The Bank of Ghana has announced that trading and using the popular cryptocurrency known as Bitcoin in the country is not yet legal because it is not recognized as a legitimate form of currency in the country.
The Governor of Ghana's central bank, Dr Ernest Addison at a media briefing to conclude the Monetary Policy Committee (MPC) annual meetings on Monday, January 22 in Accra said the necessary regulations to support the use of Bitcoin and other cryptocurrencies currently do not exist in the country.
All mediums of exchange in the country must be approved by the Bank of Ghana and there is currently a Settlements and Payments bill before Parliament which will cater for the use of cryptocurrencies in the future.
However, before that bill is passed by Ghanaian lawmakers, the country joins a list of six countries that have outlawed the cryptocurrency. The remaining countries are Morocco, Bolivia, Ecuador, Nepal and China.
Bitcoin is very popular in Ghana and in April 2016, a cursory glance at the Google Trends for the term “Bitcoin” ranked Ghana at number one in the world at 100% interest.
The vice president of Group Nduom, Papa-Wassa Chiefy Nduom recently urged the Bank of Ghana to diversify its investments by placing one percent of its reserves in Bitcoin.
Mr Ndoum, the son of former Progressive Peoples Party (PPP) presidential candidate Dr Papa Kwesi Nduom said, “I don’t think it’s a gamble, I think every investment is a gamble, getting out of your bed in the morning is a gamble. If you are completely preoccupied with risk you won’t do anything… in terms of managing reserves there is potentially a new reserve asset and as a central bank, you need to study blockchain.
He said, “Everybody agrees with that now…IMF and the rest, they’ve all said blockchain is potentially disruptive technology. Some people think it will get rid of banks. So as a central bank, you’ve got to pay attention.”
He said, “On the investment case, for a central bank, especially for a country that needs to come up with solutions, we need more funding for investments and my view is, by making that investment and by signalling that it’s an enabling environment for investments. For example, if the exchange is domiciled in Ghana trades in the digital currency will not be subject to tax or capital gains but will tax the profit that the exchange is made. That could result in massive inflows of foreign currencies to Ghana.”
“For central banks in Africa, 13 of them that I have studied, in 2016 term, they had about $111 billion in reserves and it’s also projected that the dollar may fall, against other currencies and they [central banks] already have an imperatives to rebalance their dollar holdings based on the current view of where the dollar may go. So for them [central banks] they have to rebalance anyway or they are going to lose money; potentially,” he said.
Mr Ndoum advised that African central banks, “may buy euros, Swiss franc, or Australian dollar or New Zealand dollars but they can also invest in this [bitcoin] because big investors in the world believe that this [bitcoin] will be a new digital reserve currency and reserve currencies are for central banks, and the central banks also have the technical capability to make a decision on this.”
Bitcoin has increased a lot in popularity since it was created in 2009 but there still remain several regions around the world where it, and other cryptocurrencies such as Litecoin and Ethereum, are classified as illegal and not recognized as a legitimate form of currency.
Bitcoin users in North America don't have anything to worry about as the cryptocoin is completely legal to own, buy, sell, trade, and mine in both Canada and the United States.
Here are some countries to keep an eye on though when planning your next trip abroad. Bitcoin isn't accepted everywhere just yet.
Bitcoin in Morocco
Bitcoin and other cryptocurrency transactions were officially outlawed in Morocco in November 2017 seemingly in response to a major Moroccan digital services company, MTDS, announcing a few days prior that it would begin accepting Bitcoin payments.
Sending and receiving payments via any cryptocurrency in Morocco is punishable by fines.
Bitcoin in Bolivia
Cryptocurrencies have never been legal in Bolivia and the government has been known to enforce its anti-Bitcoin stance rather firmly. People caught using Bitcoin and other cryptocoins can be fined and a number of users have even been arrested on more than one occasion for trading and mining Bitcoin.
Bitcoin in Ecuador
Ecuador outlawed Bitcoin and other cryptocoins in mid-2014 as part of its financial reform plans.
The ban on Bitcoin was seen by many as a way to reduce competition with the country's own digital currency system (Sistema de Dinero Electrónico). This official Ecuadorian currency isn't a cryptocurrency and isn't based on blockchain technology. It's simply a digital money solution based on traditional money and valued after the American dollar.
Anti-Bitcoin laws don't appear to be too strict in Ecuador as there are still several ways to buy and sell Bitcoin and other cryptocoins domestically. Enforcement isn't as strict as other countries like Bolivia and Bitcoin is seen as something that might be technically illegal but is still used by a small number of the population.
