Tor Usage goes UP PirateBay, Iran-Syria and Google-play Orbot

USCyberLabs Stats of the Tor Network Aug-27

USCyberLabs Stats of the Tor Network

gAtO hEaR _UPDATE-

Sudden rise in direct Tor users



On Tuesday 27th, Roger Dingledine drew attention to the huge increase of Tor clients running [14]. It seems that their number has doubled since August 19th according to the count of directly connecting users [15]. According to Roger this is not just a fluke in the metrics data. The extra load on the directory authorities is clearly visible [16], but it does not look that the overall network performance are affected so far [17]. The cause is still unknown, but there are already speculations about the Pirate Browser [18] or the new “anti-piracy” law in Russia which is in force since August, 1st [19]. As Roger pointed out, ?some good solid facts would sure be useful.?

[14] https://lists.torproject.org/pipermail/tor-talk/2013-August/029582.html

[15] https://metrics.torproject.org/users.html?graph=direct-users&start=2013-05-29&end=2013-08-27&country=all&events=off#direct-users

[16] https://metrics.torproject.org/network.html#dirbytes

[17] https://metrics.torproject.org/performance.html

[18] https://lists.torproject.org/pipermail/tor-talk/2013-August/029584.html

[19] https://lists.torproject.org/pipermail/tor-talk/2013-August/029583.html



Ever since the the NSA Prism program came out something else is going on in Tor. People want privacy and they will use anything they can to get it. Tor is one solution that a lot of people know about but there are other factors about the increase.

Piratebay.sx and it’s users are doing a lot more stuff with the new browser – There has not been a sustained increase in search traffic for the Pirate Browser on Google. Tor and “Tor browser” haven’t shown a spike in search, either. Could it be from users in Syria?  Also note that the Google Play Store has been unblocked in Iran, allowing distribution of Orbot/Orweb in that country to phones with the Play Store app installed (partial bootstrapping problem).

Syria had a spike from 1000 to 4000 but that’s a tiny fraction of the recent increase. Iran doubled from 4000 to 8000 which is also only a part of the increase. Is there a page listing each graph by country or overlapping them all?

The Tor Project also pushed out Orbot v12 to Google Play in the last few weeks – 2 separate updates. That would not account for all of the increase, but it could have prodded enough existing users who had not used Orbot in awhile to start the app up again. We have also seen about 75,000 new installs over the last 3 months.

So we have a lot of factors as the Tor network grows larger everyday– gATo oUt

 

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Weaponize the Tor Network:

weaponizing-the-web1-720x2808

Weaponize the Web

prism-01

if you got nothing to hide – you got nothing to worry about

 gAtO wAs – asked the Tor-Network is slow as heck, does not support sending outgoing email and does not support UDP packets of the TCP/IP protocol, so can it be weaponized? Maybe monitoring the Tor-Network like Prism and Nucleon or the Japan based Daedalus Monitoring program at the very least?

Data collection in Tor:

I guess this all depends on your definition of what a weaponize cyber weapon is-///-IP theft- here we have a vast collection of both /IP-(intellectual Property) and /copyright – /hacking /sql-i in Tor// -.- /hacktivism -how about /personal privacy online-collection of all internet transaction and data sharing with Google, Facebook, Microsoft and others— /government censorship of it’s people /Worldwide Internet monitoring-///  Like a room 641a for Tor only traffic.

prism-03

Daedalus Monitoring program

Mix a little more counter-offensive cyber class weapons like Stuxnet, Flame and DuKu – add a bit of misinformation and propaganda to the mix and we have a better question.

