Bitcoin, the alternative digital currency, has caught on around the world, from Argentina to sub-Saharan Africa. Completely free of any privately-held financial institution or government central bank, users with access to the bitcoin exchange the currency via an encrypted peer-to-peer software system over the web or by mobile telephony. The system has its hitches. First, the currency’s exchange rate was volatile for much of the year. Bitcoin’s instability, therefore, has attracted its fair share of critics; others have slammed the system as a means to fund illegal drugs and gambling (true of any currency, of course). Nevertheless, more businesses, merchants and individuals embrace the currency. Some pubs in Britain accept bitcoins; Argentines weary of inflation and the country’s dodgy banking system are warming up to the currency, too. In Africa, one in three Kenyans and one in nine Tanzanians have a “bitcoin wallet.”
Now Safaricom’s M-Pesa, operators of a mobile phone payment platform in Kenya that has transformed the country’s financial system, announced it will integrate a bitcoin service within its system. So what does this mean for the “unbanked” population in Africa, South Asia and around the world?
M-Pesa is just one example of how emerging technology hubs such as Nairobi, Accra and Johannesburg have helped nudge much of Africa’s economic transformation. Seven of the world’s 10 fastest growing economies are in Africa, so multinationals and local companies see the continent as ripe for investment. Nevertheless, many Africans from South Africa to Nigeria still lack access to basic banking services. But with over 650 million mobile phone subscribers in Africa, various services across the continent allow deposits, withdrawals and transfers for as little as $US1.
But not everyone trusts his or her country’s local currency, and most mobile banking services either do not allow cross-border wire transfers or do so at a prohibitive cost. In steps Kipochi, the bitcoin wallet that in part solves this problem and does so with very low transaction fees. Users can send remittances more cost effectively, and easily: Kipochi users simply use their mobile phone numbers in lieu of a bank account number. M-Pesa’s agility in handling very small payments makes it a natural for users of Kipochi, which divides bitcoins into millibits, one-thousandths of the currency, or about eight cents.
For now Kipochi is only available on the web, but look for the system to eventually make its way to mobile telephones. The talk over bitcoins, meanwhile, keeps up a steady crescendo. Conferences in the financial hubs of New York and London focused on this system are on the calendar, despite misgivings—naturally, bitcoin’s emphasis on privacy and anonymity has earned it American regulators’ ire. Nevertheless, watch for this currency to spread in developed and emerging economies alike: anger at big banks here and the economies’ surge in Africa, Asia and Latin America are just a few of the reasons why this latest alternative currency is more than just a fad or means to poke a finger in the eye of the global financial system.
Based in Fresno, California, Leon Kaye is the editor of GreenGoPost.com and frequently writes about business sustainability strategy. Leon also contributes to Guardian Sustainable Business; his work has also appeared on Sustainable Brands, Inhabitat and Earth911. You can follow Leon and ask him questions on Twitter or Instagram (greengopost).
[Image credit: Bitcoin.org]