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Crypto-currencies in Africa

Financial Consumer Protection Issues: Crypto-currencies Sixth Annual African Dialogue Conference Lilongwe, Malawi September 2014 Charles Harwood U.S . Federal Trade Commission. Crypto-currencies in Africa. Topics of Discussion. Crypto-currencies What? How? Why?

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Crypto-currencies in Africa

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  1. Financial Consumer Protection Issues: Crypto-currenciesSixth Annual African Dialogue ConferenceLilongwe, MalawiSeptember 2014Charles Harwood U.S. Federal Trade Commission

  2. Crypto-currencies in Africa

  3. Topics of Discussion • Crypto-currencies • What? How? Why? • Bitcoin and Competing Currencies • Strengths/Weaknesses • Regulation • Consumer Protection Issues

  4. What is Crypto-currency? • Virtual currency • Decentralized • Peer-to-peer

  5. How Does it Work? “Mining” for coins Crypto Exchanges The digital wallet

  6. Why Would People Use It? Anonymity Non-government issued currency Investment potential

  7. Bitcoin – The First and Most Famous

  8. Bitcoin – What’s it worth?

  9. Strengths and Weaknesses • Microtransactions • Low transaction costs • Potential Reduction in Loss of SI/PII • Ease of transactions • Unbanked/Underbanked Means of money laundering/illegal activity Volatility No existing consumer protection Security of stored coins Liquidity trap/Hoarding

  10. Future potential? • Unbanked and underbanked • Inner cities • Rural • Developing world • Cell phones • Small transactions

  11. Consumer Protection Implications • Exchange rates volatile and costs unclear • Rapid value fluctuation • Undisclosed costs and fees • Hackers and scammers pose serious security threats • Potential targets for highly sophisticated hackers • Fraudsters take advantage of hype around this new currency • May be hard to obtain help or refunds for lost or stolen funds

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