Cryptocurrency has become Africa’s most silent, rapidly growing finance for the last ten years. Africa has been using digital currency to send remittance payments back home as it offers a low-cost cross-border digital platform. In Kenya, the embrace of the digital coin has been outstanding, with Kenya being one of the top three countries in Africa with the highest rate of crypto consumption. The anonymity of the coins has catapulted the growth, and they are not government regulated or intermediary-related. Transactions are swift and instant. This has led to the government wanting to regulate the currencies. The main reason behind this is to make a profit in terms of tax.
The Kenyan government set up a task force in April to look into ways of gaining a better understanding and finding the possible means of controlling this new technology. They proposed the “sandbox” system, which will hold and regulate new techs before releasing them to the public. This will ensure that customer interests are protected and that there is a balance between embracing and enhancing new technologies.
Concerning the quick growth and adoption of these currencies, there has been a negative side. Not only in Kenya but in other African countries as well. Countries in Africa have been able to adopt cryptocurrencies, but it comes with diverse effects, such as a reduction in the value of its currency.
Kenyan currency since its adoption has decreased by 7% since the warning given by the Central Bank. Nigeria has faced the same issue: its Naira value dropped by nearly 52%, and its inflation rate increased by 20% due to the economic effect of Covid-19. The challenge most people face in this venture is that the legal status still needs to be clarified since it remains unregulated in Kenya. This means there is no safety net for the loss of funds by large and small-scale investors.
Before starting this venture, an investor should educate themselves extensively on cryptocurrency, and they should be able to understand the technicalities behind it. Adverse knowledge of the technology is also important for acquiring, for it plays a key role in understanding and running the investment and transactions. However, it is important to note that and realise that Tokens/Cryptocurrencies are here with us to stay.