On Dec 15, 2015 11:07 AM, "Ngigi Waithaka via kictanet" <kictanet@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@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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>
>
>
>
> --
> 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.