Next we have a more military type cyber weaponized solution. Control Drones planes in Tor -another one is dDos, attacks on the electric grid or sabotage satellites. Cyber attacks like power outage, hacking attacks on cell phones and wall street computers and add traffic lights and traffic in the northeast going wacko. Like they say trains, planes and automobiles are all connected to cyberspace from China to Canada… prism-02

Tor can also be used in all the above scenario- Yes big brother/sister it can. So the answer is Yes, but Tor is not the pony network that can do this work. There are other kinds of anonymized networks that can be used, and with your own relays all over the world you can create your own Tor-private network that only you use so it will be faster and side nobody can see it – well Tor is not the only network one to watch for cyber weaponized products – gAtO oUt

 

 

 

Government use of Cyber Weaponized Exploits

gAtO rEaD- The government is buying hackers exploits – not to stop these sophisticated cyber exploits but to use these tools against it’s own people- they are using the tools to infiltrate computer networks worldwide, leaving behind spy programs and cyber-weapons that can disrupt data or damage systems.network

The core problem: Spy tools and cyber-weapons rely on vulnerabilities in existing software programs, and these hacks would be much less useful to the government if the flaws were exposed through public warnings. So the more the government spends on offensive techniques, the greater its interest in making sure that security holes in widely used software remain unrepaired. So your computer is vulnerable and the governments knows it and will not disclose this information, but use it against you to place cookies,RAT’s or other spyware into your computer -maybe- I trust our government don’t you?

If you got nothing to hide, you should not be worried… right????

So our Tax dollars are going to Hackers and cyber criminals that sell these exploits all over the world. As a tax payer I don’t like this part at all. But the worst part is by us taking the lead of cyber offensive cyber tools -example.. Stuxnet – it is a plan book for other countries to do the same. So what we do in cyberspace has become socially acceptable to do in cyberspace and then we bitch about China. I don’t get it – mEoW

Officials have never publicly acknowledged engaging in offensive cyber-warfare, though the one case that has beenmost widely reported – the use of a virus known as Stuxnet to disrupt Iran’s nuclear-research program – was lauded in Washington. Officials confirmed to Reuters previously that the U.S. government drove Stuxnet’s development, and the Pentagon is expanding its offensive capability through the nascent Cyber Command.

Then you have the Prism disclosure and PoW- US Cyber Agents Disrupt Publication of Popular Al Qaeda Magazine – This means that Obama’s cyber military is potentially capable of more targeted attacks, specified at damaging particular pieces of information or infrastructure. I wonder where they got those vulnerabilities? maybe some bad guys—/Nato_cyber_plat

What worries me is as the U.S engages in these attacks our enemies are learning what is acceptable in cyberwar. So we must be careful not to lose the fact that everyone is watching what we do and how we treat cyberspace and others governments will follow, defensive and offensive, they are learning from the best the U.S. Government -gAtO oUt

ref: http://www.reuters.com/article/2013/05/10/us-usa-cyberweapons-specialreport-idUSBRE9490EL20130510

 

http://www.businessinsider.com/us-cyber-agents-disrupt-inspire-magazine-2013-6

 

 

Tor Tells It’s Secrets

gAtO pLaYiNg with words in Tor We just simply counted the number of times a word appeared in our search engine by pages- this is something every search engine does but what it gave us was a picture of what Tor really is. It’s not all crime and ugly but information is number one in Tor. Exactly what it’s supposed to be. Tor was created to share information from the table below we see lot’s of stuff inside Tor.output

Tor word data points: We put this report together to see what our word count occurrence was, in our crawled data so far. The chart below gives an interesting picture of the Tor data points that it generates.

We are finding that these are the best categories to put our websites into. The words by site occurrence speaks volumes to understand trends in Tor.  For example it shows i2p network in Tor 2 notices above drugs in Tor. Because i2p is fast being intwined with Tor to get better anonymity.

  • These are real data point based on 3/27/2013-4/3/2013 – this is a live report from our crawls.
  • As we crawl and add more data our picture will change as to the landscape of Tor. 
  • Bitcoins is the fourth most popular word – currency in the Dark Web is number 1  

Word Num. Occurrences
blog 1014
wiki 985
anonymous 966
bitcoin 837
sex 530
gun 492
market 458
I2P 400
software 372
drugs 365
child 353
pedo 321
hacking 314
weapon 221
politic 209
books 157
exploit 118
anarchism 105
porno 88
baby 87
CP 83
fraud 76
piracy 69

 

  • Bitcoins are above SEX tell us volumes in that bit coins are the normal exchange currency in Tor.
  • Fraud and piracy are the lowest were we would except it to be much higher, People trust more in Tor.

