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The Nairobi Bitcoin Meetup Shows Kenyan Interest in Bitcoin is Higher Than Ever

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Nairobi Bitcoin Meetup

The latest Nairobi Bitcoin Meetup took place at the Marble Arch Hotel on November 30, 2017. The aim of the event was to create awareness surrounding bitcoin, cryptocurrency mining, and blockchain technology.

The discussion panel consisted of Justus Kimasyu, Director of Belfrics Kenya, Ken Kimathi, the Kenyan Associate of Remitano, and Michael Kimani, Chairman of Blockchain Association of Kenya, among others.

“This is the best turn out to a bitcoin meetup that we have ever seen. I believe that bitcoin awareness in Kenya has grown greatly in the last four years,” Kimani stated.

Bitcoin Volatility and Regulations

The two main issues raised by attendees were bitcoin’s volatility and cryptocurrency regulation in Kenya. In light of the increasing bitcoin price, it was a general feeling that the recent spikes are worrying.

Nairobi Bitcoin Meetup“What are the possible solutions when dealing with such an unstable currency?” Someone asked. In answer to this question, Eugene Mutai, a software engineer, gave an example of the Russian government that is in the process of creating its own digital currency. Therefore, to avoid dealing with a volatile currency, governments might digitise already existing currencies which are more stable.

At the same time, the warning given by the Central Bank of Kenya against cryptocurrencies had many attendees wondering: was the CBK right in giving this notice?

Daniel Nyairo, a cryptocurrency writer, stated,

“I support the CBK warning on the basis that there are a lot of scammers using cryptocurrencies to steal from people. However, the CBK should clearly differentiate bitcoin from scams.”

The Blockchain

According to Rosemary, a Kenyan lawyer, blockchain technology is the biggest win for anyone in the crypto space. “For instance, blockchain technology can be used in maintaining land records, offering government services such as health insurance, and in conducting general elections,” she stated.

“Blockchain is currently the best technology in the world since the Internet,” Eugene Mutai added.

Blockchain technology offers a lot of opportunities that Kenyans can explore. For example, ChamaPesa is an app that uses blockchain technology with the objective of helping Chamas with record keeping.

Mining Cryptocurrencies

Mining cryptocurrencies is an expensive venture that requires cheap electricity and high computing power in order to make a profit. Eugene Mutai has braved the world of cryptocurrency mining and shared his experience at the event. He currently mines ZCash (ZEC).

“I got into mining not only because of the returns it gives but also because I support the blockchain system through my computing power,” he stated.

Eugene’s miner uses eight graphics cards and two internet support systems. He recommended Genesis and HashFlare to investors interested in cloud mining.

Opportunities in the Cryptocurrency Space

According to Frank Deya, head of business development at Bitsoko, the crypto space has many opportunities. Bitsoko is working on providing some of these opportunities to Kenyans, especially entrepreneurs. These opportunities will include initial coin offerings (ICOs) and customer loyalties.

Frank is of the opinion that there is potential for ICOs to take root in Kenya. An initial coin offering (ICO) is a new form of startup fundraising that involves the issuance of a new digital currency to investors. Any organisation that launches an ICO has to convince potential investors why their project is worth investing in.

On the other hand, loyalties are rewards that customers get for simply viewing the site of a business. Loyalties will also be given in cryptocurrencies.

Advice to Cryptocurrency Newcomers

Experts had a lot of advice to give to those new to cryptocurrencies. Attendees were warned to:

  • Avoid sites that offer monthly returns and membership fees for the purchase of bitcoins.
  • Avoid sites asking for referrals in order to purchase bitcoins.
  • Buy bitcoins from trusted sources when using peer-to-peer platforms.

Expert Recommendations

The bitcoin meetup was well attended but Eugene emphasized the need for increased enlightenment. On the other hand, Justus Kimasyu noted that there is only one cryptocurrency exchange in Kenya. He recognized the need for more exchanges to get into the scene.

Michael Kimani encouraged those present at the event to buy ether (ETH) since bitcoin is becoming more expensive as its price increases.

“There is a business opportunity in Etherum trading. Kenyans should take advantage,” he said.

What is next in the Kenyan Bitcoin Scene?

There will be a Bitcoin Baraza Meetup on December 10, 2017, at the Enkare Hotel in Nairobi. Interested persons should also check out the event called ‘How to Make Sense of the Cryptocurrency Frenzy’, which will be held on 7th December 2017 at Moringa School. Both events will be hosted by the Blockchain Association of Kenya.

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Nigeria’s Capital Markets Regulator to Create Framework for Cryptocurrency Regulation

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Framework for Cryptocurrency Regulation

Nigeria’s blockchain community and cryptocurrency exchanges could get a clear stance on the classification of cryptocurrencies from the country’s Securities and Exchange Commission (SEC) before the end of the year.

