| dc.description.abstract | Bitcoin first appeared in January 2009, the creation of a computer programmer using the
pseudonym Satoshi Nakamoto who invented an open source, peer to peer, digital
currency. The Bitcoin system is private, but with no traditional financial institutions
involved in transactions. Unlike earlier digital currencies that had some central
controlling person or entity, the Bitcoin network is completely decentralized, with all
parts of transactions performed by the users of the system. With a Bitcoin transaction
there is no third party intermediary. The buyer and seller interact directly but their
identities are encrypted and no personal information is transferred from one to the other.
However, unlike a fully anonymous transaction, there is a transaction record stored in a
global Bitcoin general ledger that is used to validate transactions. For this reason Bitcoin
transactions are thought to be pseudonymous, not anonymous. Although the scale of
Bitcoin use has increased substantially, it still remains small in comparison to traditional
electronic payments systems such as credit cards and the use of dollars as a circulating
currency. There are concerns about Bitcoin's use in illegal money transfers and concerns
about the protection of consumers and investors who might use it which raises the issue
of the regulation surrounding Bitcoin. Furthermore, there are also a number of
disadvantages that could hinder wider use. These include sizable volatility of the price of
Bitcoins, uncertain security from theft and fraud, and a long term deflationary bias that
encourages the hoarding of Bitcoins. On the other hand Bitcoin offers users the
advantages of lower transaction costs, increased privacy, and long term protection of loss
of purchasing power from inflation. This research found out that Bitcoin is unregulated in
Kenya with no regulation within the CBK Act outlining how it should be handled.
Secondly, the research found that use of Bitcoin reduced the cost of international funds
transfers and that users have challenges adopting the Bitcoin technology in understanding
it and how it works. | en_US |
