As Kenyans eagerly wait for the Kenyan government to legalise crypto trading or call for town hall meetings with the general public, let us evaluate the new opportunities that have been presented and show that Cryptocurrencies are the future of payments. A quote by Tony Robbins, “Change is inevitable, and progress is optional”, seems to make sense now, especially in the Fintech world of Crypto Currency.
When Bitcoin was presumably developed pseudonymously by developer Satoshi Nakamoto in 2009, nobody thought of the endless possibilities that Bitcoin could unlock. Fast forward to 2022, there are currently more than 18,000 cryptocurrencies in circulation, and decentralised finance (De-FI) is a household name.
In this article, we will evaluate the many opportunities presented by cryptocurrency and digital coins to developing economies (e.g. Kenya) and developed economies. In the current world of technological advancements, E-commerce seems to be doing better than purchasing goods and services.
More and more companies have invested in the internet and have introduced online stores to reach customers across their borders or towns. With online platforms comes the need to introduce a payment method that is friendly and fast. It is where Cryptocurrency and Peer to Peer platforms come in.
Cryptocurrencies, through the use of P2P, are fast, reliable, and offer various payment methods. In the case of online stores, the merchant or store owner can decide that in that particular store, they will also accept cryptocurrency as a form of payment; this increases the payment options for their customers’ good example is star buck. The seller is assured of repeat customers by offering buyers various payment methods. The world of cryptocurrencies has opened up more doors of opportunities also in the educational sector. In Dubai, for instance, a school opening its doors in September has introduced fee payment in the form of Bitcoin.
According to the school’s owners, introducing Cryptocurrency as a payment method for paying tuition fees gives parents the liberty to choose their preferred payment method. The school also stated that it recognises that the future of Fintech is in Cryptocurrency. It goes to show the unlimited possibility of cryptocurrency. As the Russia Invasion of Ukraine enters its second month, De-Fi finance has proven to be more powerful now than ever. With banks and other financial systems closing their doors, both countries have had to rethink other ways of either funding or sustaining their populations. In Ukraine, for instance, the government has received donations from well-wishers via cryptocurrency.
The donations have been used to fund the military and ensure that the country’s economy continues amidst economic and financial shutdown. Well-wishers have also sent Russia donations via cryptocurrency, and the donations have also been used to fund the military and buy other necessities that are required. In a world of an economic and financial shutdown, Cryptocurrency has again proven a De-Fi economy is a way to go in situations where there is an economic shutdown.
When we think about International Humanitarian organisations and NGOs like AMREF and RED CROSS that survive on donations, receiving payments via crypto-currency may be the way to widen their scope in terms of receiving high volumes of donations. First, Cryptocurrencies are digital coins; hence the agencies will have to create accounts to receive the payments. secondly, payments to the red cross are made anomalously, which means that only the organisation will be able to tell the source of the payments.
Secondly, there are no charges in cross-border charges. Therefore more and more people will send their donations anonymously. Crypto Currency is digital code; therefore, it is difficult for the organisation to receive bounced or expired cheques. With Crypto Currency, humanitarian organisations can increase their volume of donations and maybe even increase their donations.
With companies seeking to lower operational costs, the need to reduce costs for new hires and office rent is becoming mandatory. The need for remote employees has resulted in companies introducing different ways to pay salaries and wages. For the government to benefit there, it needed to legalise cryptocurrency, and through this, the government can earn levies and taxes from salaries and wages. In international transactions, the seller and buyers have to agree on the currency to use to ensure that none of them loses because of inflation charges.
Cryptocurrencies can sort out this. Payments done by cryptocurrency are seamless and fast. The two can agree on a cryptocurrency to use and transact. The fact that the Central Bank of Kenya has gone ahead to open discussion on the possibility of having a central bank digital currency shows that digital coins are the future of cryptocurrency. Central bank digital currencies are safe as users cannot duplicate them.
Secondly, they are easy to implement, password protected, and cannot be stolen easily. With the governments embarking on big projects in infrastructure and housing developments, the project requires international funding and sourcing, resulting in the Kenyan government receiving funding. The transaction fees are practically zero if the funds are received via P2P platforms.
Suppose Central Bank Digital Coin (CBDC) is authorised to trade as legal tender. In that case, inter-county transactions will be faster and projects being done at the country level will be funded by the central bank much faster, reducing corruption and bank charges. While digital coins offer unlimited possibilities, they also come with risks that must be well thought about before the countries agree to trade cryptocurrencies.
First, digital coins are difficult to use and require a person with a certain educational background to trade in them. Secondly, digital coins require stable internet connectivity. Considering internet connectivity is not as stable, this would limit the use of cryptocurrency.
Thirdly, digital coins can be easily hacked or duplicated; to use them, the person using them must have good security systems to avoid being hacked. So as we look to the future, African governments cannot ignore the part played by cryptocurrency. In line with this, crypto should be introduced into governments and inter-government trading and ensure that there are P2P platforms that will act as payment gateways for these transactions. Most importantly, the Central Bank should legalise digital coins, open payments, and receive payments via Crypto networks.