This map does tell us that crime is everywhere in Tor at a more alarming rate than we though.

We are doing the same in the e-mail we found in Tor. In the email table is a place where we can get a better picture of emails in the Tor network. Not all of them go to tormail.org as we thought. As mentioned more i2p and connections with other anonymous networks seems to be a trend, as the growth rate of Tor users increase so is the technical base and more sophisticated users will come on board.

Hope this gives you a better picture of Tor. -gAtO oUt

Government Spying on everyone -Thanks Microsoft

gAtO lEaRnOn 01-01-213 we hear that Microsoft buys Skype and makes changes to allow Police surveillance. Then on 01-07-2013 we hear that a professor at the Warsaw University of Technology, Wojciech Mazurczyk, found a way to insert secret 70 bits of data and add secret information similar to steganography.spy-spy

Lawful Intercept is what it’s called and we just heard punch – counter-punch from the government. I just posted about corporations and governments using offensive cyber weapons to fight crime, but this looks like just plain old spying on citizens like China, Iraq and Syria does. Skype is owned by Microsoft and we know that Word and other products have back doors for them to snoop and governments to use in criminal cases. I guess they do it the proper way and get a real FISA document to monitor us it’s citizens.

mEoW 12-30-2012 our re-elected President Obama signs FISA Warrantless Wiretapping Program. STOP – SAY WHAT. mEoW – Forget about gun control how about the privacy of citizens, are we becoming like China, Iraq and Syria the more I find out about this the crazier it becomes. I hate Skypes but now finding this out NO WAY DUDE-

I did a little digging and I found a document from the Straford hack from the LutzBoat crew and this has been on the play board for a long time. More and more governments that play nice with the America and Microsoft will have to live with the fact that they are spying on us, the people. I voted for Obama but I’m pretty sure any president would want to be able to justify this abuse of power to monitor it’s citizens, what get’s me is we scream and yell when other countries do it but here we are doing to ourselves and nobody is talking about this- Hay press wake up. I have nothing to hide but if you do you have been warned – enjoy your government spying on you behind your back – gAtO oUt

Lab Notes:

IT security continues to be the greatest challenge facing government CIOs worldwide. Most experts agree that governments require stronger partnerships between the public and private sectors for both better protection of government IT systems from intruders and for greater visibility into operators’ network traffic to fight crime. However, government systems and intelligence activities constitute a very sensitive information environment. Governments must proceed with caution when forming technology partnerships for hardening their IT network security. Melissa E. Hathaway, who in February 2009 was named to be the Obama Administration’s top cyber security official, points out how

Lawful Intercept

Challenge

Criminals, predators and hackers now use chats, blogs, webmail and Internet applications such as online gaming and file-sharing sites to hide their communications.

Solution

Qosmos provides law enforcement agencies with a powerful solution to identify a target using multiple virtual IDs and intercept all related IP- based communications. Any trigger, such as a “user login = target” initiates intercept of all IP traffic related to the “target.”

Example of recognized applications and protocols

VoIP Email (POP, SMTP)

Webmail (Gmail, Hotmail, Live Mail, SquirrelMail, Yahoo mail, etc.)

Instant Messaging (Aim, SNM, Skype, Yahoo, Google Talk, QQ, Maktoob, Paltalk, etc.)

Online games (World of Warcraft)

Online classified ads

Audio/Video (H.323, SIP, MGCP, RTP, RTCP, MMSE, RTSP, SHOUTcast, Yahoo Video,

MSN Video, SCCP, etc.)

Web applications (Dailymotion, Google, eBay, Google Earth, HTTP, MySpace, Wikipedia,

YouTube, etc.)

