<html><head></head><body lang="en-US" style="background-color: rgb(255, 255, 255); line-height: initial;"> <div style="width: 100%; font-size: initial; font-family: Calibri, 'Slate Pro', sans-serif, sans-serif; color: rgb(31, 73, 125); text-align: initial; background-color: rgb(255, 255, 255);">Mwendwa,</div><div style="width: 100%; font-size: initial; font-family: Calibri, 'Slate Pro', sans-serif, sans-serif; color: rgb(31, 73, 125); text-align: initial; background-color: rgb(255, 255, 255);"><br></div><div style="width: 100%; font-size: initial; font-family: Calibri, 'Slate Pro', sans-serif, sans-serif; color: rgb(31, 73, 125); text-align: initial; background-color: rgb(255, 255, 255);">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.</div><div style="width: 100%; font-size: initial; font-family: Calibri, 'Slate Pro', sans-serif, sans-serif; color: rgb(31, 73, 125); text-align: initial; background-color: rgb(255, 255, 255);"><br></div><div style="width: 100%; font-size: initial; font-family: Calibri, 'Slate Pro', sans-serif, sans-serif; color: rgb(31, 73, 125); text-align: initial; background-color: rgb(255, 255, 255);">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.</div> <div style="width: 100%; font-size: initial; font-family: Calibri, 'Slate Pro', sans-serif, sans-serif; color: rgb(31, 73, 125); text-align: initial; background-color: rgb(255, 255, 255);"><br></div><div style="width: 100%; font-size: initial; font-family: Calibri, 'Slate Pro', sans-serif, sans-serif; color: rgb(31, 73, 125); text-align: initial; background-color: rgb(255, 255, 255);">So the fact that Mpesa is backed by the Ksh is not itself the security but your implied trust in. KE monetary policy.</div><div style="width: 100%; font-size: initial; font-family: Calibri, 'Slate Pro', sans-serif, sans-serif; color: rgb(31, 73, 125); text-align: initial; background-color: rgb(255, 255, 255);"><span style="font-family: Calibri, 'Slate Pro', sans-serif, sans-serif; font-size: initial; text-align: initial; line-height: initial;"><br></span></div><div style="width: 100%; font-size: initial; color: rgb(31, 73, 125); text-align: initial; background-color: rgb(255, 255, 255);"><span style="font-size: initial; text-align: initial; line-height: initial;"><font face="Calibri, Slate Pro, sans-serif, sans-serif">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.</font></span></div><div style="width: 100%; font-size: initial; color: rgb(31, 73, 125); text-align: initial; background-color: rgb(255, 255, 255);"><span style="font-size: initial; text-align: initial; line-height: initial;"><font face="Calibri, Slate Pro, sans-serif, sans-serif"><br></font></span></div><div style="width: 100%; font-size: initial; color: rgb(31, 73, 125); text-align: initial; background-color: rgb(255, 255, 255);"><span style="font-size: initial; text-align: initial; line-height: initial;"><font face="Calibri, Slate Pro, sans-serif, sans-serif">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.</font></span></div><div style="width: 100%; font-size: initial; color: rgb(31, 73, 125); text-align: initial; background-color: rgb(255, 255, 255);"><span style="font-size: initial; text-align: initial; line-height: initial;"><font face="Calibri, Slate Pro, sans-serif, sans-serif"><br></font></span></div> <div style="font-size: initial; font-family: Calibri, 'Slate Pro', sans-serif, sans-serif; color: rgb(31, 73, 125); text-align: initial; background-color: rgb(255, 255, 255);">Waithaka Ngigi<br><br>Alliance Technologies<br>www.at.co.ke </div> <table width="100%" style="background-color:white;border-spacing:0px;"> <tbody><tr><td colspan="2" style="font-size: initial; text-align: initial; background-color: rgb(255, 255, 255);"> <div style="border-style: solid none none; border-top-color: rgb(181, 196, 223); border-top-width: 1pt; padding: 3pt 0in 0in; font-family: Tahoma, 'BB Alpha Sans', 'Slate Pro'; font-size: 10pt;"> <div><b>From: </b>Mwendwa Kivuva</div><div><b>Sent: </b>Wednesday, December 16, 2015 5:25 AM</div><div><b>To: </b>KICTAnet ICT Policy Discussions</div><div><b>Cc: </b>Ngigi Waithaka</div><div><b>Subject: </b>Re: [kictanet] Public Notice by CBK on Virtual Currencies</div></div></td></tr></tbody></table><div style="border-style: solid none none; border-top-color: rgb(186, 188, 209); border-top-width: 1pt; font-size: initial; text-align: initial; background-color: rgb(255, 255, 255);"></div><br><div id="_originalContent" style=""><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>
><br>
><br>
><br>
> -- <br>
> Regards,<br>
><br>
> Waithaka Ngigi<br>
> Chief Executive Officer | Alliance Technologies | MCK Nairobi Synod Building<br>
> T +254 20 525 0750 |Office Mobile: +254 716 201061 | M +254 737 811 000<br>
><a href="http://www.at.co.ke"> www.at.co.ke</a><br>
><br>
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><br>
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</p>
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