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3 Reasons Why Most Kenyans Are Still Hesitant About Investing in Bitcoin

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Most Kenyans Are Still Hesitant About Bitcoin

The value of one bitcoin currently stands at over $10,000, making it the largest and most valuable cryptocurrency in the world. According to bitcoin.com, 12,000 bitcoin transactions take place every hour and 80,000 bitcoin tweets are sent per day. These figures are an indicator of the extent of bitcoin’s popularity.

Kenya has a growing bitcoin community. Although small – compared to some of its international counterparts – it consists of bitcoin startups, regular meetups, a dedicated co-working space, investors, and enthusiasts. However, the majority of Kenyans are still hesitant when it comes to buying bitcoin as an investment for three main reasons. 

Zero Support from the Central Bank of Kenya

In December 2015, the Central Bank of Kenya (CBK) stated,

“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.”

In an attempt to further dampen bitcoin adoption, the CBK instructed local banks from doing business with bitcoin startups. For example, the Kenyan bitcoin startup BitPesa was prevented from serving Kenyan customers. Elizabeth Rossiello, CEO of BitPesa, stated:

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.”

Another bitcoin startup, Kipochi, sought support from the CBK and M-Pesa but little or none was given. As a result, Kipochi died in its infancy. In an article by one of the founders of Kipochi, Pelle Braendgaard details the challenges he faced trying to push bitcoin in Kenya.

Bitcoin’s Volatility

The value of one bitcoin has increased wildly since 2009 but with wild swings in both directions. For instance, the value of one Bitcoin in January 2017 was $1000. By June, the value had appreciated to $3,000 only to fall to $2,000 a month later. In September, the value rose to $5,000 then dropped to $3,200 a fortnight later. Currently, the value of one bitcoin is over $10,000. Thus, these fluctuations do not inspire confidence in conservative investors who prefer low volatility and steady price growth. 

Insecurity and Lack of Consumer Protection

Unfortunately, the world of digital currencies is full of scammers and hackers looking to get ahold of your bitcoin and there is no consumer protection for bitcoin users in Kenya.

The lack of regulations and consumer protection has even encouraged the pyramid scheme MMM to run its business in the country unperturbed. Consequently, until virtual currencies are regulated, Kenyans will continue to be wary of investing in bitcoin as many have been burned by bitcoin scams that are all too prevalent these days. 

Is There a Future for Bitcoin as an Investment in Kenya?

According to The Star Kenya, the CBK and the Capital Markets Authority (CMA) plans on discussing cryptocurrency regulation in early 2018.

“The joint financial specter regulators forum intends to meet in the first quarter of 2018 to review oversight of fintech solutions from a holistic perspective that covers all five subsectors in the financial market: banking, insurance, capital markets, pensions, and saccos,” says Luke Ombara, the director of the Capital Markets Authority. Ombara also said that digital currencies and distributed ledger technology will be reviewed under banking.

If Kenyan regulators issue cryptocurrency regulations or provide supportive guidance for the use of bitcoin, perhaps then more Kenyans will feel encouraged to invest in bitcoin and other digital currencies. 

Kenyans that want to learn more about bitcoin and blockchain technology can attend the Nairobi Bitcoin Meetup tomorrow at the Marble Arch Hotel.

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Kidnappers in South Africa Demand Bitcoin Ransom for Teenager, Boy Found Unharmed

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Kidnappers Demand Bitcoin Ransom

In South Africa, a gang has kidnapped a 13-year old teenager and demanded a ransom to be paid in bitcoin for his release. The abductors have demanded a ransom of 15 BTC, which is an equivalent of $120,000 at today’s prices.

“This is a kidnapping! We have your child. Your child will not be harmed if the following demands are met: We demand a ransom of 15 bitcoins to be paid to the below Bitcoin wallet to secure your child’s safe release,” reads the note left by the kidnappers.

According to The South African, 13-year-old Katlego Mariate was kidnapped while playing with two of his friends at his home in Frangipani Street, Tasbetpark Extension 3, Witbank. Witnesses testified the victim was grabbed into a gold Toyota Corolla occupied by three unknown men before driving off.

The Police spokesman, Brigadier Leonard Hlathi, said the situation is being investigated:

“We are investigating a case of kidnapping that happened on Sunday in Witbank. There was a demand that was made that the parents should deposit cash in bitcoins.”

Another police officer said the parents of the victim, who are in deep shock over the incident, do not even know what bitcoin is. “They don’t even know what this bitcoin is. They’re devastated and you can see they’re worried and asking themselves: ‘Where’s our son?”

Boy Found Unharmed

According to Reuters Africa, police spokesman Hlathi informed the public that the boy was found unharmed on May 24.

This appears to be the first case in the country involving a bitcoin ransom in a kidnapping. However, it is not the first time this has happened in other parts of the world. Last year, a bitcoin analyst was kidnapped in Ukraine and, in early 2018, a lawyer was abducted with respective kidnappers demanding bitcoin as ransom in Mexico.

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Golix Shelves ICO and Takes Reserve Bank of Zimbabwe to Court Over Cryptocurrency Ban

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Zimbabwe Cryptocurrency Ban

Following the directive by the Reserve Bank of Zimbabwe (RBZ) to ban cryptocurrency, one of the largest cryptocurrency exchange in Zimbabwe, Golix, has now gone to court challenging the directive by Zimbabwe’s central bank after it was forced to shelve its token sale, which was scheduled to start on May 14. and was asked to cease operations by the central bank.

