Saving in Bitcoin Versus Mshwari, See How Bitcoin Wins

How do the two compare?

Bitcoin versus Mshwari

Bitcoin versus MshwariYou might want to consider saving in Bitcoin, like I did after coming across Bitcoin in late 2013. I committed to saving 3,000 KES every first day of the month since 1st January 2014 and today, my bitcoin savings are worth 392,679 having grown 211% in 42 months. If I had instead tucked away this same amount in a traditional Kenyan shillings bank account like Mshwari, my savings would total 138,386 today, a little over 9.8% more than my initial amount. My Bitcoin savings turned out to be a great investment opportunity!

Bitcoin savings vs Mshwari savings

When I first came across Bitcoin, I was in my final year at Uni, school of Engineering and was slaving away at the ex Ministry of Justice as an IT and network intern. I was immediately fascinated by this newly fangled digital currency. Rather than partake in discussing politics, over newspapers, tea and mandazi, as happens at most government offices, I dedicated the last month of my internship to understanding Bitcoin.

I found out that Bitcoin was a digital token native to a distributed network known as the blockchain. There were only 21 million digital coins, a fixed limit that was hard coded on a public transparent ledger, known as the blockchain. A network of miners were entrusted to secure the integrity of this public ledger, and make sure no one tampered with it. In turn, the ledger could be used to store sensitive data for real world applications and keep track of the ownership of these coins.

Bitcoins were the economic incentive for miners to secure the blockchain for all the disruptive applications that were now possible on the blockchain. Every expert I came across agreed it solved one of the greatest puzzles in modern day internet; how to enforce trust online without relying on a single person, entity or institution.

Anyone who contributed computing power to secure the integrity of this public record, had a chance at claiming newly mined bitcoins, distributed as a reward for securing the network. Miners were rewarded with newly minted bitcoins. This is how the millions of bitcoins in circulation came into existence, versus say, having an authority like a Central Bank manage the issuance and distribution of coins.

Why invest in bitcoin

The blockchain was cheap but not free to use, so the fees for using this network were only payable in the native currency, Bitcoin. The miners would therefore sell their shiny new bitcoins on the open market to pay for their electricity costs in the real world. Meanwhile, Bitcoin buyers varied from investors, application companies and speculators, who saw the potential of all the possible blockchain applications.

Others reckoned this was the beginning of a global internet money free from government control. Regardless of demand incentives, the net result was an organic price discovery on the open markets in USD, EUR, RMB, JPY and KES, where regular people, like myself could acquire bitcoins.

It was a lot to absorb. I mulled over of what I had stumbled on in the weeks that followed. It took me another month of recommended readings to realize that the state of money was not set in stone. Money had evolved from the large stone discs of the Pacific island of Yap, to cowrie shells, to paper currencies, to mobile money, airtime currency and bonga points today. The idea of a global digital currency was not far fetched after all.

I went on to learn how to send and receive bitcoins, how to open and secure a bitcoin wallet and where to buy and sell bitcoins. It had only been 5 years since it emerged, so I was not too late.

I wrapped up my research by crafting a Bitcoin savings plan, inspired by the 52 weeks savings challenge but with a twist. Mine was modeled on setting aside 3,000 KES for buying bitcoin at whatever price on the 1st day of each month and storing them in my secure bitcoin wallet. The idea was to average down the cost over time, so that, even if the price went up and down over time, I would accumulate returns in the long term. Stock investors often used dollar cost averaging to go long on promising companies.

I shared my findings and savings plan with my best friend Mutwiri. He was not convinced. At the time, Bitcoin had just spiked to $1100 on the back of Chinese demand, and was all over the news. “How could some stupid little internet magic money have value?” Mutwiri asked. It all sounded crazy to him. But, he liked the savings plan spreadsheet, and considered adapting it for his own version of an Mshwari savings plan. Mshwari paid 7% interest per annum compounded quarterly. He would put aside 3,000 KES every 1st day of the month into Mshwari.

On 1 January 2014 the price of 1 Bitcoin was 84,400; with my 3000 KES savings, I bought and saved 0.035545 BTC. The next month on February 1st price had dropped to 68,700 and my 3,000 bob bought me 0.043668122 BTC. I got more bitcoins for my fixed savings commit. I stuck to my plans over the next 3 years.

