It takes less than five minutes to sign up for a Kipochi wallet, a service which should link an M-Pesa account to the volatile world of bitcoin.

Kipochi is a service that was launched last year with the aim of using the virtual currency, bitcoin, for remittance and money transfer across borders.

In Kenya, Kipochi’s selling point is that subscribers can use their M-Pesa accounts to purchase bitcoin. People living abroad can also transfer the value of bitcoin to M-Pesa accounts in Kenya.

However, on Friday last week, Smart Company could not buy any bitcoin via the platform. The reason given was on-going upgrades to the service which “should be available again soon”.

Despite the technical hitches, Kipochi is in the vanguard of services that may be offered increasingly to Kenyans as bitcoin entrepreneurs turn their eye to markets in the developing world.

BitPesa is another bitcoin money transfer service eyeing East Africa. In the run-up to the expected launch, the company declined to comment on its progress in Kenya.

In response to questions from Smart Company, the Central Bank of Kenya (CBK) said there had been interest from firms looking to link Kenyans and local payment systems to bitcoin.

“The Central Bank has been contacted by some entities that are proposing to use bitcoin. The entities have been informed of the laws, regulations and procedures required to offer remittance services in Kenya. However, no applications have been received by the Central Bank for approval to transact in bitcoin,” said the regulator in a statement.

Bitcoin is a virtual currency whose use and value has grown exponentially since its inception in 2009, putting to question the traditional roles adopted by governments in regulating the flow of money.

Unlike traditional fiat currencies which partly derive their value from the faith that users put in the issuing governments, bitcoin is not created, regulated or backed by any Central Bank. Instead of being minted or printed, bitcoin is digitally-mined.

Using computers, miners solve complex math problems online. For each solution, bitcoins are awarded. This stands in contrast to state-backed currencies whose circulation is determined by central banks.

Bitcoins exist wholly in the digital realm. Users can buy them, store them in electronic wallets and use them to buy goods and services. An increasing number of merchants globally are coming to accept bitcoin as a valid form of payment.

Although the conversation surrounding bitcoin is just taking off in the developing world, commentators say that bitcoin entrepreneurs could find a niche in these markets.

Remittance transfer services such as Kipochi have hit one of those niches. Money transfers are increasingly becoming vital to economies in Africa and Asia. The cost of sending money, however, remains punitive.

In Africa, the World Bank estimates, the cost of sending money is equivalent to 10 per cent of the transaction. Bitcoin money transfer services have tried to compete with firms such as Western Union by offering significantly lower fees.


Bitcoin has also proven particularly attractive in that it seems to be inflation-proof. The value of fiat currency is often at the whims of central banks. Bitcoin, which is outside this regulatory fold, is not similarly affected by inflationary pressures.

Further, bitcoin enthusiasts point out that the finite amount of currency that can be mined (produced) is in-built immunity against inflation. The limit for the number of bitcoins that can be mined is 21 million. As of Friday, 12.3 million bitcoin had been mined.

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