Example of information extracted

Caller, phone number, called party, duration of call

Webmail login, email address, sender, receiver, subject matter, attached documents

Instant messaging sender, receiver, contact lists and status

Forum login, IP address, MAC address, mobile ID (IMSI, IMEI)

Protocols identified even for unidirectional traffic (e.g. email by satellite).

http://www.huffingtonpost.com/2012/12/30/obama-fisa-warrantless-wiretapping_n_2385690.html

http://enterprise-call-recording.tmcnet.com/topics/enterprise-call-recording/articles/321789-sounds-silence-skype-hold-more-than-expected-thanks.htm

http://www.ronpaulforums.com/showthread.php?399961-Microsoft-Buys-Skype-Makes-Changes-to-Allow-Police-Surveillance

Bitcoins are Under Attack

gAtO tHiNk – the monetary system is f%^k and so are we.  My good friend Pierluigi and I have been busy putting together a new bookDigital Virtual Currency and Bitcoins – coming out in a week or so and the picture of the state of all currency is really in bad shape. Virtual currency is not new it is more a transactional system than currency but unlike PayPa, Visa, Mastercard with Bitcoins you can become a miner and create your own coins. check it out- https://blockchain.info/nodes-globe 2002_currency_

I have include the table of content so you can see our approach to understanding what is happening and the war that global bankers ar wagging on this new system of currency. Why are they fighting it so hard because more people are beginning to see that a currency that is not control by global bankers and by the people and for the people is a better solution. Of course they are vilifying Bitcoins but as other systems have tried to get their teeth into this new worldwide currency Bitcoin come out on Top.

We hope that you will gain some knowledge from our newest venture into this mad, mad world of money- as they say “Follow the money” and we did but I can tell you the more I learned the madder I got that we have been tricked into thinking that the global bankers are the good guy. Facts is the world is in debt over 10 times over just on interest alone. The world owns more than we create – THE WORLD not a nation. and if look real hard 1% of the people control 40% of the wealth in this world. It is not a national issue it’s a world issue.

We are just cyber security professional but this has been an eye opener as we see the Monterey Market System as a sham to keep the people of the world in an ever ending debt -gAtO OuT

You can pre- order just send us a message-

Table of Contents

Foreword 

Digital Virtual Currency and Bitcoins

   Digital virtual Currency Steps In: 

1. What is Digital currency: 

Digital Currency:

