10 differences between Mpesa and Bitcoin

Bitcoin vs Mpesa featured image

Centralized – Decentralized

Mpesa is a centralized electronic money system owned by Vodafone. All transactions are settled on a centralized ledger on a central server.

Bitcoin is a decentralized electronic value transfer network owned by no one. All transactions occur on decentralized ledger on a distributed network.

Pegged to local fiat on 1:1 ratio – Free floating market price

KES 200 cash for MPesa KES 200 on a feature phone

Digital currency Mpesa is issued money, fully (100%) backed by liquid reserves on a 1:1 ratio. For every Mpesa unit in mobile wallets, there is matching fiat held in trust. The value is fixed.

Bitcoin is NOT backed by anything and derives its price from a free floating market exchange. Its value changes with market sentiments.

Full identity known – Pseudonymous

Mpesa requires users to share their identity to use the system for sending money over its network as per the law.

bitcoin is pseudonymous – users can open a wallet, deposit value and send over the network without identity. However, transactions can be viewed publicly on the Bitcoin public ledger here

Proprietary – Open Source

Mpesa is owned by Vodafone.
Bitcoin is open source, owned by no one.

Clunky – Smooth

Mpesa’s USSD Menu – clunky IMO

 In my experience, Mpesa is clunky, downtimes are not uncommon and the system is prone to failures.


Sending value via bitcoin is fun – largely due to the ease of using a QR code. Scanning a QR code to send or receive bitcoins.

A bitcoin QR code. Scan this to send/receive bitcoins

Mpesa uses SMS/USSD – Bitcoin sits on top of the Internet

Mpesa runs on a cellular network combining SMS and USSD functions to interact with users. It works on ANY mobile phone with a cellular network signal – feature phones and smartphones.

Bitcoin runs on a distributed network layer on top of the internet.

Mpesa limited locally – Bitcoin works Globally & in Space!

Mpesa only works where Mpesa services are offered by a mobile network provider licensed to brand the service. This limits its geographic use to local settings. It doesn’t scale on its own.

The unique nature of bitcoin means it works virtually anywhere. Get this, you can send bitcoins over a radio signal. bitcoin can technically work between space and earth!

Mpesa makes use of physical exchanges i.e. human agents – bitcoin makes use of online exchange models

Converting from FIAT to Mpesa requires a physical exchange (agents). Visit a physical store, hand in your fiat currency for emoney and vice versa.

An Mpesa agent store in Kenya

Converting fiat into bitcoins can happen in any one of different ways – online centralized exchanges, online decentralized exchanges and P2P exchanges.

Mpesa has specific regulation – Bitcoin is not regulated in Kenya & East Africa

Specific regulation had to be drafted for Mpesa as a mobile money transfer service. The National Payments Act of 2011 clearly outlines the conditions  under which mpesa operates. For example, there is a cap placed on how much one can send/receive periodically.

There is currently no specific regulation targeted at bitcoin in East Africa.

Mpesa is inflationary – Bitcoin is deflationary

Mpesa is inflationary and subject to the whims of central banks. Ultimately, its value is pegged to the local currency.

Bitcoin is deflationary and subject to the whims of no one. There is a capped amount of bitcoins (21 million). There is no telling what the price will be in 2050.

At this moment in time, I believe the two offer great value when used together. In East Africa, Mpesa and bitcoin are complementary as bitcoin fills the void where Mpesa falls short – online transactions and cross border transactions.

For example, when I need local fiat (KES) for my expenses, I simply use a BTC gateway in Kenya to convert my bitcoins (XBT) into local fiat (KES). Within 20 minutes, I have mpesa on my mobile wallet ready to spend! I can then make local payments via mpesa, or visit an agent (within a 100m radius) and instantly convert mpesa into cash!
Bitcoin – mpesa – cash.

The reverse process works for converting cash into bitcoins.
Cash – mpesa – bitcoin

What’s right and not quite right about this article arguing that M-Pesa and Bitcoin are mirror images of each other?


  1. g2-6557f00f9a2b69846074e22aa428eea9 says:

    Other differences.

