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The Kenyan Central Bank is Hampering Bitcoin Adoption in Kenya

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Bitcoin Community in Kenya

The bitcoin space in Kenya is among the most vibrant in Africa with the capital Nairobi being home to a number of innovative bitcoin startups. This is partly due to a growing bitcoin community, the rise of a local fintech industry, and upgrades to the country’s infrastructure. However, bitcoin adoption in Kenya is being hampered by the regulatory climate in the country that is being negatively influenced by a bitcoin-unfriendly central bank.

The Central Bank Issued a Warning about Digital Currencies

Back in 2015, the Central Bank of Kenya (CBK) issued a statement that warned against the use of bitcoin saying it was not a legal tender and could be used as a conduit for money laundering and terrorism financing.

A number of people in the Kenyan bitcoin space voiced their dissatisfaction with the announcement. Speaking to CoinTelegraph, Kenyan bitcoin thought leader and CEO of Umati Blockchain Ltd, Mic Kimani, stated,

“The accusations are a bit over the top. The Central Bank got some things wrong in its notice, like casting a wide blanket warning against virtual currencies, yet here in Kenya, we already have a lot of virtual currencies in use like Bonga points, and electricity tokens.”

The CBK further instructed local banks not to provide bank accounts to bitcoin startups. One such company was bitcoin payment processor, BitPesa which had its bank accounts shut down. The bitcoin startup that is headquartered in Nairobi has found it difficult to operate in the country due to the position taken by the CBK.

Bitcoin Startups Face Challenges in Kenya

Recently, BitPesa announced that it has been forced to retreat from the Kenyan market. Due to the CBK directive, bitcoin-related businesses are unable to open or maintain accounts with local banks. As a result processing payments in Kenyan shillings has become impossible for the startup and it has opted to halt the verification of new users.

South African bitcoin exchange and wallet provider Luno, has also stopped offering its bitcoin exchange service in the country and can currently only be used as a bitcoin wallet in Kenya.

BitPesa CEO, Elizabeth Rossiello stated in Disrupt Africa,

“While BitPesa is still a tax-paying, registered Kenyan company with a large office for its finance, trading, customer support and sales functions for the region, it is blocked from servicing Kenyan customers. This is a total shame, given that the company and the African bitcoin boom it started when it launched, began in Kenya.”

According to Rossiello, the CBK made the move to restrict BitPesa and other similar startups without consulting relevant stakeholders and without any type of in-depth research. She also maintained the position taken by CBK is in stark contrast to local bitcoin users and investors, who are largely infatuated with bitcoin startups. The actions of the regulator have impeded the growth of the company locally at a time when it was experiencing a significant bump in trading volumes across its other six African markets.

Little Progress by Way of Dialogue

A recent report by Disrupt Africa titled Finnovating for Africa showed how attractive cryptocurrency startups and blockchain technology are to investors, especially since they can develop cheap, efficient and secure products for customers who need them. These technologies have the potential to solve many challenges in financial services, record keeping, and identity management just to name a few.

Therefore, it is important for bitcoin and blockchain startups to actively engage regulators and local financial players. In the case of BitPesa, conversations with the CBK, however, are yet to yield any positive results.

“We have been working closely with the Nigerian Central Bank and have a great dialogue with other Central Banks in East, Central and West Africa, but we have still made little progress in Kenya, which remains the strictest jurisdiction in Africa, having gone out of its way to ban any bank from banking or partnering with companies using this technology,” Rossiello said.

It is worth noting that major global institutions such as the World Bank and IMF, and central banks of leading economies are publishing white papers on bitcoin and are softening their regulations to allow bitcoin startups to grow compliantly. It would be wise for the CBK to reconsider its stance since it impedes local companies from entering the bitcoin space and competing against international players. It remains to be seen if the CBK will adopt a more open approach towards cryptocurrency innovation but, for now, the situation looks rather unfavourable for Kenyan bitcoin startups.

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Bitcoin Wallet Luno Adds SegWit Support to Lower Transaction Fees

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Luno Adds SegWit Support

Luno, one of the most popular bitcoin wallets in Africa, has announced full SegWit integration for bitcoin send and receive transactions. Previously, Luno customers could only receive BTC through a legacy wallet address, which was not integrated with the recent Bitcoin blockchain upgrade SegWit. Only send transactions were SegWit compatible.

With the full integration of SegWit, Luno users can now enjoy cheaper and faster bitcoin transactions.

“By implementing SegWit internally, Luno has managed to reduce the send fees paid by customers by over 25% already. As customers start switching over to new SegWit addresses, this will translate into a further reduction in sending fees in the coming weeks and months,” Werner van Rooyen, head of marketing and communications at Luno stated.

Luno currently operates in South Africa, Nigeria, Malaysia, UK, and in 35 other European countries.

What is SegWit?

Segregated Witness (SegWit) was an upgrade to the Bitcoin blockchain that is intended to address Bitcoin’s scalability challenges as well as fix the issue of transaction malleability. With SegWit, signature data is separated from transaction data in order to enable more transactions to fit into each block. The signature data is kept in an extended block called the witness. As a result, bitcoin transactions become faster and transaction fees become lower.

