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The State of Bitcoin Regulation in Africa

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bitcoin regulation in africa

The legal status of bitcoin varies from one country to another and is mostly undefined or under review in most parts of the world. While some African central banks have explicitly banned or restricted its use, others have allowed it or have simply not issued any statement or regulations covering digital currencies.

In this guide, you will find a list of financial regulators in Africa that have made statements or issued regulations for the use of bitcoin and other decentralised cryptocurrencies within its borders.

Kenya

Kenyan Central Bank is not a Fan of Bitcoin

Buy Bitcoin in KenyaIn 2015, the Central Bank of Kenya (CBK) issued a public notice warning against the use of bitcoin citing the lack of regulations to govern its use. The CBK proceeded to send out a circular to local banks instructing them not to provide services to bitcoin startups.

However, the CBK’s stance seemed to have little impact on Kenyans appetite for bitcoin with the country being ranked third in Africa when it came to trading volumes at local exchanges such as Localbitcoins. Also, things seem to be looking up with a number of public and private entities now experimenting with blockchain technology.

In addition, some financial regulators seem to differ with CBK’s stance, such as the country’s financial market regulator, the Capital Markets Authority (CMA). The CMA announced plans in April 2017 to organise forums for fintech and cryptocurrency players to discuss the state of regulations and challenges it poses to their activities. It is also worth noting the Kenyan government and World Bank announced their intention to partner in using blockchain technology to sell government bonds earlier this year.

South Africa

South African Reserve Bank is Open to Digital Currencies

south africaThe South African market regulator was the first to warn against the use of bitcoin in Africa saying it wasn’t a legal tender. The South African Reserve bank (SARB) argued in a December 2014 public notice that while cryptocurrencies and their underlying technologies had the potential to facilitate faster transactions, efficiency and reduce payment costs, they could also, “simultaneously provide a platform for, inter alia, money laundering and the financing of terrorism, and introduce a new set of risks to consumers as DCVCs (cryptocurrencies) are susceptible to misuse and at the very worst, have the ability to disrupt the financial system.”

Having said that, in August 2016, the SARB softened its stance on digital currencies with the Reserve Bank Governor, Lesetja Kganyago hinting the bank was open to cryptocurrencies. In July 2017, the SARB indicated plans to test regulations related to bitcoin and other digital currencies and selected Bankymoon, a blockchain solutions provider for its first sandbox trial run.

The Reserve Bank had already announced its intention to undertake its own research about blockchain technology’s feasibility in South Africa. However, according to an ITWeb report, the deputy governor of the SARB, Francis Groepe indicated at an August 2017 conference in Johannesburg,

“For the central bank to issue virtual currencies or cryptocurrencies in an open system will be too risky for us. This is something we really need to think about.”

Nigeria

The Central Bank of Nigeria is Open to Digital Currencies

Bitcoin in NigeriaThe Central Bank of Nigeria (CBN) is notorious for currency controls and so it came as no surprise when it informed the public to be wary of speculating in bitcoin and other cryptocurrencies. The January 2017 directive caused uncertainty in the local bitcoin community, which is among the largest in Africa, with trading volumes on the P2P marketplace Localbitcoins showing an average of $3.2 million worth of trades being conducted every week.

Having said that, the CBN has shifted its position and is now researching blockchain technology and its possible applications in various industries. The regulator has also allocated personnel and resources to work on a whitepaper on digital currencies and its underlying technologies.

Many people in Nigeria view bitcoin as the alternative to hedge their wealth against currency losses, brought about by the constant depreciation of the local currency, the naira.

Speaking at a recent cryptocurrency conference in Lagos, CBN deputy director, Musa Jimoh said,

“[The CBN] cannot stop the tide of waves generated by the blockchain technology and its derivatives. Currently, we have taken measures to create four departments in the institution that are looking forward to harmonising the white paper on cryptocurrency.”

Uganda

The Bank of Uganda warns against Cryptocurrencies

UgandaThe Bank of Uganda sent out a strong statement cautioning investors against MLM schemes such as OneCoin, which was promising people high returns if they invested in the scheme.

The bank also warned against the use of digital currencies indicating there was lack of consumer protections or a regulatory framework to govern their use. As of the time of writing this article, the central bank’s position remains unchanged despite a growing bitcoin presence in the country.

