Bitcoin Foundation Q1 2014 Proposal

Bitcoins for Development: Cambodia

 Overview:

We propose to introduce and promote the use of Bitcoins in Cambodia as a tool for development. Cambodia is a Least Developed Country ranked 138th in the Human Development Index (HDI) according to the United Nations. It is the 15th most corrupt country in the world and only 3.7% of the population have a formal bank account.  Bitcoins allow nearly any one with an internet connection access to e-commerce and low cost money transfers. Bitcoin’s public ledger solves the corruption and bribery problem that plagues Cambodia’s businesses and foreign aid organizations. Spreading the use of Bitcoin in a developing nation further standardizes it as a global currency and its spread to different areas of the world protects the long term legitimacy of that currency.  If Bitcoins can effectively help Cambodia’s poor and unbanked, then the project model along with crypto currencies in general will become a legitimate tool in helping the developing world solve many of its most common problems.

Bitcoins will be brought to Cambodia through local awareness, knowledge, and usage. First we promote Bitcoin awareness through sports by sponsoring local fighters because Kun Khmer (Cambodian kickboxing) is a national sport with a long traditional and massive following. Furthermore, Cambodians have recently embraced the sport of Mixed Martial Arts (MMA) and even started competing on the international stage of MMA. Bitcoins can be used to buy training equipment, nutritional supplements, and Bitcoin branded clothing for these local heroes who, even with experience in hundreds of fights, can only hope to earn a few hundred dollars per fight if they compete locally in Cambodia.

 The second step is to create knowledge of Bitcoins in the country.  This can be done by creating informational websites which will be funded and maintained with Bitcoin. These websites will feature articles, videos, and infographics in both English and Khmer (Cambodian). Local offices and bitcoin “representatives” can also be used to spread the word on Bitcoin to Cambodians by explaining the benefits and helping sign them up for wallets as well as educate local vendors on how to accept the new currency. These representatives can also talk to local non-governmental organizations (NGOs) and other aid organizations and explain to them the benefits of how Bitcoins can be the most effective way of getting donation money into the right hands.

 To promote usage, at least two Bitcoin ATMs need to be set up in Phnom Penh so that local people have an easy way of accessing and purchasing Bitcoins. Because Cambodia is not set up for accepting Bitcoins yet, we would use the grant money to buy from foreign sources that accept Bitcoins and have goods shipped to Cambodia. This would provide an extra incentive for business in the region and in Cambodia to accept Bitcoins. An indirect effect would be foreign aid organizations who are curious and interested about Bitcoins coming to our project to learn more and eventually adopt Bitcoin as a platform for donations and a way to track funding.

This is an opportunity to put Bitcoins on a truly global stage, not just for use in rich, developed countries, but to make an impact everywhere. This is also an opportunity to display the power of the Bitcoin community in creating positive change in the world. Cambodia is a test. It is an experiment to see if Bitcoin can fulfill its promise that many believe it can fulfill. If it works here, then we can repeat it in other regions where traditional financial systems have failed to make life better for the people.

  Needs assessment: Objectively address specific situation, opportunity, problem, issue, or need your proposal addresses.

 Why Cambodia?

 Cambodia presents an exciting opportunity for Bitcoin because the population is young, increasingly connected, and hungry for change. The country has the unique advantage of having a very young population with more than 50% of the population under the age of 25. This is due mainly to the Khmer Rouge genocide that devastated the country from 1975 to 1979 and killed nearly 2 million people. Though infrastructure is still lacking in many areas, the use of internet in Cambodia has risen rapidly in recent years and will continue to do so to meet the demands of the youth.

 One of the problems in Cambodia is underdeveloped internet economy. E-commerce is still very limited even in the capital of Phnom Penh where wifi can be found almost anywhere. Paypal does not support Cambodian bank accounts so locals have had to resort to creating fake accounts or dummy accounts based in other countries like Thailand or pay high bank transfer fees. A recent solution has been the development of WINGS, which is a service to “transfer, deposit and withdraw money between each other and with anyone in Cambodia, via any mobile phone, at low cost.”  WINGS has been gaining popularity and demonstrates the openness of Cambodians to adopt new methods of payment. In regards to sending money across borders, Cambodians outside of the country sent $256 million back home last year, but were charged on average 5.59 percent for these transactions. These are very high transaction costs for a country that averages an income of less than $900 per year. As a result of limited financial institutions and high fees many Cambodians resort to using informal or illegal networks in order to send money back home to their relatives.

 The most obvious benefit of Bitcoin is that it provides a global payment method without high transaction fees or restrictions on who can use the system, but the other aspect of Bitcoin that applies specifically to Cambodia is the public ledger. The country has an extremely high corruption rate ranking at the bottom of the 2013 Corruption Perceptions Index at 160 out of 175. That means it is the 15th most corrupt country in the world and a large percentage of the billions of dollars of foreign aid and NGO money that pour into the country goes into dirty pockets.  The public ledger of Bitcoin, the blockchain, solves this problem by tracking every single transaction so each milliBit spent can be viewed by the public. The blockchain injects accountability into the foreign aid system in Cambodia which has been criticized as largely wasteful and ineffective.  Just like existing payment methods and financial institutions were not made for the internet, governments were not designed to help in aiding the development of foreign countries. Politics interrupt the ability to help. Allowing anyone to donate and track spending creates a system of transparent and decentralized aid.

 The people in Cambodia are ready for change. In January of this year, five garment workers were shot and killed by military police for participating in strike to increase their wages to $160 per month. In the July 2013 election, which was marred by mass voter fraud, the ruling party controlling all the media, bribing supporters and intimidating the opposition, the opposition party managed to win 55 out of 123 seats and 44% of the vote. This not only shocked the nation but spurred mass protests around the country calling for a fair election until January when the government resorted to using violence against the protesters and banned public assembly. The government of Cambodia, which has been ruled by the same party and Prime Minister for almost 30 years is being seriously challenged for the first time in decades.  The people of Cambodia after so many years of hardship can truly benefit from the potential for change that Bitcoin promises.

Goals/objectives: Provide a succinct description of the proposed project outcome and accomplishments, including your overall goal(s) and specific objectives or ways in which you will meet the goal(s).

Our overall goal is to promote the  use of Bitcoin in Cambodia, which is currently nonexistent.  In order to achieve this goal we propose a 3 step process: 1. awareness, 2. education, and 3. usage. I propose a 1 year program to see how far the Bitcoin community can go in truly injecting Bitcoins into a developing country like Cambodia. After the project is over, we hope that the average Cambodian will be aware of what Bitcoins are and have some basic understanding. We also hope that some Cambodians and NGOs in Cambodia will start using Bitcoins for their own projects.

Awareness

We will promote awareness by having Bitcoins sponsor local fighters who are very public figures in Cambodia and are hometown heroes to many. We want Bitcoins to be seen as truly supporting the local people instead of another outside charity. Once people in the country know what Bitcoins are and their curiosity is peaked, we must provide a way to educate them on Bitcoins.

 Education

Bitcoins have no presence in Cambodia, which means that it also has a clean slate. We want to forge a solid image of Bitcoin of a new technology which supports locals and provides solutions to long term problems.  Our goal with education is to give anyone who is curious about Bitcoins all the knowledge they need to get involved, learn more, and tell others.

 Usage

Our final goal is to have people, organizations, and businesses use Bitcoins in Cambodia. My long term hope is that Cambodia will be a successful experiment of how Bitcoins can positively affect a developing nation. If done well the model can be repeated and adapted all over the world.

Methodology: Describe the process to be used to achieve the outcome and accomplishments, the impact of your proposed activities, how they will benefit the community and who will carry out the activities.  Provide a time frame for your project and long-term strategies for ongoing maintenance of the project.

 Awareness

Mixed Martial Arts (MMA) is the fastest growing sport in the world and Cambodia has recently adopted it, training fighters and organizing competitions for MMA.  This new sport is a combination of striking techniques such as Western Boxing and Khmer boxing as well as grappling techniques such as Jiu-Jitsu and wrestling. Khmer Boxing or Kun Khmer is a national sport in Cambodia and one that many young fighters start training and competing in from a very young age. However because of low fight purses many boxers must fight up to every week and even champions have very little money for proper nutrition and training compared to their counterparts around the world.

 We propose that sponsored fighters will come from Afighter Gym in which Ki Chong Tran is a co-owner. Afigther trains and manages Cambodia’s top Kun Khmer and Mixed Martial Arts fighters and brings them to the international competitions such as One FC, the largest MMA promotion in Asia. The six Cambodian fighters under OneFC contract that fight for Afighter gym will be the first ones “powered by Bitcoin.” Bitcoin donations would be used to buy Bitcoin branded gear and clothing for fighters to wear during their fights. This clothing and advertising material will have references to our educational website, a Bitcoin logo, and a personal QR code for each fighter. Fans who are curious will want to learn more, get involved, and hopefully tell their friends.