Golix informed Bitcoin Africa on May 15 that it has decided to suspend its planned ICO due to the RBZ’s new directive, which is effectively forcing them to shut down its operation by preventing banks from dealing with cryptocurrency startups. Moreover, as reported by TechZim, the central bank also reached out to Golix directly, in the week to follow the directive announcement, informing them that they are required to cease operations entirely.

Aside from warning the general public to keep away from decentralised digital currencies, RBZ sent a directive to all banks on May 11, 2018, giving them a maximum of 60 days to end any relationships they may have with cryptocurrency exchanges. Several bank accounts belonging to Golix have already been closed.

The circular, which was issued by the Registrar of Banking Institutions in Zimbabwe, N. Mataruka, lists Golix and Styx24 as the country’s cryptocurrency exchanges. In the circular, one of the reasons RBZ gave regarding the ban was that they wanted to be able to “safeguard the integrity, safety and soundness of the country’s financial system, and to protect the public in general”.

Golix is Fighting Back

Golix Launches ICOGolix will not go out without a fight. Golix has presented the High Court of Zimbabwe with three arguments on why the ban of cryptocurrency in the country is not just. In their first argument, Golix questioned whether the RBZ has any legal authority to ban cryptocurrencies. In their explanation, Golix detailed how they had severally met the RBZ including a day before the circular was released. According to their first argument, RBZ has no authority over Golix and neither have they, in their engagements, ever shown or behaved in a manner that indicated so.

Golix’s second argument terms RBZ’s directive as unfair based on the legal principle of administrative justice as the central bank of Zimbabwe neither gave reasonable notice nor the right of response. This, according to Golix’s argument, means the RBZ breached the right to Administrative Justice considering that by statue, RBZ is an administrative body.

A quote from the second argument by Golix as shared by Techzim states:

“Applicant was never advised prior to the ban that it will be implemented even though Respondents had ample opportunity to advise Applicant of same. As aforesaid, the last meeting between the parties was held on 11 May 2018. Four officials from the Applicant including myself attended the meeting while fifteen officers, including the Registrar of Banking Institutions represented the Respondents. In that meeting, the discussions were more of Respondents wanting to learn and understand the technology behind our business and our business model. The impression we got was that Respondents wanted to understand in order to begin working on regulation. No mention was made of any impending ban on our business”.

Unconstitutional Ban

According to Golix’s third argument, the ban by the RBZ is unconstitutional. Golix sited Section 68 of the constitution by saying: “Section 68 of the Constitution requires that administrative action be lawful, reasonable, proportionate and procedurally fair. I humbly submit that Respondents’ actions fell short of the standard required in the Constitution”.

In their defense, they give reasons as to why the view the directive as unconstitutional as:

“First, the press statement issued by 1st Respondent does not state the purpose for which the ban was imposed. The reason why it was necessary to impose the ban is not stated in the press statement. We can only speculate as to why the ban was imposed. In the absence of a clear reason for the imposition of the ban, it is really difficult to assess the proportionality of 1st Respondent’s decision vis-a –vis the goal it was intended to achieve. Nonetheless, even in the absence of a clear reason for the ban, it is not difficult to see that the decision is disproportionate”.

Following the directive, Golix issued a statement via their blog notifying its customers that unless RBZ changed its position before the 60-day window period given, they “will not be able to send or receive fiat currencies for cryptocurrency trades”.

While the High Court of Zimbabwe will determine the fate of the case between Golix and RBZ, the move by Zimbabwe’s central bank to ban cryptocurrencies is a clear indication of how most African states are yet to embrace digital currencies such as bitcoin. And while we cannot speculate on the ruling that the court will make, this move could slow down the adoption of cryptocurrencies in other African markets.

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Can Bitcoin QR Codes Provide Artists With A New Revenue Stream?

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Bitcoin allows everyone in the world with an Internet connection to send and receive payments without the need for a financial institution as an intermediary. This also enables anyone to be rewarded for their product, service or even artwork by simply providing a bitcoin address for payments.

Pascal Boyart, a French street artist, is using quick response (QR) codes to help Kickstart his street art career with bitcoin donations. He recently gained the attention of the bitcoin community when one of his murals became a trending topic on the Bitcoin subreddit. Boyart has already received over 0.11 bitcoin, which translates to roughly $1,000.

A self-described cryptocurrency enthusiast, Boyart believes that there are many benefits for the creative industry from decentralisation. According to a report by The Next Web, rather than displaying art in galleries and going through dealers, the bitcoin QR code is part of a movement by artists who want to gain more independence. Boyart also explores the themes that relate to crypto and decentralisation in his work. The artwork that made Boyart popular on Reddit was a mural painting of Rembrandt, the famous Dutch painter.

Bitcoin QR Codes

Bitcoin QR CodesWhen using bitcoin to pay at point-of-sale or face-to-face, users generally scan QR codes to make the payment instead of typing in lengthy bitcoin wallet addresses. A QR code can easily represent the amount of data required in a machine-readable manner for a bitcoin payment to be processed.

Independent artists often struggle financially, which is why new forms of monetisation, such as Patreon or integrating cryptocurrency QR codes into their work, provide excellent alternatives that could lead to artists being able to live solely off their art.

Boyart managed to earn revenue from his murals without needing an exhibition in a gallery simply by attaching bitcoin QR codes to his work. This shows that as a decentralised peer-to-peer payment platform, bitcoin presents all creatives, whether they are authors, artists, musicians or photographers, with a new potential monetisation avenue as they can sell their work directly to fans worldwide.

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