Bitcoin exchanges are already helping business turn customers' bitcoins into dollars, instantly. But they might have an even bigger impact in a place like Kenya.
At least that's the hope of a forthcoming bitcoin exchange known as BitPesa. As the Wall Street Journal reports, the Kenya-based startup is launching a new platform on Saturday that could disrupt the current money transfer system, using bitcoin.
The money transfer industry is huge. According to the World Bank, international migrants from developing countries are expected to send $436 billion to their home countries in 2014. Migrants from Sub-Saharan Africa alone sent $32 billion to their home countries in 2013. The problem is that it's expensive to make that money transfer, especially to Sub-Saharan Africa, where it costs African migrants an estimated 12 percent in fees to send their money home.
That's where bitcoin and a product like BitPesa could shake things up. Instead of paying a company, like Western Union, big fees, someone looking to send money to, in BitPesa's case, Kenya, would just need to purchase bitcoin and send it to someone with a Kenyan mobile money wallet (M-Pesa, Orange, Airtel, or Yu). The bitcoin is exchanged for Kenyan Shillings and transferred into the mobile money wallet. With BitPesa there are no transaction fees and a three percent fee for the currency exchange, a bargain compared to the 12 percent that is normally paid in transfer fees.
The other benefit, it only takes minutes to complete a transfer, the company says.
And Kenya could be especially ripe place for money transfer disruption. That's because many people are already accustomed to using mobile money. After launching the mobile money service M-Pesa in 2011, Safaricom already has 18.2 million customers, mostly in Kenya. And, in Kenya, twice as many people use mobile money than have a bank account. So the idea of virtual currency will hardly feel foreign.
Photo: Flickr/Jason Benjamin