 Education

We will create a webpage for our project in which people can learn more about Bitcoins in Cambodia. This will have information on what we are trying to do as well as how to use Bitcoins. The website will feature original content including videos, infographics, and articles in both English and Khmer (Cambodian). Bitcoin information will be made easily digestible for everyone. The website will allow people outside Cambodia, but in the Bitcoin community to get involved with the project remotely. The website will allow people in Cambodia a way to get involved and learn more. The website will serve as a gateway for fans of fighters, allowing a fun way in which fans can interact and donate Bitcoins to their favorite fighters and learn more about them at the same time.

 Usage

We can gauge the effectiveness of our Bitcoin awareness campaign in two ways. The first way is to see how much money is donated to the sponsored fighters QR codes. This way we would know that the campaign is actually working and people are using Bitcoins. The second way is monitoring traffic to our educational website and social media pages. If we see that we are generating a lot of Cambodian traffic then obviously the awareness campaign is having a positive impact. The website will also have a link to the fighters so fans can see simple and easy steps on how buy Bitcoins and donate to their favorite fighters. Fans can track their donation spending and see that their money was used to buy this supplement or this training equipment, etc.

The model and website will become self sustaining. Fighters get a permanent QR code and address and the more they fight the more their code can be seen by fans. The more donations they receive and the easier it becomes to buy. We would have to set up a system where fighters can easily use their Bitcoins to buy a set list of items for themselves. The website can also have merchandise that fans can buy and sales from the merchandise can fund maintenance for the website.

                The problem with local use is the absence of ways in which people can buy Bitcoins. The best way to remedy this is with ATMs in two locations throughout the capital city. This allows local people access to Bitcoins so they can start participating in the process. Vendors will be the second way to promote usage. Since when we start out there will likely be no vendors accepting Bitcoins in Cambodia, we will have to rely on vendors in the South East Asia region to support our need for supplies. In time we hope the Cambodians will see the benefits of Bitcoins and start accepting them in local businesses.  The third usage effect that we hope will come from the project is aid organizations such as Non Government Organizations (NGOs) who will turn to Bitcoins instead of traditional currency as a means to fund their projects. They will see how the ease of donations, the low transaction fees, and public ledger solve many of the problems that limited NGOs funds in the past. If this Bitcoin donation model works I believe NGOs and aid organizations will start implementing it and Bitcoins will again be further promoted, standardized, and protected around the world.

 Estimated costs/budget: Clearly delineate costs to be met by the Foundation.  (Note: Grants will be awarded in BTC.)

We are asking for a total budget of about $100,000 in Bitcoins.

Awareness

We will sponsor 6 fighters to 10 fighters depending on the budget and cost to create promotional items. Branded clothing, banners, and other advertising should cost less than $10,000. Art and design will also be done by an artist who accepts Bitcoins. We will be purchasing shirts, hats, and shorts for the fighters to wear with a unique QR code for each fighter. Leftover funds will be used to purchase training equipment with Bitcoin branding. We want to have high quality merchandise to display and promote Bitcoin.

 Education

The website development should cost $5000 for a fully functioning e-commerce and educational website. This website will be in both Khmer and English. It will feature original content about what are Bitcoins and how to use them. It will also integrate the fighters into the site allowing fans to track fighter’s spending and purchase merchandise. We will also need people to write up content and maintain the website. This can be done remotely or through freelance projects and I would allocate $10,000 for original content creation.

 Usage

The Bitcoin ATM would be Lamassu which would cost $5000 each and already has one operational in nearby Singapore. Since this is the first year of the project, I would allocate $15,000 to purchase, ship, and maintain two Lamassu Bitcoin ATMs to be placed in the capital of Phnom Penh.  These ATMs would also need to be maintained by two local Bitcoin representatives. Both representatives would have to be fully knowledgeable of Bitcoins and accept Bitcoins as payment. One Bitcoin representative must be fluent in both English and Khmer and their main duty would be to speak to local people and vendors about Bitcoin. The other representative would be responsible for advocating Bitcoin to foreign aid groups. I request $60,000 a year for hiring both representatives.