Bitcoin in China
The trading of Bitcoin and other cryptocurrencies was banned in China in September 2017. Due to the technology being so popular in the country before the ban though, the change in law hasn't ceased its use completely and many Chinese people continue to trade cryptocoins via in-person trades and chat apps like Telegram and WeChat.
The Chinese government appears to target professional cryptocurrency trading companies over individuals.
Bitcoin in Nepal
Nepal's stance on many aspects of Bitcoin and cryptocurrency is a little ambiguous however it has been confirmed that the trading of Bitcoin is considered illegal following several arrests of Bitcoin traders in 2017 that resulted in a combination of fines and jail terms for those involved. Attempting to use Bitcoin and other cryptocoins in Nepal is not recommended.
What is Bitcoin? by www.coindesk.com
Bitcoin is a form of digital currency, created and held electronically. No one controls it. Bitcoins aren’t printed, like dollars or euros – they’re produced by people, and increasingly businesses, running computers all around the world, using software that solves mathematical problems.
It’s the first example of a growing category of money known as cryptocurrency.
What makes it different from normal currencies?
Bitcoin can be used to buy things electronically. In that sense, it’s like conventional dollars, euros, or yen, which are also traded digitally.
However, bitcoin’s most important characteristic, and the thing that makes it different to conventional money, is that it is decentralized. No single institution controls the bitcoin network. This puts some people at ease, because it means that a large bank can’t control their money.
Who created it?
A software developer called Satoshi Nakamoto proposed bitcoin, which was an electronic payment system based on mathematical proof. The idea was to produce a currency independent of any central authority, transferable electronically, more or less instantly, with very low transaction fees.
Who prints it?
No one. This currency isn’t physically printed in the shadows by a central bank, unaccountable to the population, and making its own rules. Those banks can simply produce more money to cover the national debt, thus devaluing their currency.
Instead, bitcoin is created digitally, by a community of people that anyone can join. Bitcoins are ‘mined’, using computing power in a distributed network.
This network also processes transactions made with the virtual currency, effectively making bitcoin its own payment network.
So you can’t churn out unlimited bitcoins?
That’s right. The bitcoin protocol – the rules that make bitcoin work – say that only 21 million bitcoins can ever be created by miners. However, these coins can be divided into smaller parts (the smallest divisible amount is one hundred millionth of a bitcoin and is called a ‘Satoshi’, after the founder of bitcoin).
What is bitcoin based on?
Conventional currency has been based on gold or silver. Theoretically, you knew that if you handed over a dollar at the bank, you could get some gold back (although this didn’t actually work in practice). But bitcoin isn’t based on gold; it’s based on mathematics.
Around the world, people are using software programs that follow a mathematical formula to produce bitcoins. The mathematical formula is freely available, so that anyone can check it.
The software is also open source, meaning that anyone can look at it to make sure that it does what it is supposed to.
What are its characteristics?
Bitcoin has several important features that set it apart from government-backed currencies.
1. It's decentralized
The bitcoin network isn’t controlled by one central authority. Every machine that mines bitcoin and processes transactions makes up a part of the network, and the machines work together. That means that, in theory, one central authority can’t tinker with monetary policy and cause a meltdown – or simply decide to take people’s bitcoins away from them, as the Central European Bank decided to do in Cyprus in early 2013. And if some part of the network goes offline for some reason, the money keeps on flowing.
2. It's easy to set up
Conventional banks make you jump through hoops simply to open a bank account. Setting up merchant accounts for payment is another Kafkaesque task, beset by bureaucracy. However, you can set up a bitcoin address in seconds, no questions asked, and with no fees payable.
3. It's anonymous
Well, kind of. Users can hold multiple bitcoin addresses, and they aren’t linked to names, addresses, or other personally identifying information. However…
4. It's completely transparent
…bitcoin stores details of every single transaction that ever happened in the network in a huge version of a general ledger, called the blockchain. The blockchain tells all.
If you have a publicly used bitcoin address, anyone can tell how many bitcoins are stored at that address. They just don’t know that it’s yours.
There are measures that people can take to make their activities more opaque on the bitcoin network, though, such as not using the same bitcoin addresses consistently, and not transferring lots of bitcoin to a single address.
5. Transaction fees are minuscule
Your bank may charge you a £10 fee for international transfers. Bitcoin doesn’t.
6. It’s fast
You can send money anywhere and it will arrive minutes later, as soon as the bitcoin network processes the payment.
7. It’s non-repudiable
When your bitcoins are sent, there’s no getting them back, unless the recipient returns them to you. They’re gone forever.
So, bitcoin has a lot going for it, in theory. But how does it work, in practice? Read more to find out how bitcoins are mined, what happens when a bitcoin transaction occurs, and how the network keeps track of everything.