Namibia

The Bank of Namibia bans Bitcoin for Commercial Purposes

NamibiaIn August 2015, the Central Bank of Namibia issued a statement saying that it did not support the use of digital currencies and users did so at their own risk. Similar to Kenya and other jurisdictions, the bank cited the lack of regulatory oversight as being its biggest concern with a promise to clarify its position in the future.

In September 2017, the bank proceeded to officially ban the use of bitcoin or other cryptocurrencies in the country. The directive was contained in a nine-page position paper which cited risks such as money laundering, legal, credit and operational risks as threats to Namibian users.  However, recognising the potential of blockchain technology and its possible application in various sectors, the Namibian Central bank acknowledged the need for further research stating, “the current position of the Bank may be amended and/or supplemented, should a need arise.”

Cameroon

Cameroon Still Undecided on Bitcoin

CameroonPresently, bitcoin traders and startups operating in Cameroon do not fall under regulatory oversight as the Central African Central Bank is yet to release specific guidance on the use of digital currencies. This means Cameroonians can purchase, hold or use bitcoin until specific guidance by the market regulator is issued.

The government has previously tested a cryptocurrency called Trest in 2015, which shows the country could be open to cryptocurrency solutions given its largely underbanked population.

Egypt

The Central Bank of Egypt Rejects Bitcoin Use

EgyptBitcoin and other cryptocurrencies are not officially recognised by the Egyptian Central Bank and trading them for fiat currencies is thus not authorised. In July 2017, the deputy governor of the Egyptian Central Bank, Mr Gamel Negm, responding to rumours that the bank was looking to officially adopt cryptocurrencies, insisted the bank only recognises official currencies and would not accept any digital currencies.

Mauritius

State Bank of Mauritius is Receptive to Cryptocurrencies

MauritiusThe island nation is aiming to become a leading hub for blockchain companies and serve as a gateway to African and Asian markets. Setting up this ‘Silicon Corridor’, which will be known as the Ethereum Island, is a collaborative effort between local authorities and blockchain-based companies.

Already, the country’s second-largest bank, State Bank of Mauritius (SBM) has partnered with Secured Automated Lending Technology (SALT) to allow its clients to use bitcoin or ether as a guarantee for loans. However, this was not always the case with recognition of cryptocurrencies in the country. Previously, in December 2013 the Bank of Mauritius warned the public about risks associated with the use of bitcoin. It appears the Bank reversed its position in light of the island nations ambitions to cement its position as a breeding ground for blockchain solutions.

Swaziland

Swaziland Central Bank is Studying Cryptocurrencies

swaziland cryptocurrenciesSwaziland is among the few African countries that is actively researching cryptocurrencies and their potential applications. Swaziland Central Bank Governor, Majozi Sithole, disclosed the bank was looking at potential case studies, at the Swaziland Economic Conference (SEC 2017). Speaking to the Swazi Observer, the Chief Banker said,

“It may not be wise to dismiss virtual currencies, and as the CBS we are learning, and we want to accept and support innovation. If this is innovation, we do not want to stifle it. We want to learn more about it.”

Currently, cryptocurrencies like bitcoin remain unregulated in the country and Sithole cautioned traders on local exchanges to be careful as the Central Bank seeks opinions of experts on the issue.

Algeria

Algeria Plans to Ban Bitcoin and Other Cryptocurrencies

AlgeriaBitcoin use, for the most part, has been undefined under the law in Algeria. However, a new 2018 Finance Bill being considered at the National’s People Congress (NPC) will make it unlawful to possess bitcoins or use it for transactions. The government aims to establish stricter control over cryptocurrencies, and its perceived dangers such as money laundering or tax evasion due to the pseudo-anonymity it guarantees its users.

Article 113 of the Finance Bill states,

“The purchase, sale, use and holding of the so-called virtual currency is prohibited. The virtual currency is the one used by Internet users through the web. It is characterized by the absence of physical support such as coins, banknotes, payments by check or bank cards. […] Any violation of this provision is punished in accordance with the laws and regulations in force.”

The document also recognises that cryptocurrencies such as bitcoin have no central authority, and presently escape any regulations or control by the state. This means bitcoin users in Algeria can still go about their activities until tighter restrictions are put in place.

Zimbabwe

Reserve Bank of Zimbabwe Remains skeptical about Bitcoin

ZimbabweBitcoin adoption in the Southern African country is among the highest in Africa buoyed by hyperinflation, weak local currency and limited access to financial services. This has resulted in Zimbabweans moving to local exchanges to trade for bitcoins, which are immune from inflation, and thus allow them to protect their savings.

The Reserve Bank of Zimbabwe (RBZ) has not officially permitted the use of bitcoin. In July 2016, the RBZ’s Director of National Payments, Josephat Mutepfa, warned Zimbabweans about the risks associated with bitcoin while speaking at a conference. He asserted that while they were a number of bitcoin initiatives in the country offering specific services, the central bank was yet to devise regulations for use of cryptocurrencies.

Recently, Reserve Bank of Zimbabwe director and registrar of banking institutions, Norman Mataruka, stated that the use of bitcoin is illegal in Zimbabwe. However, no actual regulations have been issued by the RBZ and no laws have been passed covering digital currencies in Zimbabwe.

Morocco

Regulators in Morocco Declare Bitcoin to be Illegal

moroccoThe central bank of Morocco, Bank Al-Maghrib and the country’s Foreign exchange office, issued a joint statement on November 20, 2017, informing the public that transacting in cryptocurrencies such as bitcoin is now considered illegal. According to the statement, transactions in digital currencies such as bitcoin, ether and others will constitute a violation of the country’s exchange regulations.

The two regulators point to the risks involved in using digital currencies for transactions as their reason for the directive. They further state,

“As a hidden payment system that is not backed by a financial institution, the use of virtual currencies entails significant risks for their users.”

This comes at a time when the demand for bitcoin in Morocco has been growing steadily for the past one and half years evident from trading volumes on the bitcoin exchange, Localbitcoins. But while the ban is a blow to bitcoin adoption in the country, it will be hard to control the cryptocurrency given its pseudo-anonymous and censorship-resistant nature.

Rest of Africa

Bitcoin regulation in the rest of Africa is essentially uncharted territory as regulators are still coming to terms with how best they can assimilate decentralised digital currencies into their economic structures without potentially destabilising their economies.

Ultimately, the challenge will be to come up with a regulatory framework that protects consumers against harmful activities and promotes cryptocurrency-based innovation. For now, bitcoin is largely unregulated and, therefore, de facto legal to use in the majority of African countries.

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Kenya Blockchain Event in Nairobi Records a Huge Turn Out

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Kenya Blockchain Event

December 10, 2017, saw a large number of bitcoin experts, enthusiasts, investors, newcomers, and traders converge at the Metta Entrepreneur’s Club Nairobi. The atmosphere indicated an increased desire among Kenyans to understand and discuss cryptocurrencies at length.

The four-hour discussion was detailed, explicit, and informative. Key speakers included Michael Kimani, Daniel Nyairo, Janet Kemunto, Damaris Njoki, and John Karanja among others. These cryptocurrency experts had a lot to share and plenty of advice to give. Thanks to their endless efforts, the crypto scene in Kenya is presently buoyant.

Is Bitcoin Valuable?

According to Michael Kimani, bitcoin is valuable.

“The bitcoin surge is more than just speculation. A substantial number of people are purchasing bitcoin because they believe in its future. These people are betting on the future because there is proof that the underlying technology (blockchain) actually works,” he said.

Is Bitcoin in a Bubble?

2017 has been a great year for cryptocurrencies.

“I have been in the technology sector for ten years and I have never seen anything grow as fast as cryptocurrencies have this year,” John Karanja, the founder of BitHub Africa, said.

The bitcoin price has risen by more than 1,500 percent in 2017. Surprisingly, altcoins like ether have risen by a higher percentage than bitcoin this year. Still, bitcoin is taking the lead with its current price of over $16,000. The recent surge has left many wondering: is bitcoin in a bubble?

In the opinion of Mutai, a software engineer, “Bitcoin is somewhat in a bubble because the underlying technology is being overlooked. Currently, the bitcoin price is keeping up with the pace of speculation.” Nevertheless, the self-taught tech expert believes that bitcoin is worth it in the long-term.

