When a user wants to buy bitcoins, Kipochi's backend servers place an order with a local bitcoin exchange, which charges a 2 percent spread to buy or sell the currency. The local exchange delivers the bitcoins to Kipochi's servers. Kipochi users receive an SMS when their account is credited. Kipochi maps a user's phone number to a character alphanumeric Bitcoin address, which is needed in order to receive the digital currency. It also allows users to send bitcoins to another person just using their phone number, a key component for usability, Braendgaard said.
Sell BTC to these buyers
Due to the low-value transactions handled by M-Pesa, Kipochi also works in a much smaller denomination of bitcoin, a "millibit," or one-thousandth of a bitcoin. The bitcoins are also not stored on a mobile device. Bitcoin uses public key cryptography to complete transactions, and Kipochi's servers securely store the bitcoins' private key needed to send the currency, Braendgaard said. So far, Kipochi is just a web service, but developers are working on an operator menu for use on feature phones. People in the U.
Perhaps surprisingly, Kipochi doesn't have a plan to make money. Aside from the fees a user pays to buy or sell bitcoins at the exchange and the fees associated with M-Pesa, Kipochi itself is free. Braendgaard said Kipochi is a "loss leader" intended to spur more interest in Bitcoin in developing countries.
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But Braendgaard said he is working on a merchant platform called "Soko" that uses bitcoin. He won't reveal many details, but said the platform will tackle authentication issues around payments and scenarios such as recurring subscriptions. But before a merchant platform is feasible, people have to start using Bitcoin. Braendgaard said he has seen many virtual currency projects fail, but Bitcoin holds the most promise of any. Here are the latest Insider stories.
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More Insider Sign Out. Sign In Register. The surge in popularity of Bitcoin and other crypto-currencies has led many experts to believe that Africa will once again leapfrog the digital divide, bypassing traditional banking much like it did with the fixed-line telephone. Yet even in the famed Kenyan tech hub of "Silicon Savannah" there are few if any businesses that allow customers to buy with Bitcoin - and there are cautionary tales.
Look out for it on partner stations from 22 October. Peter Oduba, a would-be investor from Kenya, fell for a Bitcoin Ponzi scam called Crypto Wealth and lost a significant amount of money in the process. He told the BBC the scam had involved "six pots" investors could "jump into". We didn't know it was a scam, and we did it for quite some time and then it just collapsed. Bitcoins, and the blockchain technology that underpins crypto-currencies, are often touted as presenting an opportunity to transform business and the way governments run in Africa. Transparency and accountability are key aspects of the blockchain system - two qualities citizens seek in African countries that have been mired in corruption and maladministration.
Pan-African telecommunications company Liquid Telecom said in its blockchain report this year, that the technology was a "truth engine that represents a new opportunity to improve processes and drive efficiency". If all government contracts, tenders and budgets were available in an incorruptible blockchain network there would be an exponential decline in corrupt practices and shady deals. But it is important to note that blockchain technology is not the panacea to the governance problems seen in parts of Africa.
Much of the appeal of Bitcoin and other crypto-currencies for investors is that they are free from the strictures of regulatory authorities, partly because legislation has not caught up with the technology yet. South Africa's central bank trialled a system earlier this year called Project Khokha, which used blockchain technology, to process interbank payments and settlements.
It found that "the typical daily volume of the South African payments system could be processed in less than two hours" with full confidentiality of transactions assured. Earlier this year, the country's Senate ordered an investigation into Bitcoin trading and central bank governor Godwin Emefiele warned: "Crypto-currency or Bitcoin is like a gamble, and there is a need for everybody to be careful.
Kenya is finally softening its stance on blockchain technology
Business instinct and pioneering endeavour has led Ms Wambugu to invest in Bitcoin and make it a payment alternative for her customers. Betty's Place is at the confluence of traditional food and modernity in a rural setting, and that is exactly how Ms Wambugu wants it to be.
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Five African tech trends to look out for in Africa Today podcasts. Bitcoin lessons. Behind the jargon. It is a crypto-currency that has no notes or coins. It is digital and largely exists online and is not issued by governments or traditional banks. What is blockchain?
It is the technology that underpins Bitcoin - a method of recording data, a digital ledger of transactions, agreements and contract. Distributed across computers around the world, no one person or entity can control the data, which makes it transparent. Mobile phones make paying with crypto-currency at Betty's Place and other retailers easy.