Bitcoin wallet Kipochi eyes African adoption
Bitcoin wallet Kipochi eyes African adoption
When Kenya’s biggest telco Safaricom launched its mobile money offering M-Pesa in 2007, it would transform the way Kenyans and even other Africans transfer cash to each other.
Mobile money offerings since then have gone to be used across multiple countries in Africa.
Telecommunications firm Orange, for example, has on Friday unveiled a mobile money offering that enables cross-border transfers among three West African nations.
But African startup Kipochi, which launched on 2 July this year, plans to take the concept of transferring money among mobile phones global by enabling handsets across Africa and even parts of the world to become bitcoin wallets.
Kipochi is bitcoin wallet technology where users’ mobile numbers become their account numbers. Bitcoins can then be sent and received across borders, with only the US not being able to use the Kipochi service.
Users can apply for a Kipochi wallet by enrolling details on the Kipochi website using a web enabled phone. Details such as their full names, email addresses, mobile numbers and ID numbers are required.
Of course, users need to buy bitcoins from exchanges in Africa or globally as well. But Kipochi says it has teamed up with a Kenyan bitcoin seller who sells coins via mobile money service M-Pesa.
“Kipochi itself will never directly sell and buy Bitcoin. We are looking to partner with bitcoin sellers and exchanges throughout Africa. We will also soon be launching a simple to use merchant interface that integrates with the wallet,” says Pelle Braendgaard, co-founder of Kipochi.com.
Kipochi says that while it is trying to make its service seem similar to a mobile money service such as M-Pesa, it's different both technically and legally.
“With bitcoin a wallet basically holds on to the keys to the account. The wallet doesn't hold any customers funds as such as they live within the bitcoin network itself,” says Braendgaard.
Bitcoin transactions typically occur when a buyer uses software to encrypt a specific number of virtual coins with a code. The buyer then affiliates that code with a seller's public key or ‘address’, and once a transaction occurs, the software broadcasts to the bitcoin network that the particular amount of coins are owned by the seller.
Bitcoins do have advantages over mobile money. The virtual currency can be traded across international borders, while mobile payment systems are limited to money transfers within countries and, at best, regions. Furthermore, mobile payment systems are tied down to telcos or banks, while bitcoins work on a decentralised model.
Disadvantages of bitcoin, though, do include that it is not widely acceptable as a form of payment for goods and services, whereas M-Pesa in Kenya, for example, has become increasingly accepted as a payment means even for the likes of rent.
Nevertheless, bitcoin wallets allow owners of the virtual currency to transact with the world by giving them ownership of bitcoin addresses that they can use to receive coins from other users and then lets you send those coins onwards.
Like email, users can receive bitcoins when they are offline, and all wallets are compatible with each other
Yet, according to Kipochi, one Bitcoin is currently worth about 979.85 South African rands, a figure that is incredibly high when considering that one US dollar buys just over nine South African rands.
Kipochi’s founders say “this is way to (sic) much to use for normal day to day transactions.”
But the bitcoin currency does support transactions down to 0.00000001 bitcoin, and it is these transaction levels that Kipochi is hoping its users will use.
When transferring bitcoins across borders, though, lawmakers in nations such as the US have raised eyebrows about how to control the flow of the currency.
Concerns among some lawmakers in the US are that because of bitcoins’ decentralised nature, they could be used by criminals, for instance, to make drug purchases without having their transactions tracked.
Reuters reported last month that two US senators are even pressing federal authorities to crack down on an online black market and bitcoins after reports that they are used to buy illegal drugs anonymously.
Apart from the risk of a crack down on bitcoins, tax issues may surround the purchase and selling of the currency in various countries as well.
“While I'm not aware of any African countries tax authorities making a specific judgement yet on Bitcoin, I would recommend you think of it as being similar to gold,” says Braendgaard.
“If you receive payment with gold you are still taxable. The safest bet is to assume that you are taxable with Bitcoin earnings as well.
“As an investment you should look at it as any other asset whose price could go up or down. Germany's tax authority ruled that there is zero capital gains tax on bitcoin held for over a year, matching their existing rules,” he adds.
Regardless of concerns, risks or confusion regarding bitcoin, Kipochi says it is pushing ahead with its offering especially on the continent.
“We are actively pursuing the African market as a whole and not just Kenya.
“We should be available everywhere with mobile data and SMS,” concludes Braendgaard.