The buzz of Bitcoin
While the Reserve Bank of Malawi (RBM) is yet to issue an official statement on Bitcoin—a form of cryptocurrency—international media is awash with news of how digital money is making headway in the financial market.
Unlike notes or coins people use to make transactions, Bitcoin largely exists online and is considered an alternative currency.
The market capitalisation of all crypto-currencies is estimated at $150 billion but is seen as very volatile and of high risk as digital currencies are not printed by governments or traditional banks and are, therefore, unregulated.
Virgin Money, a UK-based bank and financial services company has since joined Lloyds Banking Group in banning customers from buying Bitcoin and other digital currencies with their credit cards.
Spokesperson for the Ministry of Finance, Economic Planning and Development, Davis Sado, said the central bank is mandated to regulate all financial matters and that it is up to on the central bank to come up with a position on the Bitcoin market.
Some people we spoke to indicated that they had received either text messages or emails inviting them to purchase Bitcoin.
British Prime Minister, Theresa May, was quoted recently by the BBC as saying that action against digital currency may be required “precisely because of the way they are used, particularly by criminals.”
Both Sado and President of the Economics Association of Malawi (Ecama), Chikumbutso Kalilombe, said Malawians should be cautious to avoid being scammed.
Kalilombe said, considering that financial literacy in Malawi is at slightly above 30 percent, there is need to do civic education to empower people with information on the Bitcoin market.
“RBM should work with financial service players to sensitise the masses but people need to be cautious, when making Bitcoin transactions to avoid being duped,” he said.
The Ministry of Finance has since pledged to work with RBM to decide on the way forward on the issue.
RBM Director of Communications and Protocol, Mbane Ngwira, was yet to respond to our questions when we went to print.
Facebook recently announced it would block any advertising that promotes crypto-currency products and services.
Bitcoin is notorious for its volatility, amid reported unprecedented peaks recently. In late 2013, its value jumped from around $100 to $1,000 but it is worth more than four times that today.
The BBC has reported that speculation is driving the Bitcoin market but that many people think that Bitcoin is just a bubble.
Crypto-currencies remain associated with plenty of risks that go beyond their volatility. Many people store their bitcoins in online exchanges and should these be hacked or go bust, which has happened more than once, then the money is often lost forever.
Offshore, one of Japan’s largest digital currency exchanges, Coincheck, has said it would refund $534 million (£380 million) worth of virtual assets lost in a hacking attack.
Coincheck will use its own funds to reimburse more than 46 billion yen ($423 million) to customers who lost their NEM cryptocurrency coins towards the end of January.
The Tokyo-based company suspended trading after detecting “unauthorised access” of its digital exchange.
Some 260,000 customers are said to be affected by the reported theft.
Bi tcoin ended last week down 30 percent at $8,291.87, its worst week since April 2013 and far below the $19,000 it reached last November.
However, the crypto-currency is still ahead of the $1,000 it was trading at this time last year.
Over the weekend, several of the biggest issuers of credit cards in the US also banned customers from using their cards to buy digital currency.
The list of financial firms included Bank of America, Citigroup, JP Morgan, Capital One and Discover.
Bitcoin and other crypto-currencies are gradually cementing their stated position – providing a radical new alternative to the investment options that existed before them. But there is no certainty as to how this massive experiment will play out. Additional information sourced from The BBC