A Framework for Cryptocurrency Regulation Is Coming

According to a report by Pulse, the regulatory institution is set to implement the roadmap for the fintech industry as it pertains to its capital markets. According to the roadmap, between the last quarter of this year and the first quarter of 2020, the SEC is expected to:

  • Decide on its preferred classification of cryptocurrencies (either as commodities, securities or currency).
  • Develop a framework for the regulation of Virtual Financial Assets (VFAs) and VFA Exchanges.
  • Issue guidelines and standards for whitepapers and ICOs.
  • Develop a framework for KYC and due diligence for cryptocurrencies, Virtual Financial Assets, tokens, and ICOs.
  • Define clear classification for tokens based on their unique properties. They could be payment tokens, asset tokens, utility tokens or others.  

The Acting Director-General of the SEC, Mary Uduk, revealed at a Capital Markets Committee briefing last month that the Working Group to drive the implementation of the roadmap would be chaired by Adeolu Bajomo, the Vice-President of the Fintech Association of Nigeria. 

Cryptocurrencies as Commodities or Securities But Not as Currency

traderOne of the recommendations that stands out in the roadmap, which was prepared by a committee comprised of officials from the regulatory agencies, the private sector, and a member of the blockchain community, is for the SEC to recognise cryptocurrencies as commodities or securities, and not as a currency. This classification is expected to have tax implications for investors.

This recommendation is in line with the central bank’s directive last year, which stated that “virtual currencies” were not a legal tender.

Cryptocurrencies have lacked a single, definite identity. For example, Germany is treating them as money and means of payment while the US uses the Howey test to decide whether a cryptocurrency is a security or not.

Crypto Adoption in Nigeria

Citigroup, a US investment firm, reported in January 2018 that Nigerians were the third-largest holders of bitcoin as a percentage of gross domestic product (GDP). The use has ranged from ­trading to making fast, low-cost cross-border transactions, saving on the high fees taken by commercial banks and traditional money-transfer services.

Nigeria has a fast-growing young population with a significant chunk below the age of 35. But there is still a small number of people with access to the financial system. Less than 50 million people with bank accounts in a population of over 180 million. Blockchain applications could be a great way to onboard millions of underserved people into the financial system.

With the SEC expected to take responsibility for the regulation of cryptocurrencies in the country soon, we can foresee more scrutiny of Nigeria’s biggest crypto companies, which could lead to a more secure crypto trading ecosystem down the road. 

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Poor Financial Infrastructure? Why Ghanaians Need Crypto More Than Ever

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Ghanaians Need crypto

Ghanaian investors continue to face difficulties as the Bank of Ghana (BoG) continues to probe fund managers for mishandling funds. Is it time for one of the fastest-growing economies to look at cryptoassets for financial freedom?

A Three-Year-Old Banking Crisis 

Why Ghanaians Need BitcoinThe Ghanaian banking crisis started on August 14, 2017. The Bank of Ghana (BoG) revoked the licenses of UT Bank Ltd and Capital Bank Ltd and approved a Purchase and Assumption (P&A) transaction with GCB Bank Ltd that transferred all deposits and selected assets of the two banks after they were found to be insolvent.

The following year, the BoG subsequently revoked the universal banking licenses of five banks, including UniBank Ghana Limited, Construction Bank, Sovereign Bank, Royal Bank, and Beige Bank. Additionally, it issued a license to a newly created bank – Consolidated Bank Ghana Limited – which is wholly owned by the Government of Ghana.

After a tough time dealing with the aftermath of the shake-up in the banking sector, the BoG then proceeded with revoking the licenses of 23 insolvent savings and loans and finance house companies just weeks ago.

These happenings in the country’s financial sector have led to several issues in the world’s fastest-growing economy in 2019

A Time to Consider Cryptoassets?

With the current turbulences in the financial ecosystem in Ghana, one may raise the question: “Is it time for Ghanaians to consider cryptoassets as investments with real asset ownership and transparency?”

Bitcoin and other decentralised cryptocurrencies are a natural fit in situations like these. For investors and consumers to escape the uncertainty of such a disorganized space, they will have to hold assets that they directly control.

Cryptocurrencies allow users to own their assets and give them independence from regulated, mainstream and established systems. With cryptoassets, no financial institution is responsible for the safekeeping of your funds and, therefore, cannot mishandle your funds.

Unlike the current situation where thousands of Ghanaians are not sure of the future of their funds due to the changes in the financial sector over the last three years, cryptocurrency users always have control of their funds and can access them at any time.

Imagine a pregnant woman in Kumasi, Ghana who kept her money in a savings and loans institution ahead of giving birth to cater for the hospital bills but cannot access her funds and is now stuck in the hospital because the institution has been closed down.

If she held bitcoin instead, she could pay in BTC or easily exchange it to cedi, to pay her bills without any issues.

