[kictanet] Public Notice by CBK on Virtual Currencies

Wed Dec 16 11:09:12 EAT 2015

True Ngigi, these guys just print money out of nothing. My point was mpesa
and PayPal are accounts backed by that printed currency.
On Dec 16, 2015 8:48 AM, "Waithaka Ngigi" <ngigi at at.co.ke> wrote:

> Mwendwa,
>
> Every currency that you mention that backs Mpesa & Paypal is also virtual.
> How? Up until the 70s I think, the USD was pegged to actual Gold bullion at
> the Fed Reserve. In essence you could take a dollar anytime and get your
> Gold equivalent.
>
> But for reasons I wouldn't get into, that stopped. Currencies became
> 'virtual' and backed only by the confidence users have of the underlying
> government. Monetary policy.
>
> So the fact that Mpesa is backed by the Ksh is not itself the security but
> your implied trust in. KE monetary policy.
>
> If. KE was to print more Ksh to fund the coming 2017 elections what
> happens to your Mpesa it loses value, something which can't happen in
> Bitcoin which cannot just be mined at a whim.
>
> The main issue here is that BitCoin in a way challenges the central
> authority of a Central Bank. Everything else about what is backed by what
> is very similiar across the board.
>
> Waithaka Ngigi
>
> Alliance Technologies‎
> www.at.co.ke
> *From: *Mwendwa Kivuva
> *Sent: *Wednesday, December 16, 2015 5:25 AM
> *To: *KICTAnet ICT Policy Discussions
> *Cc: *Ngigi Waithaka
> *Subject: *Re: [kictanet] Public Notice by CBK on Virtual Currencies
>
>
> On Dec 15, 2015 11:07 AM, "Ngigi Waithaka via kictanet" <
> kictanet at lists.kictanet.or.ke> wrote:
> >
> > Very dicey...
> >
> > Let's see... What is MPesa? It's a Virtual Currency that has a 1:1
> Mapping with the Kenya Shilling. That's why when I send you MPesa, you
> don't receive a legal tender, but you know you can convert it to KES at a
> rate of 1:1 minus the small charges.
>
> Mpesa is backed by equivalent shillings deposited to reflect the actual
> amount in your mpesa account. Let us call mpesa a bank account, because
> that is what it is. Is your bank balance a legal tender?
>
> >
> > What is Paypal? a Virtual Currency that has a 1:1 mapping with say USD
>
> PayPal too is an account that reflects real money controlled by a central
> bank earned by offering goods or services.
>
> >
> > What is BitCoin? A Virtual Currency that has a *fluctuating* mapping
> with other currencies e.g 1:130 with USD.
> >
> > If I take the risk that BitCoin might fluctuate, a risk we also take
> when we get paid in USD / Euros etc when in Kenya, why should it be illegal?
> >
> > Its just a Virtual Currency, one of many....
>
> This is where the analogy gets wrong. Mpesa and PayPal are real cash
> deposited into an account. The cash is controlled by a central bank
> depending on the currency.
>
> Bitcoin on the other hand is a digital currency that is created and held
> electronically without an equivalent hard currency cash deposit, unlike the
> ordinary legal tender, and is not a government-backed unit. Bitcoins are
> created as a reward for payment processing work in which users offer their
> computing power to verify and record payments into a public ledger. This
> activity is called mining and miners are rewarded with transaction fees and
> newly created bitcoins. A good analogy is the virtual coins you get as a
> reward when you play computer games like Temple Run. Although bitcouns are
> obtained by mining, bitcoins can be exchanged for other currencies,
> products, and services. A better analogy is the way I can sell my mangoes
> and apples, and IT skills for $$$.
>
> All that said, we should accept that bitcoin can provide legitimate
> financial services.
>
> >
> > Regards
> >
> > On Tue, Dec 15, 2015 at 10:00 AM, Josiah Mugambi via kictanet <
> kictanet at lists.kictanet.or.ke> wrote:
> >>
> >> CBK has taken a stand:
> >>
> >>
> https://www.centralbank.go.ke/index.php/news/464-public-on-virtual-currencies-such-as-bitcoin
> >>
> >> Extract:
> >>
> >> ++++
> >>
> >> The attention of the Central Bank of Kenya (CBK) has been drawn to
> media reports
> >> on the use, holding and trading of virtual currencies such as Bitcoin
> in Kenya.
> >> Bitcoin is a form of un-regulated digital currency that is not issued
> or guaranteed by
> >> any government or central bank. Domestic and international money
> transfer
> >> services in Kenya are regulated by the Central Bank of Kenya Act and
> other
> >> legislation. In this regard, no entity is currently licensed to offer
> money remittance
> >> services and products in Kenya using virtual currency such as Bitcoin.
> >>
> >> This is to inform the public that virtual currencies such as Bitcoin
> are not legal
> >> tender in Kenya and therefore no protection exists in the event that
> the platform that
> >> exchanges or holds the virtual currency fails or goes out of business.
> Some of the
> >> risks associated with buying, holding or trading virtual currencies
> include the
> >> following:
> >>  Transactions in virtual currencies such as bitcoin are largely
> untraceable and
> >> anonymous making them susceptible to abuse by criminals in money
> laundering
> >> and financing of terrorism.
> >>  Virtual currencies are traded in exchange platforms that tend to be
> unregulated
> >> all over the world. Consumers may therefore lose their money without
> having
> >> any legal redress in the event these exchanges collapse or close
> business.
> >>  There is no underlying or backing of assets and the value of virtual
> currencies is
> >> speculative in nature. This may result in high volatility in value of
> virtual
> >> currencies thus exposing users to potential losses.
> >>
> >> CBK reiterates that Bitcoin and similar products are not legal tender
> nor are they
> >> regulated in Kenya. The public should therefore desist from transacting
> in Bitcoin
> >> and similar products.
> >> ++++
> >>
> >>
> >> --
> >> Josiah Mugambi
> >>
> >> _______________________________________________
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> >>
> >>
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> >>
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> >
> >
> >
> >
> > --
> > Regards,
> >
> > Waithaka Ngigi
> > Chief Executive Officer | Alliance Technologies | MCK Nairobi Synod
> Building
> > T +254 20 525 0750 |Office Mobile: +254 716 201061 | M +254 737 811 000
> > www.at.co.ke
> >
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> >
> > The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform
> for people and institutions interested and involved in ICT policy and
> regulation. The network aims to act as a catalyst for reform in the ICT
> sector in support of the national aim of ICT enabled growth and development.
> >
> > KICTANetiquette : Adhere to the same standards of acceptable behaviors
> online that you follow in real life: respect people's times and bandwidth,
> share knowledge, don't flame or abuse or personalize, respect privacy, do
> not spam, do not market your wares or qualifications.
>
>
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