Where Can Kenyans Buy Bitcoins and Altcoins?

Expert recommended exchanges are Belfrics Kenya, Kraken, Bitstamp, and Bittrex. Other platforms such as peer-to-peer (P2P) markets are also great places for purchasing crypto.

Localbitcoins, Paxful, and Remitano Kenya are suitable P2P markets.

Tips On Cryptocurrency Investments

Advising clients on cryptocurrency investments is a full-time job for George Mang’eni, an experienced trader at the Nairobi Securities Exchange (NSE). “Keep calm & HODL,” he advised attendees at the event.

Bitcoin investments are made through mining, trading, and HODLING (Holding On for Dear Life). Mang’eni recommends investors to conduct a fundamental analysis and create a portfolio before investing in cryptocurrencies. “Always invest in an asset that is higher than the inflation rate,” he said.

A fundamental analysis involves looking into the following:

  • Real-world application of the cryptocurrency
  • Researching the reputation and achievements of its developers
  • The big investors involved
  • Liquidity
  • Crypto supply limits
  • Transaction processing system

Security is a Priority

Any person who owns crypto knows that security is everything. The crypto scene has attracted a lot of scammers, hence the need for caution.

Daniel Nyairo, a cryptocurrency freelancer stated, “Scammers use social proof to steal from unsuspecting customers.” The social proof marketing technique is often used to make customers feel like they are missing out. “A person selling bitcoins to you while trying to influence your emotions should be a red flag,” Nyairo warned.

With regards to ICOs (Initial Coin Offerings), attendees were advised to research thoroughly before investing. “Investigate the authenticity of the names and images of those behind the project,” Nyairo stated. Furthermore, he emphasised the need to carefully scrutinise business models, business descriptions, and business processes of the companies launching ICOs.

The Three Kenyan Women Thriving in Cryptocurrency Trading

Kenya Blockchain Event NairobiAccording to Damaris Njoki, Juliana Mwangi, and Janet Kemunto, bitcoin trading is a rewarding employment opportunity. “We do not work for the money; the money works for us,” Kemunto said.

Juliana and Kemunto both left their jobs to take up bitcoin trading as a full-time job. “Cryptocurrencies are the future. I love what I do,” Juliana asserted.

Trading bitcoin requires two things: trust and 0.2BTC. “My job is not about meeting the margins; it is about the client,” Kemunto said. “My goal is taking care of the client and in turn, the client takes care of me.”

The main challenge that these women face is a low supply of bitcoins. Other than that, the demand for bitcoins is huge. “We have markets not only in Kenya but also in China and the UK,” Damaris said.

Meet Kenya’s Popular Miner Eugene Mutai

Mutai has been making headlines as the only crypto miner in Kenya for a while now. The millennial states that it took him two months to put his mining rig together. “For a non-tech savvy person, it might take longer,” he said.

Mutai mines Zcash and other altcoins. “I began with a modest budget and it took me around 8 months to break even,” he explained. Cloud mining is one and a half times more expensive than mining individually,” he added.

Two-thirds of what Mutai mines are his profits. The rest goes into electricity and Internet costs. Nevertheless, he faces two challenges that result in the loss of two months of mining yearly. “I need to back up my Internet in case my main connection fails me. On the other hand, I experience electricity blackouts on average twice every week,” he said.

Kenyan Regulators are Lagging Behind

Cryptocurrency regulation in Kenya is still a major topic mainly because little is taking place. “Kenyan regulators will find themselves playing catch up,” William Mutiso, a crypto trader said. Kenya has lost the business from startups such as Kipochi and BitPesa because of poor regulations.

“There is need to keep these conversations going to show regulators the extent of crypto interest in Kenya,” Eddie Ndichu, a cryptocurrency enthusiast, noted.

Upcoming Startups and Events

Despite regulation setbacks, the Kenyan crypto space is taking in new startups as fast as new ideas are conceivable. Some of the startups under the works are JijiPlan and Pesabase. Other startups like ChamaPesa are also about to launch.

Besides startups, Kenyans should watch out for upcoming crypto events such as a mining class that Mutahi will be teaching. The mining class targets those interested in mining as individuals as well as cloud mining.

