Co. conference late last year. After Gates dismisses Bitcoin because of its anonymity, Casares quickly responds back, telling him that his programs in developing countries should be using the nearly free transfer that Bitcoin offers rather than ones that charge a fee. “You are spending billions to make poor people poorer,” Casares said to Gates.

Moments later, according to Casares, the conversation ended with Gates replying amicably: “You know what? I told the foundation not to touch Bitcoin and that may have been a great mistake. We are going to call you.”

It would appear that we are seeing the fruits of that conversation, with GCE’s award to Bitsoko. On June 23, Bitsoko CEO Daniel Bloch announced the GCE win on the company blog, and described the service more completely. It is a web app that “is designed around a money transfer wallet and a point of sale service, allowing money to be sent around the world as long as you know their Bitsoko username, phone number, or bitcoin wallet address.”

“One advantage of the Bitsoko app service is that Bitsoko replaces all of your public keys and wallet identifiers with an easy-to-remember four digit numeric passcode. So once inside the app, sending money, paying for goods and access to other services are only a click away.”
— – Bitsoko

On the GSC website, they describe their service as also offering “simplified options for paying household bills and payrolls” and go on to say that they will “raise awareness of their platform to scale up the number of users and merchants, and continue to evaluate the security and capability of the platform.”

The topic Bitsoko won the challenge for was titled "Enable Universal Acceptance of Mobile Money Payments," which the GSC website described as a Financial Services category meant to “create an economic ecosystem that will help lift the poorest out of poverty.” Along with Bitsoko, there were 9 winners altogether for this topic, each receiving $100k for their submissions.

Initial grants of $100,000 are awarded two times a year, and if they can prove viability, successful Phase I projects like Bitsoko will have the opportunity to receive a follow-up Phase II grant of up to $1 million US.

“The GCE initiative invites high-risk, high-reward proposals on a range of topics, and it awards grants in two phases.”
— – Grand Challenges report

Bitsoko will also begin sponsoring a Blockchain Event series soon. This will be six events held monthly at the iHub innovation lab that will focus on Blockchain education, networking, and opportunities for local startups to pitch. Their goal is stated as “to further develop the community on the opportunities presented by the Blockchain and encourage entrepreneurs in Nairobi to innovate the industry.”

One can only speculate what a successful launch for Bitsoko will mean for Bill Gates and future foundation involvement. However, as we highlighted in May, Bitsoko won’t be alone in trying to bring bitcoin’s advantages to Africans.


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