<p dir="ltr"><br>
On Dec 15, 2015 11:07 AM, "Ngigi Waithaka via kictanet" <<a href="mailto:kictanet@lists.kictanet.or.ke">kictanet@lists.kictanet.or.ke</a>> wrote:<br>
><br>
> Very dicey...<br>
><br>
> 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.</p>
<p dir="ltr">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?</p>
<p dir="ltr">><br>
> What is Paypal? a Virtual Currency that has a 1:1 mapping with say USD</p>
<p dir="ltr">PayPal too is an account that reflects real money controlled by a central bank earned by offering goods or services.</p>
<p dir="ltr">><br>
> What is BitCoin? A Virtual Currency that has a *fluctuating* mapping with other currencies e.g 1:130 with USD.<br>
><br>
> 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?<br>
><br>
> Its just a Virtual Currency, one of many....</p>
<p dir="ltr">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.</p>
<p dir="ltr">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 $$$.</p>
<p dir="ltr">All that said, we should accept that bitcoin can provide legitimate financial services.</p>
<p dir="ltr">><br>
> Regards<br>
><br>
> On Tue, Dec 15, 2015 at 10:00 AM, Josiah Mugambi via kictanet <<a href="mailto:kictanet@lists.kictanet.or.ke">kictanet@lists.kictanet.or.ke</a>> wrote:<br>
>><br>
>> CBK has taken a stand:<br>
>><br>
>><a href="https://www.centralbank.go.ke/index.php/news/464-public-on-virtual-currencies-such-as-bitcoin"> https://www.centralbank.go.ke/index.php/news/464-public-on-virtual-currencies-such-as-bitcoin</a><br>
>><br>
>> Extract:<br>
>><br>
>> ++++<br>
>><br>
>> The attention of the Central Bank of Kenya (CBK) has been drawn to media reports<br>
>> on the use, holding and trading of virtual currencies such as Bitcoin in Kenya.<br>
>> Bitcoin is a form of un-regulated digital currency that is not issued or guaranteed by<br>
>> any government or central bank. Domestic and international money transfer<br>
>> services in Kenya are regulated by the Central Bank of Kenya Act and other<br>
>> legislation. In this regard, no entity is currently licensed to offer money remittance<br>
>> services and products in Kenya using virtual currency such as Bitcoin.<br>
>><br>
>> This is to inform the public that virtual currencies such as Bitcoin are not legal<br>
>> tender in Kenya and therefore no protection exists in the event that the platform that<br>
>> exchanges or holds the virtual currency fails or goes out of business. Some of the<br>
>> risks associated with buying, holding or trading virtual currencies include the<br>
>> following:<br>
>> Transactions in virtual currencies such as bitcoin are largely untraceable and<br>
>> anonymous making them susceptible to abuse by criminals in money laundering<br>
>> and financing of terrorism.<br>
>> Virtual currencies are traded in exchange platforms that tend to be unregulated<br>
>> all over the world. Consumers may therefore lose their money without having<br>
>> any legal redress in the event these exchanges collapse or close business.<br>
>> There is no underlying or backing of assets and the value of virtual currencies is<br>
>> speculative in nature. This may result in high volatility in value of virtual<br>
>> currencies thus exposing users to potential losses.<br>
>><br>
>> CBK reiterates that Bitcoin and similar products are not legal tender nor are they<br>
>> regulated in Kenya. The public should therefore desist from transacting in Bitcoin<br>
>> and similar products.<br>
>> ++++<br>
>><br>
>><br>
>> -- <br>
>> Josiah Mugambi<br>
>><br>
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> -- <br>
> Regards,<br>
><br>
> Waithaka Ngigi<br>
> Chief Executive Officer | Alliance Technologies | MCK Nairobi Synod Building<br>
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