In this second country insights series, we take a closer look at buying and selling cryptocurrency in Kenya and how cryptocurrencies are reshaping traditional marketplaces. Kenya is no stranger to digital currency and the use of mobile phone payments with a huge growth rate of over 80% (within a decade) when it comes to smartphone usage alongside the use of e-payments system M-Pesa. It seems that crypto markets are emerging in their best-suited climates, markets where access to traditional financial systems are lacking.
Lowering Financial Barriers
Trade between African countries has been stunted by the dominance of the US dollar in allowing growth and access to rapid financial payments. With the introduction of cryptocurrencies, the dependence on the dollar is slowly being mitigated. This opportunity is not lost to the entrepreneurial people of the Kenyan population.
As of right now, the traditional model requires Kenyans to convert their native currency (the Kenyan Shilling) to the US dollar before even trading with neighboring countries. This is a huge barrier and not to mention a timely exercise that is covered in middleman fees.
The Blockchain Association of Kenya (BAK) has noted that Kenyans have grown increasingly aware of cryptocurrencies, most notably, of course, bitcoin. The freedom granted allowing for people to use their cryptocurrencies to purchase goods abroad in countries like China as well as be a simplified form of payment for freelancers seeking payments from employers both at home and abroad.
Although the number of people using cryptocurrencies today in Kenya is still relatively small there is a definite uptrend.
As of August 2018, Kenya ranked 28th in the world for bitcoin volume. With the population miles ahead in the use of telecommunication with a large assortment of mobile banking as well as e-payment systems in place it would be realistic to assume that permissionless, private cryptocurrency payments will only continue to grow as more merchants adopt the ability to buy and sell with bitcoin and cryptocurrencies in Kenya.
This could also be the case for local and international business as well as those reliant on obtaining goods from abroad. Granting them faster borderless payment options may very well see a new generation of business growth opportunities to those who had before now been limited or even stopped from realizing their business goals.
In Kenya, the Central Bank of Kenya has rejected the use of digital currencies due to their unregulated nature, however, blockchain is already being implemented in the country in a number of ways and a task force, led by Dr. Bitange Ndemo has been established by the Government of Kenya to explore the use of digital currencies and artificial intelligence.
Regulation And Potential Societal Change In Kenya
With the world firmly looking to cryptocurrencies and their use cases, regulation and compliance are stepping in, if not somewhat bewildered at where to begin. Much like many other countries the rules are still not clear for these new asset classes within Kenya. In a similar tone to other countries, the Central Bank of Kenya (CBK) has stated to Kenyans that caution should be advised due to the volatility of cryptocurrencies as an investment.
It is not just the use of cryptocurrency as a financial instrument that has caught the attention of Kenyans interest in cryptocurrency but the underlying blockchain technology itself. There is with open blockchains, an opportunity to utilize their transparent nature in changing the way large scale business and government is run as well as providing beneficial possibilities in changing the lives of its citizens.
The first blockchain class in Kenya has recently graduated it was reported by bitcoinke.io, celebrating at the first restaurant business to accept bitcoin as a payment method. The participating students took the course in understanding how real use cases within a business can be achieved, with the owner (Beatrice Wanjiru) of the restaurant named “Betty’s Place” taking part and graduating in the studies also.
The Kenyan Government has also been working on plans to utilize blockchain in aiding the building of affordable housing for its citizens. The specific demographic being those that cannot afford a mortgage and thus secure homeownership due to limited earnings.
After a reported slew of arrests for fraud on previous initiatives, the government hopes to earn the trust and deliver on promises to those most in need as well as bolster the overall reputation of the government itself in actively removing criminal elements from within their funded projects.
Kenya is an emerging star in the early adoption of cryptocurrency with a huge potential to lead the way over the coming years. As a new rising class of entrepreneurs emerges, with access to buy and sell cryptocurrency as well as finding real application of cryptocurency in thier daily lives, Kenyans are seizing the opportunity with both hands.
Buying and selling cryptocurrency with the use of M-Pesa on P2P platforms as well as with gift cards and other alternative payment methods will certainly boost the rate of everyday integration with the mobile payment savvy Kenyan population.
As the government finds its way through regulation alongside the CBK it is refreshing to see that even at this early stage they are aware of the possibilities and investment opportunities that blockchain has to offer. As the unbanked start to become their own bank via cryptocurrency and move into the new technology with the use of peer-to-peer exchanges we could very well see over the next few years a very different financial landscape.
If you wish to learn more about LocalCoinSwap and how to buy and sell cryptocurrency peer-to-peer with over 250 payment methods including cash in person, local bank transfer, M-Pesa or gift cards, take a moment to read our recent post on how to make money with P2P trading.
This article is an editorial opinion piece contributed by an LCS community member.