[kictanet] Public Notice by CBK on Virtual Currencies

Wed Dec 16 11:12:29 EAT 2015

Well... in actual sense BitPesa or BitCoin's value is backed by physical
currency. Its not in thin air.

On Wed, Dec 16, 2015 at 11:09 AM, Mwendwa Kivuva via kictanet <
kictanet at lists.kictanet.or.ke> wrote:

> 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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>> >
>> >
>> >
>> >
>> > --
>> > 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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>
> 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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