Shadow Economy

   System D and technology 

   The Cyber Underground 

   Black market payment 

   Perfect Money 

   Liberty Reserve 

   Webmoney 

   Pecunix 

   Voucher-Safe 

Digital Currency -Trust Thru A Consensus 35

Where does Digital Currency get it’s value? 35

   Trust Thru A Consensus 37

Cyber-War Digital -Vs- Global Currency 39

Cyber Death Of The Banking Industry 42

   Those that control the quantity of currency have all the power. 42

   Cyber Fixed Rate Exchange 2012 43

System D- Bitcoin’s Underground Economy 47

Digital Currency and Policy Makers 50

   American Express Gamer Digital Virtual Currency 50

   Facebook Credits 50

   Google Bucks 51

   Moba-coin 51

   Mastercard 51

How a bit coin Transaction Works: 53

   Iran and Bitcoins: 53

2. Who uses Digital Currency 55

Bitcoin -Vs- Evil Global Bankers 55

   Credit Cards 2 BTC-Bitcoin – BTC-Bitcoin 2 Credit Cards 55

Case Study Black Market Silk Road 57

Money Laundering in -The Digital Virtual World- 63

   Games: 63

DC -Digital Currency – Launder CASH to Bitcoins 64

USD (Major banks, 7-11, Walmart, CVS) 64

Bitcoins cannot be traced back to the Owner 65

Happy Satoshi Nakamoto -Bitcoin- Day Nov 1 67

   money $$ with – NO GOVERNMENT  – NO BANKS 67

Underground Financial Networks 69

   Reloadable Debit Cards – Basics 69

Western Union /MoneyGrams Basics 71

   E-currency Basics 73

   Trust Networks Basic 76

   Borrowed Bank Accounts / Underground ATM cards 77

   Mule Networks 78

Global Bankers Fear Bitcoins 79

   European Central Bank report October 2012 report: 81

Secure Bitcoin Trading Online 84

   Introduction: 84

   Credit Cards 2 BTC-Bitcoin – BTC-Bitcoin 2 Credit Cards 84

   Creating a secure identity: 85

   Setting up OpenPGP email 86

   Use Bitcoin-OTC 87

   Using the Web-Of-Trust 87

   Use an escrow 88

3. Digital Currency Financial Stuff 89

Bitcoin and Forex Trading 89

   But really let’s take a look at FNIB – and Bit4X – 90

Bit4X – the  new kid on the block – 90

Digital Currency 92

Top Ten Bitcoin Financial Charts 92

Virtual Currency Schemas 

Virtual Currencies and banking, disaster or opportunity? 98

   Price stability 99

   Risks to financial stability 99

   Risks to payment system stability 100

Bitcoin Still Up 137% YTD 2012 102

   Geek Stuff – API to Bitcoin Block 103

Buying bitcoins 104

   Major Exchanges 104

   Exchanges are listed in alphabetical order. 104

   Fixed Rate Exchanges & Others 118

   Direct / Bulk Buying 123

   Other Financial Services 123

   Physical Bitcoins 124

4. Legality of Digital Currency 125

Bitcoins entities and possible legal responsibilities 125

Law enforcement and financial institutions against bitcoins 127

Legality of Bitcoins-Digital Currency? 130

   Virtual Currency Real or Not 130

2012 timeline of the legality of Bitcoins around the world: 133

5. Governments and Digital Currency 142

Government -Vs- Bitcoin Anonymity 142

Canadian Mintchip And Bitcoins -Whats Up 147

   The MintChip System 148

   Hosted MintChip (Cloud Account) 148

   Transactions-Sender and Receiver 149

   MintChip Value 149

   Sustainability 150

   Architecture 150

   The MintChip – Value Creation 150

   The MintChip – Security Overview 151

6. Business and  Digital Currency 152

Merchant Tools for Digital Virtual Currency 152

   A basic overview of the Payment Gateway follows 153

   List of Features and Advantages 153

   Mt.Gox “Pay Now” Button 154

   Now supporting Magento! 154

Mt.Gox instant Merchant API 155

7. Cyber Crime Digital Currency 156

Cyber Crime Digital Currency 156

Cybercrime and Anonymous Cyber Economy 158

   Impact of digital currency schema on financial ecosystem 158

Digital currency schemas 160

Money laundering 165

Theft of digital currency 170

   Malware, the new generation of digital robbers 174

   Bitcoin Botnet Mining 176

   Deep Web, Botnet and Bitcoin mining … a dangerous mix 183

Counterfeit digital currency and double spending attacks 190

   A race attack 192

   The Finney attack 192

Bitcon and money laundering 194

   Simple scenarios for money laundering 196

How To- Digital Money Laundering 199

   Digital Currency ExchangeExchangers 2010 202

8. Bitcoin and Digital Virtual Currency 204

Get a Bitcoin Wallet and Make FREE-BitCoins Yourself 123 204

   My Mining Machine 205

Bitcoin Miners Pools and how it works – 206

Bitcoin Wallet 210

   Who, What and Where is a Bitcoin Wallet? 210

Bitcoin Qt 211

The beginning of the Bitcoin question 214

   What is the Bitcoin Distribution Network? 214

   Analysis of the model 216

   The model 216

   How does Bitcoin work? 218

Bitcoin  exchange operates as a bank 222

Welcome to the Dot-BIT project 226

Miner: 226

   Current Miners 228

   OZCoin – http://ozco.in 228

   P2Pool 229

How Anonymous is Bitcoin? 231

   What Users Can Do To Increase Anonymity 231

Bitcoin Mining Scam 233

   The Bitcoin Miner Scam 234

   Bitcoin Scam -How does it work? 235

Satoshi Nakamoto, the manhunt 238

   Who developed Bitcoin Virtual Currency Schema? 240

9. Future of Digital Currency 246

Bitcoin and Digital Currency in the New World 246

Dominate The Future With Bitcoin 248

10. Geek Stuff Digital Currency tools and tricks 256

Address Tags 256

   What Are Address Tags? 256

gATO Mining Rig – Information 258

   ATI Radeon HD 4670: 259

Bitcoin Miner for Websites 260

   Quick Start Guide to add the Miner to your website 260

   Explaining the Miner to your visitors 261

   Fees 261

   Requirements 262

   Advanced Usage 263

 

Digital Currency -Why is half the world unbanked?