In theory, the Bitcoin network can handle seven transactions per second. However, in reality, it is around four transactions per second. With the number of bitcoin transactions increasing as bitcoin’s popularity grows, transactions take longer as the unconfirmed transactions pool increases. Therefore, bitcoin users who can afford it have been paying higher transaction fees to incentivise miners to prioritise their transactions and, thereby, increase the speed of their transactions. At the end of 2017, this has led to the average bitcoin transaction fee spiking to over 35 dollars.

However, when SegWit addresses are used, bitcoin transactions become faster and the required resources decrease as well. Consequently, the transaction fees reduce.

How Can You Add a SegWit Wallet Address on Luno?

To add a SegWit address on the Luno wallet you have to follow these steps:

  • Open your Luno account either on the mobile app or the web app
  • Choose “wallets” from the menu
  • Click on your “BTC wallet”
  • Choose “receive bitcoin”
  • Click “add address” and follow the prompt

To receive bitcoin, use your SegWit bitcoin receive address. Legacy bitcoin addresses begin with 1 while SegWit bitcoin addresses begin with 3. Even after adding a SegWit wallet address, bitcoins sent to your previous legacy bitcoin address will still work. In addition, you can still send bitcoin from a SegWit wallet to a legacy wallet and vice versa since the transactions are still taking place on the same blockchain. But if you are sending bitcoins to and from a SegWit wallet, you can benefit from reduced fees.

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Bitmart Opens Cryptocurrency Mining Hardware Store in South Africa

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Bitmart Opens Cryptocurrency Mining Hardware Store

Bitmart, South Africa’s leading supplier of mining hardware, has opened a cryptocurrency mining hardware store in South Africa. This makes Bitmart’s retail outlet the first cryptocurrency mining store in Africa.

Products and Services Offered by Bitmart

Bitmart was founded by CEO Jacques Serfontein in 2015 to offer cryptocurrency mining hardware to South Africans. Currently, Bitmart offers GPU rigs, ASIC miners, GPU rig mining software, graphics cards, international mining rig monitor app, cryptomatic watches, hardware wallets, and motherboards. Customers can find GPU mining rigs that mine cryptocurrencies such as zcash, monero, decred, bitcoin, and litecoin.

Additionally, Bitmart provides services such as bitcoin mining farm design and deployment, mining training, antminer repair tickets, mining farm management using Genesis Hive, and shepherd services.

Through its shepherd services, Bitmart helps owners of second-hand miners to find buyers. Therefore, both sellers and buyers are assured of safe and secure transactions through Bitmart’s SSL-secured online shop.

According to MyBroadband, Bitmart is an authorised distributor of Avalon Miners, Genesis Hive, Trezor, Ledger wallets, KeepKey, and UniSat (satellite mining solutions) in Africa.

The company also supplies mining hardware to countries such as Japan, Dubai, North America, Australia, and England.

What Does Bitmart Plan for the Future?

Bitmart will be holding seminars in Johannesburg and Mbombela. The seminars will focus on bitcoin basics and advanced cryptocurrency trading. In addition, Bitmart will be introducing a satellite mining connection in partnership with Uniwisp that will allow mining rigs to mine from any place in the world. Uniwisp is an Internet service provider based in Nelspruit, South Africa.

 

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Kenya’s BitPesa Acquires Spanish Money Transfer Platform TransferZero

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BitPesa Acquires TransferZero

On February 8, 2018, BitPesa announced that it has acquired TransferZero, a Madrid-based online money transfer platform, which operates in over 200 countries using more than 50 currencies.

Why Did BitPesa Acquire TransferZero?

BitPesa, which is already operating in Africa and Europe, will be able to “set deep roots to UK and European licensing, bank accounts, and integrations” through this acquisition, according to the company’s statement on its blog.

“Europe is a hub for global remittance and payments companies. Digital currencies and decentralized technology have hit critical mass in the financial services and payments space. It is no longer a question of whether this technology will have staying power [but] which specific technology and what product iteration will launch and scale first […],” Elizabeth Rosiello, founder and CEO BitPesa said.

“BitPesa has the support of top-tier, institutional investors and a network that will help to bring TransferZero’s technology to the next level. With this support, we will be able to provide even more efficient transfers and user experience,” Luis Cambronero, former TransferZero CEO and present Managing Director, BitPesa stated.

Setting Up Infrastructure Across Europe and Africa is a Priority

“Setting up infrastructure across Europe and Africa has always been a focus of ours. […] We’ve just doubled our bank accounts, our infrastructure, and it’s licensed by the Bank of Spain as a payment institution. So we are fully compliant with PSD2 regulations […],” Rosiello said.

“This is truly a partnership where the whole is greater than the sum of the parts, allowing BitPesa to solidify our leadership in this space. By bringing our regional and technological expertise together, we will further accelerate our month-to-month growth,” Rossiello asserted.

TransferZero will neither change its name nor its headquarters. In addition, its employees will remain with Bitpesa.

This acquisition from an Africa-based bitcoin startup of a European fintech startup shows that leading African startups can make waves beyond the borders of the continent and create a positive impact on a global scale.

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