Kipochi has launched as Africa’s first bitcoin wallet, piggy-backing on Kenya’s M-Pesa system.
M-Pesa is widely popular mobile payment system in Kenya with more than 70% of the country’s adult population using the virtual wallet for small transfers.
The system is supplied by Vodacom through Kenyan mobile operator, Safaricom, though the Kipochi to M-Pesa service is operated by an independent 3rd-party company in Kenya and is not directly affiliated with Safaricom.
Kipochi CTO, Pelle Braendgaard, took to Reddit to answer questions about the bitcoin wallet, how it works, and explain where the company plans to go.
A first for Africa
Kipochi links to M-Pesa in Kenya, and allows users to send and receive bitcoin by converting it to and from the M-Pesa balance.
The company is working on streamlining this process even further, and hopes to partner with exchanges and mobile operators throughout the developing world, the CTO said.
According to Braendgaard, the company’s aim isn’t to directly compete with M-Pesa, but rather to give users access to international transfers at lower rates.The system currently uses a combination of web and SMS, but Kipochi is testing a USSD implementation which will allow it to bring bitcoin to every single feature phone user in about 20 countries in Africa.
“There are many Somali, Ethiopians, Ugandans and West Africans here. I expect we will see a fair amount of flow both ways,” he said.
According to Braendgaard, the wallet is already available in South Africa – but without a local exchange method.
“We will likely partner with local companies there to solve [any] issues,” he said.
Currently the wallet allows users to send bitcoin to anyone with a mobile phone number world wide, except the US.
The service currently actively blocks US IP addresses and phone numbers from the wallet to avoid exposure to regulatory action by either the US or individual states.
Can Bitcoin work for Africa?
Bitcoin is a digital currency that can be moved via computer or smartphone without a financial intermediary.
It was launched in 2009 in the wake of the global financial crisis by an anonymous programmer who wanted to create a currency independent of any central bank or financial institution.
Bitcoins are produced through complex strings of code created by raw computing power — a process called “mining” that can in theory be carried out by anyone with a computer.
As more bitcoins are mined, it becomes harder to produce them, with the total amount of bitcoins allowed to be in circulation capped 21 million.
There are currently just under 11.4 million bitcoins in circulation, carrying a total market value of US$887.64 million (trading at US$77.9 on Mt Gox).
Bitcoins are stored on a user’s hard drive in a virtual wallet, and can be sent directly to another person. These peer-to-peer transactions bypass banks and are largely anonymous.
Due to the anonymous and virtual nature of the currency, the system is susceptible to security risks and manipulation through hacking, with little to no recourse for traders.
When asked if people understand and trust bitcoin in Africa, Braendgaard said that most people are familiar with the concept.
“There is some knowledge of it amongst more educated people,” Braendgaard said, “But ordinary people I explain it to instinctively understand the concept and benefits, without questioning the technical aspects too much.”
“Our primary job is one of education in the beginning,” he said.