    To operate as an M-Pesa (Kenya) agent you must meet certain requirements for your application to be considered. These requirements include being an LLC, operating at least three agent locations, depositing at least 100,000 Ksh, conformance to Safaricom/M-Pesa branding, Government-issued business permits, police clearance (i.e., background check), and much more. Since Bitcoin is just software that implements a protocol, it has no limitations impacting individuals wishing to provide exchange other than to actually hold the bitcoins that are to be sold.

    Physical security:
    An M-Pesa customer wishing to deposit or withdraw cash must visit an M-Pesa agent. Most agents operate from a kiosk (a steel cage) leaving the customer standing on the sidewalk in front of the kiosk window to count cash. This makes the customer vulnerable to a robber and many customers and agents even have been killed. Individuals providing Bitcoin exchange can protect themselves and their customers as they see fit. Some will operate from their own homes, some will be willing to visit the customer’s office to transact, while others can operate in a public place — such as the inside of a restaurant or bank even which has its own security.

    Fraud prevention:
    M-Pesa agents are operating the role similar to bank tellers but are not subject to the same checks and balances. Thus cheating the customer is extremely easy. Did the customer really hand over 50,000 Ksh or just 49,000 as the M-Pesa agent claims. While claims that an agent is not honest might become a pattern that Safaricom might later investigate, that information wouldn’t be available to potential customers. A service like LocalBitcoins has user ratings that would help dissuade an individual from trying to cheat as doing so would cause a negative rating to appear relatively instantaneously.

    M-Pesa agents get a small cut of the fees that Safaricom charges M-Pesa users — as little as a few shillings per transaction. Individuals providing Bitcoin exchange set the fee they wish to charge and keep the entire amount (though some markets impose a small fee of their own, such as LocalBItcoins which assesses a 1% fee for the party that placed the ad.) M-Pesa agents are asked to service transactions as small as 50 ksh (worth under $1 USD). Individuals providing Bitcoin exchange can set whatever transaction size limits (large or small) they wish.

    Business grade:
    M-Pesa itself is essentially consumer-grade. For example, M-Pesa has a per-transaction limit of 70,000 Ksh, a per-day transfer limit of 140,000 Ksh and a balance limit of 100,000 ksh (which is an amount slightly over $1,000 USD). Businesses wishing to use M-Pesa for business-to-business transactions oftentimes transact with larger amounts forcing them to continue using banks. Additional services such as Lipa Na M-Pesa enable M-Pesa to be used by retail businesses for receiving payment from customers but that is an add-on service and still isn’t suitable for most e-commerce and business-to-business uses. Bitcoin, being simply software that implements a protocol, has no maximum per-transaction or per-day limits. Payment processors can be utilized to convert some or all of the bitcoin revenues into fiat that is wired to the business’ bank account.

    Transaction awareness:
    An M-Pesa transaction is initiated via USSD and is acknowledged with an SMS text message response. There’s no guarantee that the request will be processed promptly, or at all, and there’s no guarantee that the SMS response for a processed transaction will be generated or delivered even. It usually works, but when it doesn’t the M-Pesa user is left wondering what the status of the transaction is. With Bitcoin, nearly all peer nodes globally are aware of new transactions within seconds.

    Safaricom enables balance inquiry and mini statement (showing the last five transactions) from a mobile. Using their selfcare online tool a statement for the last 6 months of transactions can be obtained. That statement is not real-time and might not show transactions from the last 24 hours. A Safaricom shop visit is needed to obtain a statement for transactions prior to six months (and incurs a fee). The public Bitcoin network knows of every transaction, and the blockchain holds every confirmed transaction, forever. Bitcoin Wallet software will report the real-time transaction history status, and there are numerous free services that provide full details of transactions.

  2. Indeed, however Bitcoin is not the only technology to look at… what about the inevitable future appearance of a BITKES in BitShares for example ?

    This will be a far superior form of Kenya shilling that pays a real interest and runs on a blockchain (like BITUSD already does http://www.bitsharesblocks.com/assets/asset?id=USD) and it will obsolete the clunky old proprietary mpesa.

  3. I am in fact grateful to the holder of this site who has shared this great piece of writing at at this place.

  4. Reblogged this on victechy.


  1. […] 10 differences between Mpesa and Bitcoin […]

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