Kenya is fifth, among countries with the largest Bitcoin holdings per
capita in the World. This is according to a recent survey by Citibank. The value of
Bitcoins held by Kenyans account for 2.3% of Gross Domestic Product (GDP)
which translates to Kshs 163 billion worth of Bitcoins.
Citibank analysts are now warning that this could
impact the economy negatively if cryptocurrency exchanges collapse. To put this
in perspective, a collapse could wipe out the equivalent of 25% wealth generated by the tourism sector. Such an impact is likely to
cause seismic disruptions to our economy.
The Central Bank of Kenya (CBK) has already warned
citizens against putting money in Bitcoins because they are not a legal
tender and are not backed by any assets. If Kenyans lose money from
their engagements with the cryptocurrency, CBK has said it should not be
held accountable.
But Kenyans are buying more Bitcoins and investing in
other cryptocurrencies such as Ethereum. The main reason is that
cryptocurrencies have been rising in value over the last few months.
Return on investments from these digital currencies is abnormal and
incomparable to any other form of investment in recent history. More Kenyan
investors are willing to take the risk and ride the wave.
Kenya is among the top five countries in the world with
high per capita holding of Bitcoins. Three Africa countries namely
Nigeria, Kenya and South Africa are in the top six. Russia has the
highest amount of Bitcoins per capita at 5%. By contrast the United States of America has just a 0.17% per capita hold on bitcoins.
The warning by CBK has fallen on deaf ears and Kenyans
are even growing bolder and smarter in buying Bitcoins. A number of
trading clubs have been started whereby those interested, pay between Kshs 70,000 and Kshs 100,000 to join. Once you join a trading club, you
get one share and from there you start earning a percentage of the
revenue generated from gains made by currency rises.
Bitcoin mining is not popular in Kenya because of the
costs associated with setting up and running a mining rig (basically
computers dedicated to mining bitcoins). Mining requires a lot of
electricity to power up the powerful computers. So Kenyans have opted for the cheaper alternative of trading clubs which are similar to pyramid schemes.