** This article has been retrospectively corrected by the editor.

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The State of Bitcoin in Botswana

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Bitcoin in Botswana

Botswana may not be the first country that comes to mind when thinking about bitcoin and blockchain innovation but the Southern African country is home to a small but active bitcoin economy that encompasses startups, meetups, a blockchain hub, and bitcoin trading WhatsApp groups.

To receive local insight into the current state of bitcoin in Botswana, Bitcoin Africa spoke to Satoshicentre founder and Botswanan bitcoin thought leader Alakanani Itireleng.

The Local Bitcoin Community

According to Ms. Itireleng, the introduction of bitcoin cloud mining and multi-level marketing schemes has been a key driver of bitcoin adoption in Botswana. There has been a lot of interest in these types of make money online schemes in Africa and this interest has also helped to boost bitcoin awareness in Botswana. 

Meetups held by the blockchain hub, Satoshicentre, have also helped to spread awareness about the benefits that digital currencies and blockchain technology can provide.

Bitcoin Trading in Botswana

There is currently no bitcoin exchange in Botswana and at the time of writing, there was only one offer on the global peer-to-peer bitcoin exchange LocalBitcoins to buy bitcoin using the Botswanan pula. Not surprisingly, therefore, most bitcoin trading occurs through bitcoin trading WhatsApp groups and in dedicated Facebook groups.

Some Botswanan bitcoin users prefer to use South African exchanges such as AltcoinTrader, which allows direct bank deposits, and those with friends or relatives in South Africa often use Luno to buy and sell cryptocurrency.

According to Ms. Itireleng, Botswana is still in search for a local bitcoin exchange that can meet local demand. Bitcoin exchange, Belfrics, which recently launched in Kenya, has announced that it would launch in Botswana as well at some point in the future. Having a local exchange would likely boost adoption and help to grow Botswana’s bitcoin economy.

The Bitcoin Startup Scene

Currently, there are three notable blockchain startups in Botswana. The Satoshicentre, a blockchain hub run by Ms. Itireleng, Plaas, a blockchain-based farming platform provider, and Kgoboko, a blockchain-powered financial services platform for the unbanked launched by IndieStudio Africa.

The Satoshicentre is a blockchain hub that was founded in 2014 by Ms. Itireleng with the mission “to provide disruptive Innovations with the sole purpose of changing the way we carry out our daily routines and processes with ease through the help of the Blockchain.”

Plaas is a startup launched under Satoshicentre, founded by Alakanani Itireleng, which is working with various blockchain experts around the world, including BitcoinTracker and Bitsoko, to develop a mobile application that enables farmers and farming cooperatives to manage their daily farming productions and stock on the blockchain.

IndieStudio Africa launched Kgoboko, a financial services ecosystem that aims to address the needs of the unbanked in emerging markets. The startup aims to solve the problem of restricted access to funding and investment as well as low uptake and awareness of cryptocurrencies in Africa.

Cryptocurrencies Remain Unregulated

Currently, the Bank of Botswana (BoB) has not issued any regulations in regards to cryptocurrencies or the use of blockchain technology. According to Ms. Itireleng, the central bank has stated that it currently has no intention of regulating or studying cryptocurrencies. However, she believes that as more blockchain startups will launch in the country and more businesses will start to accept digital currencies, the regulator will be forced to take a closer look at this new technology.

When talking about bitcoin in Africa, Botswana should not go unmentioned. While the country does not have the sizable bitcoin economies of Kenya, Nigeria, and South Africa, it has developed an active bitcoin community that is working on local blockchain solutions and is spreading cryptocurrency awareness. 

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12 Facts About Bitcoin You Were Probably Not Aware Of

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facts about bitcoin

2017 was the year that the digital currency bitcoin officially became mainstream. Thanks to its impressive price rally throughout the year, which was extensively covered by global media, most people will have at least heard of bitcoin at this point in time. However, there are things about bitcoin that not everyone knows about. In this article, you will discover 12 facts about bitcoin that you were probably not aware of.

