Markets & Finance

eBay founder invests in digital currency, asks for official flexibility


Pierre Omidyar, founder of eBay and Omidyar Network. PHOTO | FILE

Founder of eBay Pierre Omidyar has invested an undisclosed amount in a digital currency platform and is now asking central banks to embrace the innovation of virtual cash such as bitcoin.

Omidyar Network, his investing firm founded in 2004, has taken a stake in eCurrency Mint (eCM), a Dublin-based company which targets issuing digital currency to central banks.

The Iranian-American billionaire’s investment in the cryptocurrency firm comes at a time Central Bank of Kenya has cautioned the investing public against dealing with digital currencies such as bitcoins.

Omidyar reckons that use of central bank-backed digital currency can help accelerate uptake of digital transactions, infuse trust in payments systems, and drive greater financial inclusion and is cheaper than paper cash.

Financial inclusion

“eCurrency can help accelerate financial inclusion by turning today’s digital value systems into sovereign-backed national currencies, increasing trust, and addressing key issues currently hindering the adoption of digital value systems, such as interoperability,” said Tilman Ehrbeck, partner at Omidyar Network.

“eCurrency also delivers major savings to governments and taxpayers: the cost of minting and distributing eCurrency is around one-tenth of the cost of printing, securing, distributing, and eventually destroying paper.”

Mr Omidyar’s company wants to work with governments and reserve banks to help them issue own digital fiat currency, dubbed eCurrency, which is a bit different from the bitcoin.

Bitcoin is a virtual currency whose use and value has grown exponentially since inception in 2009 by a techie going by the pseudonym Satoshi Nakamoto.

Unlike traditional fiat currencies which partly derive value from the faith that users put in the issuing governments, bitcoin is not created, regulated or backed by any central bank.

CBK was sucked into the digital cash debate after BitPesa - a Nairobi-based bitcoin trading platform linked to M-Pesa and partly owned by ICT cabinet secretary Joe Mucheru – took Safaricom to court for terminating mobile money payments to its network.

Safaricom defended the decision to cancel M-Pesa services for BitPesa, saying the firm failed to adhere to Kenya’s strict anti-money laundering laws, it said in court documents.