There is rise in the interest and acceptance of crypto-currencies across the African continent, especially in Kenya, which has been dubbed Africa’s Silicon Valley.
The central bank of Kenya has relayed warnings several times about the volatility of cryptocurrencies, but this hasn’t stopped the spread. Some businesses in Nairobi are now accepting bitcoin payments.
The total number of Bitcoin transactions in Kenya are estimated to be worth over $1.5m, according to the Blockchain Association of Kenya.
But the question on our minds is “can the technology really take off?”
Cryptocurrencies are digital currencies that makes it easier to conduct any transaction securely. They can be used to pay for things in the real world.
Cryptocurrencies use decentralized control as opposed to centralized digital currency and central banking systems.
The decentralized control of each cryptocurrency works through ledger technology, typically a blockchain, that serves as a public financial transaction database.
Blockchain is a digital ledger which is used by bitcoin and other cryptocurrencies in order to recorded transactions chronologically and publicly.
The first-ever blockchain-backed currency developed was Bitcoin, and it continues to be the most widely-used globally. Besides Bitcoin, there are several other pretty important cryptocurrencies such as Ethereum (ETH), Litecoin (LTC), Dash and Ripple (XRP).
At the moment, the cryptocurrencies Bitcoin, Dash and Lisk are used in Botswana, Ghana, Kenya, Nigeria, South Africa and Zimbabwe.
Blockchain is also being implemented by start-ups and tech conglomerates alike in Kenya to help solve problems, such as IBM’s platform to help small businesses to determine if they are suitable to receive financial credit.
Tony Mwongera, the chief executive of Healthland Spa in Nairobi, began accepting Bitcoin payments in 2018.
According to him using cryptocurrencies has helped him curtail theft in his business and has made it more secure.
Healthland Spa customers told the BBC that they like the convenience of using cryptocurrencies to pay for purchases.
Though in Kenya today, the number of people involved in the use of virtual currencies are relatively few. According to BBC, only about 40,000 people have ever made a transaction using Bitcoin.
Part of the reason cryptocurrency penetration isn’t growing that much is because Kenya’s central bank has forbidden banks from dealing in virtual currencies.
Banks are not allowed to open accounts for people who are known to dealing in any virtual currency, which means that the population cannot easily convert Bitcoin payments into cash or mobile money.
“Cryptocurrencies can facilitate and ensure that you do an unlimited number of transactions, however the volatility, lack of control and the non-acceptability of cryptocurrencies across different jurisdictions impairs what you’d expect a currency to do,” economist and policy expert Vincent Kimosop told the BBC.
The Blockchain Association of Kenya (BAK) are in complete disagreement with this line of thought and are working on a plan to educate the country on the benefits of cryptocurrencies.
The non-profit body says that using virtual currencies can greatly reduce the cost of transactions, and enable people without bank accounts to quickly make and receive payments.
According to BAK, there are many things Kenyans have realised they can use Bitcoin for – whether it is to pay merchants in China for goods, or to enable Nigerians to pay to send their children to school in Kenya, or to enable young African freelancers to be easily paid for their work online.