In the 42 months since I started saving in January 2014, I have amounted a total of 2.913049017 BTC and my savings are worth 392,676 KES as at 1st May 2017, a 211% return over 42 months. Even though the price of bitcoin has fluctuated wildly over the years, dollar cost averaging has served me well. In comparison, Mutwiri’s savings now total 138, 386 KES, 9.8% return over the same period.

I got 266,279 KES returns over and on top of my initial savings, while Mutwiri only got 12,385 over his savings. I intend on sticking to my plan for the foreseeable future, and hopefully have enough to buy a plot someday.  For me, saving in Bitcoin certainly beats saving in Mshwari hands down.


  1. Hi Mike, this is interesting. Would you mind sharing the process from inception, i.e. how to join, which wallet would you recommend to choose and why? et cetera; It would be great to know the basic stuff.

      • Hi ken, very interesting article, for the last year I’ve been following the Bitcoin price from $600 to $1,000 , where I thought it could not possibly surpass, but as we speak it’s at $1,700.

        Having said that, I would also appreciate you sharing how to buy bitcoins as an investment option.

        • thank you for taking time to read. The response has been overwhelming and techweez and i (the author) have decided to do a series of articles on the ‘How to’ get started.

          Look out for an article series on techweez

  2. Interesting analysis abou basically a higher intrest rate… But how do you actually claim the bit coins and convert them to cash money more so Kenya money. If the process involves unscrupulous local methods of forex money conversion such as what is seen in paypal…. Id rather m-shwari any day as you will end up getting a quarter of that money making that american payment system as good as the dream its based on.

    • Thanks for asking this. In an investement/savings scheme, i look at the exit clause. How do you get your money when you need? Hope he explains this.

    • i will use an analogy.

      What happens when banks are in trouble? Customers rush to ATMs to withdraw their savings into cash. Why? Because if they hold cash, they control it versus bank deposits which are custodial.

      In the Bitcoin industry, users have a choice. They can trust custodians to hold their funds for them like a bank would. For example Norwegian online bank Skandiabanken now recognizes bitcoin as a new investment class and allows its customers to access their bitcoin. So in future, we could expect to see banks provide access to bitcoin for their clients.

      The other choice is for users to hold and control their own bitcoins, like they would cash. Bitcoin is like a digital cash. All you need to do is download an wallet like mycelium, and use it to store your coins. You will be in full control of your bitcoins at all times.

      In Kenya, we do not have Bitcoin companies that provide custodial services. So Option 2 is ideal.

      Also, we used to have a company in Kenya that would allow people to exchange Bitcoins into Kenya shillings and vice versa. But Safaricom denied the company service. And the Central Bank of Kenya issued a warning.

      So what now?

      Marketplaces. There are marketplaces where buyers and sellers exchange bitcoins for national currencies (or services, or gift vouchers, or bonga points). These marketplaces have an escrow feature, that allow two people to exchange bitcoins without either reneging on the transaction. Bitcoins are held in escrow temporarily while one party confirms receipt of payments, then they are released.

      This is why bitcoin is unique. It does not necessarily require a forex bureau. It is digital peer to peer currency. You and I can exchange, and so can anyone else.

      An example of this marketplace is localbitcoins[dot]com or paxful[dot]com Both have plenty of Kenyan buyers and sellers, and volumes are up to 12 million KES per week. It is a peer to peer marketplace.

      I hope to see local banks in future allow people the option to invest in bitcoins. Banks can act as custodians. Maybe even a start up can come up that offers this as a service.

      To clarify, Bitcoin does not pay interest. Bitcoin is similar to gold, or land. Its a digital commodity with fixed supply. And its price changes according to market sentiment.

      As of now, the price of 1 full Bitcoin is $1800, about 190,000 KES.


      • And the Central Bank of Kenya issued a warning.

        For which reason?

        Bitcoin does not pay interest. Bitcoin is similar to gold, or land. Its a digital commodity with fixed supply. And its price changes according to market sentiment.

        You honestly cannot see how this can rapidly go south? It’s a digital commodity. At least with land or gold, you’re left with something to hold if their prices depreciate. But a devalued digital commodity leaves you with nothing.

        Also, didn’t someone say they’re ‘mined’? Something that can be mined isn’t fixed supply…

          • It’s under the “opinions” section for a good reason, in my opinion.

            The dark web prefers to trade with bitcoins for very particular dark reasons – anonymity, and deregulation. If bitcoins were traceable and regularized, persons of sinister motives would be less inclined to embrace their adoption.