Why is half the world unbanked? The defining characteristic of the unbanked is less that they have a lower income level than the rest of us but the fact that, lacking stable or formal jobs, they tend to be paid with less predictable regularity and in cash. Whether they are farmers, day laborers, traders or micro-entrepreneurs, nobody is guaranteeing them where their next dollar will come from. And yet they are probably earning some money on a more frequent, perhaps daily, basis when they sell their wares or their labor for cash. Small wages paid with high frequency make for very small payments. Unstable income makes it hard for them to commit to time-based financial products. Banks’ offerings are indeed stacked against them.

 

Three representations of money
Let’s formalize the banking challenge. Making financial services relevant to poor people entails connecting three different clouds, as represented in Figure 1:

 

figure 1 chart

   A physical cloud of hard cash (or, worse, specie currency,) which is the legacy payment system on which most poor people operate today to exchange and store value.
A digital cloud where money is just an accounting record. This constitutes an alternative payment system, and is where financial services ought to reside. Making money digital makes it easier to supervise the integrity of transactions and accounts, to create new financial products and to move money around as a mere debiting and crediting of accounts.
A neural cloud in people’s brain, through which people form their ideas and habits around money in the context of their circumstances, their needs and their aspirations. It is through this cloud –the mind— that people interpret the range of informal and formal financial services proposed to them.

 

The opportunity with mobile phones 
Connecting these clouds is the job of financial institutions. Mobile phones’ digital communications capabilities, combined with their increasingly pervasive presence in people’s pockets, hold significant promise to connect these clouds in novel, cost-effective ways.
Mobile phones allow for a ubiquitous, low-cost deployment strategy. If transactions can be initiated remotely through a secure electronic channel (ensuring the proper authentication of transacting parties and integrity of the data transmitted) and authorized in real time (ensuring that all transactions are pre-funded,) then banking transactions can be safely taken outside of bank branches and into neighborhood stores (which act as cash in/out outlets) or right into customer hands (with mobile banking as a self-service channel.) This particularly helps with the exchange and transfer functions in Figure 1.
Beyond reducing costs, mobile phones also permit customers to interact more directly with their banks, checking balances and initiating transactions from wherever they are. Using mobile phones as the access device offers the customer a level of immediacy, convenience and control that no other channel can provide. The real power of mobile will come when it is seen not only as a mechanism for reducing access costs but also for building new types of banking experiences that begin to approximate how people think about their money – the plan function in Figure 1.

 

Local shops as bridges to cash
In the first instance, in order for poor people to opt to formal financial services, we need to dramatically increase the number of bridges between the cash and the electronic clouds.

 

Figure 2 chart
The bridge at the top of Figure 2 is big and imposing: let’s call it a branch. But it´s way too costly to build in every village and neighborhood. It’s efficient to build in high-traffic locations, but smaller communities on the river will need to travel significant distances to access it. To service these smaller communities more effectively, what we need is a whole hierarchy of smaller bridges that are appropriate in different environments.
The bridge at the bottom is no less safe than the top one given the stream it is trying to cross; it is entirely appropriate given the risks involved. Just don’t build this type of bridge to cross the river at the top. The bridge analogy underscores the principle that improving the economics of serving poor people shouldn’t be done by relaxing safety standards; it should be done by deploying the appropriate infrastructure given the risks involved in each case.
Unlike the bridge at the top, the bottom one is cheap because building it requires materials and skills that are available locally. So we can now afford to build many more of them. How to build the small bridges to cash? Start by using the bricks and mortar of retail shops that exist in every village and neighborhood. They are more convenient, less crowded, and, chances are, more friendly to customers than the bank branches. But is it safe to deposit at these retail outlets? It can be, as long as these shops trade entirely with their own stock of both electronic money and cash, and transactions are properly authorized in real time.
Think of how they might sell rice: they hold a stock of rice, and after a sale, they end up with a little less rice but more cash than before. They make a small margin in between. Making a deposit at the store would be the same thing, except that the commodity the shop stocks and exchanges for cash is electronic money sitting in its bank account. After the transaction, their bank account will have less value but they´ll have more cash in the till. The customer´s situation will be the mirror opposite. The store earns a small commission for the service and it will attract customers into the store.
Risk can be eliminated as long as electronic value can be transferred securely and in real time between the shop and the customer. We can ensure this with a traditional card and point-of-sale infrastructure, but even that is too expensive. Instead, we can use mobile phones which already exist in people´s pockets, as a virtual card and point-of-sale system.
Using stores and phones that already exist, we could increase the number of places where people can deposit and withdraw by 10 or 20 times, relative to the number of bank branches that exist today. Only then will banking begin to be convenient for the majority of people in developing countries.

