The Bitcoin revolution is set to change the monetary system in the world. However, the biggest question that is left lingering in people’s mind is; how will it traverse through the complicated and compact governmental policies? Neither the president nor government can stop a Bitcoin transaction; it’s a private and relatively well secured transaction. In short, the cryptocurrency has nothing tied to it; even banks are left to watch from a distance.
In some countries, Bitcoin is the real deal. The cryptocurrency is booming all over the townships. As much as I might not consider Bitcoin real money, the coin is making people really rich. Institutions and politicians are adopting the fact that, technology must revolutionize the world. Larry Summers, an American economist provided that he’s 100% behind the technology. In addition, US presidential candidate Rand Paul began accepting bitcoin donations, just to mention but a few.
Currently, the Bitcoin price is around $425 and the techies believe that it’s here to stay albeit the increasing opposition from policy makers. Sam Gichuru, Co- Founder and CEO at Nailab believe Bitcoin can survive and replenish the unpredictable economy.
In the past – 4,000 BC, priests acted as bankers, the temples played the role of banking halls and the items kept were gold and silver. Well, modern banking tracks back to 1826 when there was an economic recess which led to a crisis in the banking sector. Banks were not able to meet their obligations and users became impatient leading to a ‘run on the banks’ – this occurs when all customers of a bank demand to have all their money paid in cash. Ideally, banks are for safekeeping but in practical terms they invest the money and keep only a small amount in liquid assets.
In that period, many banks collapsed leaving a few struggling to sustain people’s needs. Prior to the crisis, there were no regulations and banks were mainly operated through partnerships limited to six people who had to raise capital. To shine light on the naivety, policy makers came up with regulations. The following Acts and Regulations govern the payment infrastructure in Kenya: Central Bank of Kenya Act, National Payment System Act, Kenya Information and Communication Act, Consumer Protection Act, Proceeds of Crime Act and Anti-Money laundering Act.
However, Bitcoin has close to zero legal framework. Many people would like the virtual currency to be inscribed in the Data Protection Bill and Cyber Crime and Computer Related Crimes Bill. Across the world governments are in a gape trying to adopt the growing online market and experts from different institutions believe the online system might be a scheme or a mystery since it’s issued by an algorithm in a computer.
“I think the Central Bank of Kenya should place a ban on it. Kenya is not ready for such innovation. What if somebody pulls the thing down yet there’s no law governing it? We need to ask ourselves tough questions before embracing money related innovations. To add on that, tough policies may hinder the cryptocurrency.” Kevin Jumba and Keneth Agir, from the Ministry of Interior and Co-ordination of National Government Department of IPRS (Integrated Population Registration Services) commented.
In Hampshire legislators killed a bill that would allow the residents to pay their tax bills using bitcoin. The bill was introduced by state Representative Eric Schleien last January. The representative wanted the citizens in New Hampshire to pay taxes and fees using the digital currency because most people in the country were already carrying transactions using Bitcoin. If the Bill had passed, the New Hampshire State Treasurer would have been mandated to select a bitcoin payments firm to process the transactions and prepare a plan for how to accept bitcoin payments by January 2017.
In Kenya, the Central Bank released an advisory regarding digital currency like bitcoin. The bank stated that they are not considered legal tender. Kenya’s BitPesa toured the court a number of times following a lawsuit involving money network M-Pesa operator Safaricom and Lipisha, a payments gateway.
BitPesa filed the lawsuit after it lost access to M-Pesa in mid-November last year. BitPesa had used Lipisha as a way to offer M-Pesa as a payment option to Kenyan bitcoin buyers. The startup provided that Safaricom intimidated its gateway partner, Lipisha, forcing it to suspend its services without prior notice. Legally, Safaricom infringed on their rights to acquire and own property, fair administration and economic interests.
As a defense, Safaricom argued that the suspension of Lipisha was justified because of anti-money laundering rules. Safaricom claimed that Bitpesa had failed to obtain authorization for bitcoin transfers from Kenya’s central bank. As a result, Bitpesa’s transactions through Lipisha and its account at Safaricom contravened some rules. But a lawyer representing the two companies said Safaricom failed to understand the central bank’s requirements.
“The Central Bank told BitPesa that bitcoins are not regulated in Kenya but Safaricom insists that it produces a license to that effect,” the firms’ lawyer, Kiragu Kimani, said.
Besides court cases and other demerits, BitPesa is making huge strides in the market by signing more users both in Africa and globally. Early this year, the startup partnered with Airtel and MTN. The partnership gives BitPesa an upper hand in establishing itself in more African countries.
Bitcoin is a currency that one will never see nor touch since exchanges are made in wallet software. In addition, it’s not controlled by any central bank or authority so the value of your bank balance is determined by the supply and demand of market. In Kenya, few people have bitcoin knowhow.
“I think that’s an experiment because I don’t even trust M-PESA with my money. Many people in this market are not that educated. If Bitcoin was to takeover Kenya, they should have engaged everybody in the village and carryout an extensive training. Now they are very late because banks are also going digital with their mobile Apps and friendly services. Michael Okoth, a shop owner at Toy Market said.
Bitcoin transaction or growth in value is also affected by network failure. Early this year, the price of bitcoin declined in global markets, falling by 15%. In dollar-denominated markets hit a low of $372.73.
An independent educational group – Consumer Research, wrote a publication blockchain technology. In the publication, the researchers brought out the opportunities presented by the technology, the challenges present today and potential solutions to those concerns. Joe Colangelo, executive director for Consumers’ Research wrote. “At the core of bitcoin is the ability to send money faster around the globe, improve property rights, and enable people who have never met to fully trust one another.”
The researchers believe Bitcoin will bring a new era in the world and governments should open their hands because technology will solve many problems. “We believe that we now find ourselves in a situation not unlike that faced by our predecessors,” the report states.