1. The Inventor of Bitcoin is Unknown

“Satoshi Nakamoto” is the pseudonym that was used by bitcoin’s creator(s). The mysterious identity of the bitcoin creator(s) has led to a lot of speculation but no conclusive evidence of the identity has yet been published.

“Satoshi Nakamoto” is currently worth about $13 billion and is a nominee for a Nobel Prize in Economic Sciences. He last made a public post in 2011.

2. No One Actually Controls Bitcoin

Bitcoin is not owned by any government or central bank and thereby gives its users the freedom to be their own bank. However, governments can declare the use of bitcoins illegal like countries such as Ecuador and Bangladesh have done. As a matter of fact, anyone caught using bitcoins in Bangladesh can earn themselves time in prison.

In light of this fact, some countries might ban bitcoin but users can still go about and buy and sell the digital currency regardless as governments cannot stop the decentralised peer-to-peer network that bitcoin is built on.

3. Bitcoin Has a Limited Supply

There can only ever be 21 million bitcoins in circulation thanks to the way that bitcoin has been coded. The 21 million coin limit will be reached at around 2140. Currently, there are around 16,725,000 million bitcoins in circulation.

This limited total supply is one of the reasons why bitcoin has increased in value so much as it is a scarce asset.

4. There are over 20,000 Bitcoin Millionaires

According to Bitcoin Rich List, there are over 20,000 bitcoin millionaires. In fact, some millionaires have turned into billionaires. According to CNBC, Cameron and Tyler Winklevoss have become the first bitcoin billionaires thanks to the recent surge in the bitcoin price.

5. Bitcoin is Actually Highly Transparent

The media often claim that bitcoin is anonymous but that is far from true. Bitcoin transactions can actually be very transparent.

“If I have all my bitcoins in a single address and keep reusing it, everyone I ever interact with can follow everything I do. This makes bitcoin the most transparent money system ever created,” said Marco Carnut, founder of CoinWISE, highlighting how transparent the bitcoin system can be when it is being used in a particular way.

6. Supercomputers Have Nothing on The Bitcoin Network

500 supercomputers combined are less powerful than the bitcoin network. Presently, the bitcoin network has a hash rate of over 14,867,776 TH/s, which is way more than the world’s most powerful supercomputer.

7. The Bitcoin Network Uses More Energy Than Most African Countries

report compiled by UK-based energy comparison platform, Power Compare, states that the power consumption from bitcoin mining is currently estimated at over 30 TWh per annum, which is more than that of 159 individual nations in Europe, Africa, and America.

In fact, only Algeria, Egypt and South Africa use up more power than the bitcoin blockchain.

8. Bitcoin Transactions Cannot Be Easily Refunded

Your bitcoin wallet is so precious that if you lose it, you could lose your coins forever (unless you have backed up your wallet!). What’s more, bitcoin transactions are non-refundable so if you make a mistake about the amount or the recipient wallet address that money is likely gone forever. Unless, of course, your counterpart is so friendly as to refund you the amount.

9. You Can Live Solely on Bitcoin

Austin Craig and Beccy Bingham created a documentary called “life on bitcoin” to prove the statement: “man can live on bitcoins alone.”

The documentary illustrates that a married couple can actually live on bitcoin for 90 days.

10. The FBI Was a Major Bitcoin Holder

The FBI once possessed around 1.5 percent of the world’s bitcoins. After shutting down the dark web marketplace Silk Road in 2013, the FBI confiscated 144,000 bitcoins, which were later auctioned. The US government made $48 million from the auction. Unfortunately, its shutdown did not prevent more black markets from cropping up. Google search results depict the existence of a Silk Road 3.1.

11. Several Major Corporations Accept Bitcoin Payments

You can make payments in bitcoins to companies such as Dell, Microsoft, and Overstock. That means that you can pay for laptops, hotels, and throw pillows with bitcoin.

In Africa, there are also several online retailers that have started accepting bitcoin as a payment method.

12. The Early-Bird Advantage

If you had invested $100 worth of bitcoins in 2010, you would be a bitcoin millionaire in 2017. For example, Barry Silbert, the founder of Digital Currency Group, bought 48,000 bitcoins from the Silk Road auction in 2014.

At that time, one bitcoin was worth $350. In 2017, Silbert’s investment has increased over 16 times and has made him a very wealthy man.

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