Growing Interest in Cryptoassets in Ghana

Perhaps, the point made above has already been registered in the minds of many in the country who have shown interest in cryptocurrencies, especially bitcoin.

bitcoin in ghana

Currently, Ghana sits at number three on the list of countries on Google Trends for the search keyword “bitcoin” and Accra sits at number two for the keyword “buy bitcoin“.

With a more deliberate effort to push education and adoption – like the BlockTech Women Conference Accra 2019 held last week – the existing interest in cryptocurrencies could translate into growing adoption that could disrupt the current financial system in the West African nation.

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Is Bitcoin Really A New ‘Safe Haven’ Asset?

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Safe Haven Asset

The launch of the Bitcoin blockchain in 2008 was a low-key affair among a fringe group of cryptography enthusiasts. Just over a decade later, the pioneer cryptocurrency is a world-famous phenomenon with a market value of about $10,000 at press time.

This is certainly a remarkable turnaround, which only the most ardent early supporters could envision. That said, bitcoin as a currency has taken a life of its own and is gaining rather sophisticated market functions. One of these is the emergence of Bitcoin as a possible ‘safe haven’ asset. How ready is bitcoin to perform this unique function? Let’s find out.

Bitcoin currently has a solid market presence. Moreover, a great number of retailers in the market, especially online, accept bitcoin payments. This means that bitcoin users can freely operate and trade which is a great leap forward.

Trading is efficient and simple because of modern exchanges where you can trade for USD, trade BTC-EURX or any major fiat and crypto trading pairs. Generally, bitcoin is now a currency and an asset you can freely own and transact with ease. At the moment, there are over 250,000 bitcoin transactions each day across the world.

Incidentally, some of bitcoin’s intrinsic factors have made it play a unique market function. For one, bitcoin is a finite currency. Unlike fiat which is freely printed by Central Banks, there will only ever be 21 million bitcoin. Whilst this has placed a ceiling on mass adoption as a currency, the finite virtue has made it an attractive proposition as an asset.

The Case for Bitcoin as A Safe Haven Asset

goldFor a historically volatile asset, bitcoin being discussed as a potential safe haven asset is remarkable. In years gone past, equity investors would regularly purchase gold during periods of market uncertainty to distribute risk. Gold is a traditional safe haven investment due to its scarcity and value. Can bitcoin take up such a role?

In the first few days of August 2019, stock markets went wild on fears of a USA-China trade war escalation. Simultaneously, bitcoin booked impressive gains of more than seven percent as opposed to the drops in the major stock markets. This is certainly not a fool-proof case for bitcoin as a safe asset. Regardless, crypto enthusiasts took the development with glee as part of a general argument for bitcoin’s status as a safe haven asset. The major arguments include:

  • Bitcoin is effectively immune to geopolitical tensions like the trade wars.
  • By virtue of decentralisation, bitcoin is independent of government monetary policy. This means that bitcoin prices are entirely market dependent. Accordingly, bitcoin (though significantly volatile) is attractive because it has no direct correlation to the volatility of other asset classes.
  • Bitcoin’s scarcity gives it innate value, like rare metals. Satoshi Nakamoto capped bitcoin supply at 21 million.

Potential Drawbacks

Is it that simple though? The fact that bitcoin has a life of its own is an impressive aspect of its position as an asset class. However, the case for bitcoin as a safe haven asset is not as straightforward as it may seem.

goldTraditional safe haven investments are usually boring. Gold, for all the credibility it has, has generated an average annualised return of 0.32 percent over the last five years. As a matter of fact, its value most of the time is relatively consistent. This would be fitting for the name ‘safe haven’ as it remains safe in the midst of market volatility.

However, bitcoin, even in the most generous terms, would be a ‘colorful’ safe haven. Bitcoin may have a value trajectory unique from the regular stock markets. However, this does not take away bitcoin’s volatility issues. Therefore, investors are as motivated to diversify risk in a volatile stock market as they are to cash in on potential outsize gains.

Taking prices from August 2018 to August 2019, bitcoin has appreciated more than 100 percent. This is certainly a very impressive return from an investment perspective. However, it does little to lend credence to the general idea of a ‘safe haven’ asset.

Moreover, bitcoin still has to navigate a number of regulatory challenges with global financial entities because to truly gain the status of a mainstream ‘safe-haven’, regulators like the SEC have to be on board. Additionally, the stability of the coin against hard forks and security of secondary players like exchanges can add to its credibility.

Is It a Safe Haven Asset?

From the aforementioned, you can look at it both ways. For an investor looking to distribute risk and have an asset class whose volatility does not correlate to mainstream asset volatility, bitcoin can act as a safe haven investment. However, it fails to live up to the classic role of a safe haven like gold in the market. Regardless, this debate will only intensify as bitcoin matures and grows further.

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