There is an old joke to the effect that you will always know a Kenyan in a foreign city because the first thing they will ask right at the airport is where they can find an M-Pesa agent in town. Of course, this is an exaggeration, but it goes to show how the service is entrenched in Kenyan society.
M-Pesa facilitating Bitcoin adoption in Africa
For those who might not be privileged to know what M-Pesa is, this is a mobile system that allows people to store money on their cell phones and, most importantly, pass it around.
It is now a norm to pay for your dinner at a restaurant using M-Pesa and even buy electricity tokens from the power supply company when you reach home and you are greeted with a blackout since the previous token has expired.
Vodafone through its local subsidiary, Safaricom, launched M-Pesa in 2005. Since then this service has grown so big so that when there is system downtime, everything across the country seems to come to a standstill.
And the numbers explain why this is so. Of the 40 million Kenyans approximately living in the country, there are close to 17 million active M-Pesa accounts. That means if you took away the approximate number of those under and over the age of the majority, it becomes clear that almost every adult transacts using the mobile money service.
On the face of it, M-Pesa it seems to be the perfect competitor that bitcoin has to take on if it dreams of becoming mainstream in the country. However, recent developments seem to point to the opposite.
In November 2013, the digital currency exchange, Bitpesa, opened up shop in the country and one of its leveraging tools turned out to be M-Pesa.
Its initial target market was individuals sending money from UK to Kenya. While the sender sends bitcoins, the recipient receives the money in the form of Kenyan Shillings with their mobile number or M-Pesa account serving as the digital wallet.
But that seem to have expanded to enable individuals to covert their money between shillings and bitcoin using an M-Pesa account. Indeed, it is now possible to buy bitcoins using M-Pesa for other purposes such as trading.
And the cost of all these transactions is capped at 3%.
Things seem to be going well for the company as it was able to raise up to US$1.1 million in its second round of funding from San Francisco-based Pantera Capital, Crypto Currency Partners, Future/Perfect Ventures, Stephens Investment Management, and Bitcoin Opportunity Corp. among others in February 2015.
And this is not the only company that is using M-Pesa to transact between fiat and bitcoin. Tagpesa, a local company, got into the market in late February with a similar service.
At about the same time, the company was acquired by the Australian exchange Igot, one of the fastest-growing Bitcoin exchanges in the world. It is already operating in close to 50 countries, including the Middle East.
In result, what these two companies have done is turn a potential formidable business rival into a dependable partner. And at least for the foreseeable future, these services seem to be the simplest, cheapest and most convenient channels through which Kenyans will interact with bitcoin.
by Daniel Nyairo
Did you enjoy this article? You may also be interested in reading these ones: