A first for Africa<\/h3>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
![\"Pelle](\"http:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2013\/07\/Pelle-Braendgaard.png\")
<\/a>Pelle Braendgaard [Source: Flickr]<\/p><\/div>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.<\/p>\n
“There are many Somali, Ethiopians, Ugandans and West Africans here. I expect we will see a fair amount of flow both ways,” he said.<\/p>\n
According to Braendgaard, the wallet is already available in South Africa – but without a local exchange method.<\/p>\n
“We will likely partner with local companies there to solve [any] issues,” he said.<\/p>\n
Currently the wallet allows users to send bitcoin to anyone with a mobile phone number world wide, except the US.<\/p>\n
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.<\/p>\n
Can Bitcoin work for Africa?<\/h3>\n
Bitcoin is a digital currency that can be moved via computer or smartphone without a financial intermediary.<\/p>\n
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.<\/p>\n
Bitcoins are produced through complex strings of code created by raw computing power \u2014 a process called \u201cmining\u201d that can in theory be carried out by anyone with a computer.<\/p>\n
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.<\/p>\n
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).<\/p>\n
![\"Bitcoin](\"http:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2013\/07\/Bitcoin-circulation.png\")
<\/a>Bitcoin circulation (click to enlarge)<\/p><\/div>\n
Bitcoins are stored on a user\u2019s 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.<\/p>\n
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.<\/p>\n
When asked if people understand and trust bitcoin in Africa, Braendgaard said that most people are familiar with the concept.<\/p>\n
“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.”<\/p>\n
“Our primary job is one of education in the beginning,” he said.<\/p>\n
More on Bitcoin<\/h3>\n
US regulator mulls Bitcoin rules<\/a><\/strong><\/p>\n Bitcoin volatility due to growing pains: backer<\/a><\/strong><\/p>\n Bitcoin economics: a primer on a volatile currency<\/a><\/strong><\/p>\n