Bringing personal back into banking
If you don’t have a stable, predictable source of income; if you are not literate or not comfortable with basic mathematics; if there are no computing devices available to you: how then do you budget? A time-tested way for people to budget and discipline themselves is by separating money into distinct categories and savings vehicles (represented in Figure 3, below.) You might have relatives who still do.
Whenever such people have some extra money, they are likely to set some aside for their children’s school fees, and that might be hidden under the mattress. They might also set some aside for the bicycle they want to buy to be able to get to town faster, and that money may fund the monthly contribution to the rotating savings club they run with their neighbors. They might also want to build a cushion to pay for any family medical emergencies, and that goes into keeping more chicken in the backyard.
This kind of separation of funds helps in two distinct ways. First, people are more easily reminded of how much money they have for each purpose.
They can easily check how much more they need for each savings objective. Second, all their savings is accounted for, in the sense that it has a defined purpose. Money under the mattress is not general liquidity, it is money ear-marked for their children’s education. This mental assignation of a purpose to each savings vehicle helps them avoid the temptation to use those funds for other less important purposes.
If this is how they manage their financial lives, it should be no surprise that they find bank accounts unhelpful, even if they are conveniently available. Expecting them to regroup all that value and dump it into a single account goes against the grain of the financial education they have received from their parents and grandparents. If banks want to capture people’s money, first they need to capture electronically how people think about their money. Cracking the savings problem requires incorporating into a formal banking service the kinds of tools and tricks that people use daily to plan their financial lives and build discipline, and that includes the explicit separation of money for different purposes.
In a recent paper, I have shown how this might be done easily by allowing people to send money to themselves at future dates. In many African countries, people are used to sending money to each other (across space) in real time using their mobile phones. If we expand this capability to allow them to transfer money to their future selves (over time,) they will then have a tool for managing not just today’s payments but tomorrow’s as well – a planning tool.

 

Figure 3 chart
The key to linking the mental and digital representations of people’s money is therefore to put financial planning at the center of the provider-client relationship. This helps them understand how they can use new banking products to reinforce the financial mechanisms they have always used. In addition, clients’ financial educations will grow with usage, which in turn opens up new possibilities for client development.
This would require a fundamental shift in the nature of the conversation between banks and their clients. Now it’s fundamentally about the bank’s products: get this account, buy this product, get this loan. But imagine a bank that never uttered the words ‘savings’ or ‘loan,’ only ‘bicycles’ and ‘school fees’ and ‘retirement.’ The account would be pretty much the same for all –simplicity!—but each customer would experience it differently. Each customer would associate a different set of goals and dates with various pots of money, and the bank would have a different understanding of what they need and what their credit risk profile is.
The objective is to endow mobile financial services with as much richness of interpersonal interactions as possible. But it will certainly be impossible to electronically capture the subtlety of informal financial relationships. To bring effective financial services to millions more poor households, providers need to continue developing a high level of intimacy with their customers. Those relationships help providers learn from customers and permit them to propose the right thing at the right time. It might be hard to visualize such a service, but I am pretty certain it can’t be done without mobile phones.

Original -by Ignacio Mas -http://www.transactionworld.net/articles/2012/december/cover-story.html