            Well aware how this doesn’t matter to you, I’m still not yet convinced. Sure, I could “invest” a few thousand bob that I am willing to lose, but would I? ¯_(ツ)_/¯

          • For balance, i’ll add that the dark net use is one extreme end.

            The other extreme end is Wikileaks.

            “Following a massive release of secret U.S. diplomatic cables in November 2010, donations to WikiLeaks were blocked by Bank of America, VISA, MasterCard, PayPal and Western Union on December 7th, 2010. Although private companies certainly have a right to select which transactions to process or not, the political environment produced less than a fair and objective decision. It was coordinated pressure exerted in a politicized climate by the U.S. government and it won’t be the last time that we see this type of pressure.

            Fortunately, there was/is a way around this and other financial blockades with a global payment method immune to political pressure and monetary censorship.”

            source: Forbes Magazine

            Only Bitcoin donations could go through, because it is free from censorship.

            Bitcoin is neutral.

          • I wanted to share a honest opinion in regards to the subject discussed but you appear to have answered already sir.
            Bitcoin and/or any other digital currency can only suffice best to *black hats* or ‘Deep Dark Players’… If the author can catch my drift. Period.

  3. Interesting. My only thinking points would be;
    1. It’s not wise to compare a savings account with an investment product. We use savings accounts to build up savings that we then invest elsewhere for returns.Bitcoin to me seems to be a speculative investment. Like land or even stocks.

    2. What is driving Bitcoin prices and is there an element of speculation? In finance we like to say, “trees do not grow to the sky”. Gains from Bitcoin are from its price going up. What is driving this price and what would cause it to go down?

    • 1. It is common in finance to compare returns of different asset classes. In this case a digital commodity (with potential to become a currency) and a savings product. I (the author) was careful to make the distinction that one was a savings product that pays interest, and the other a new emergent digital asset class – with potential.

      2. I have to ask what you mean by speculation? The word is broad. People speculate on land, stocks, property ventures. Perhaps what you mean is it is unproven and its future still uncertain. This is true, and why i took the time to explain what Bitcoin was, and its potential. Yes, it is new, and we can’t say for certain how its future will evolve. But that is also the opportunity, and i have taken the time to study it and can say with authority the opportunity is unprecedented. Granted, i understand your skepticism. Bitcoin is not for everyone.

      Ask yourself,

      Why did Japan legalize Bitcoin?
      Why did the CFTC classify it as a commodity?
      Why is there a Bitcoin ETN trading on swedish exchange?
      Why are venture capitals investing in Bitcoin companies?

      Like all other assets, bitcoin has factors that affect its price – like Banking crisis in Europe, or Monetary crisis in Venezuela or the potential of applications built on the bitcoin blockchain.

      Anything new will always encounter resistance. But someone has to tell people what is out there, what is going on, what is happening. This was the point of the article.

      • I dunno, it sounds like an elaborate cryptic pyramid scheme. I mean, like a pyramid scheme, the more people are into it, the greater the value. Problem is, people are finite. And usually that’s where the bubble bursts. I have tried to understand how bitcoins “are mined” and nope, nothing.

        So suppose these (virtual) bitcoins, stored in a (virtual) secure wallet see lowered demand for them. What then? Panic selling drops the value. There are no physical assets at the end of this railroad to be auctioned off. No one to sue, no one to blame other than yourself. What then?

        These get-rich-quick schemes are going to bankrupt those that seek them.

        • everyone is entitled to their opinion. So are you. Just because you did not get, doesn’t mean it is a scheme. Perhaps consider dropping me an email for consulting services, or not.

          Bitcoin is not for everyone. I disagree with you 100%. You call it a get rich quick scheme, i call it the greatest invention in the past century. Bitcoin will change the world. Watch and see.

          • @pesa_africa:disqus am afraid @nobdyevr:disqus is affirmative on his voiced sentiments… Bitcoin has its ‘deeper and darker’ purpose and has those it can suffice to their needs seamlessly.
            Don’t lure this innocent sheep into the bushy pasture yet you know the wolves are in the wait bruh.

  4. Interesting article. I’ll definitely seek to learn more. In finance, the risk should be directly proportional to the return. Bitcoin is not for everyone.

    For the risk averse, it’s best to stand aside and wait for the “I-told-you-so” moment. For the risk takers, the return could be very handsome (or beautiful, for that matter). Let all take sides freely.

Comments are closed.