- Adoption of cryptocurrency is gaining momentum across the world and Kenya is leading the way in the African market
- Although crypto is not regulated in Kenya, the country is among the top 20 world economies with the highest number of people who own cryptocurrencies
- William Nanjero, a digital financial services expert, explains the steps to becoming a crypto investor and other opportunities one can take advantage of
In July 2022, a new report by the United Nations Conference on Trade and Development revealed that Kenya held the largest share of the African cryptocurrency market.
Cryptocurrency adoption in Kenya
Kenya was ranked fifth among the top 20 global economies with the highest number of people in possession of digital currencies, beating developed economies like the United States and the United Kingdom in crypto adoption.
But what could be driving the rapid adoption of cryptocurrencies in Kenya? How can new investors get involved and make money, what are the risks, and how do you navigate them?
And what is a cryptocurrency?
“Cryptocurrency is basically any currency on a digital platform, that’s the most basic way for me to explain it. There are thousands and thousands of cryptocurrencies,” said William Nanjero, a digital financial services expert, in an exclusive interview with TUKO.co.ke.
Nanjero is the general manager at Sol Generation. He also consults for International Finance Corporation (IFC) and provides advisory services to banks, mobile network operators and fintechs.
Crypto, which Nanjero defined simply as a digital currency, exists on a technology called blockchain.
“Blockchain is a store of a ledger…(let’s say) if you have a digital asset and you want to store it in a way it will be secured, cannot be interfered with or cannot be stolen, blockchain technology facilitates that,” he explained.
“Blockchain technology is decentralised, meaning you and I can both initiate, store and own that asset…Based on the same concept, crypto is decentralised, meaning the rules are not defined by one authority.”
Crypto is decentralised
Nanjero noted cryptocurrencies are not confined to the borders of one country. It is not regulated or controlled by any authority.
“There is no legal framework for crypto in Kenya. For example, I cannot go to the sole generation store and buy a piece of merchandise using cryptocurrency.”
He said there are over 10,000 cryptocurrencies, including Bitcoin and Ethereum.
Global payment in crypto
According to Nanjero, most of these coins have been useful in global digital payments.
“One of the biggest use cases for crypto is payments. It facilitates quick, easy, and efficient payments across borders. For example, if I want to buy a Ferrari in Italy, it’s very fast for me to initiate through crypto as opposed to traditional services like fiat, which is regulated by both local and international rules.”
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Kenya’s leading telecommunication company, Safaricom, launched a virtual visa card on its M-Pesa platform to facilitate global payments.
Safaricom noted the card will reduce forex conversion costs on the local currency used in online payments.
But for Nanjero, such costs can be avoided if one uses crypto coins to make global payments.
“M-Pesa operates within the legal framework of the Kenyan financial policy. Crypto is not competing with M-Pesa in Kenya to facilitate payments because, as I mentioned, there is no regulatory framework.
But when you go cross border transactions, that’s where the use case for crypto is much bigger than M-Pesa. Compared to M-Pesa global payment card, the difference comes with the cost, how much will it cost if I use M-Pesa or crypto to make a transaction in, say Brazil?”
Before you invest in cryptocurrencies, understand the fundamentals, just like in any other form of investment, Nanjero advised.
“Let’s say you want to invest in Bitcoin. The fundamentals are well known, you can go and research what Bitcoin is, how it is mined and exchanged, and where it is accepted.”
“Then you have to understand the demand and supply, the authenticity, and how many people are using the coin,” he explained.
The investor would also need to understand how to use a digital wallet, as this would allow easy conversion from one currency to another.
The risk profile you possess as an investor is another fundamental you should consider when investing in crypto.
“”How much money are you willing to put away that you know will not come back. This should be income that you do not need, should not be money that is driving your basic need. It is your disposable income. Be patient as well.
In addition, “look at the coin itself, who are the founders of that coin, what are they doing, what are the use cases, and the success stories of the people trading using it?”
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Nanjero said Bitcoin, for example, has invested heavily in its distribution services over the years, allowing conversion to and from US dollars and payments in cafes and hotels globally, and therefore it is one of the most trusted and preferred digital currencies.
Trading crypto is risky
Millions of Kenyans holding the assets have suffered massive losses, especially in the recent months owing to extreme volatility and meltdown in the crypto market.
And owing to the fact that crypto market is un-regulated and fraught with fraud, Kenyans have lost billions of shillings through crypto frauds, for instance Bitstream Circle Cryptocurrency Scam.
Nanjero noted one of the first important steps in crypto trading is picking the right exchange house duly registered and regulated within a country.
This, he said, reduces the risks of stashing money in rogue exchange houses and losing it.
“An exchange house is a market that facilitates buying and selling crypto, all the coins and assets. Do background research on the exchange house trading history.
“Find an exchange house that will give you a wallet, fund your wallet, buy the coin, and it will be in your wallet.”
He noted that the only way to improve the digital currency environment is when the private sector, policymakers, and consumers work together.
How to get started in crypto
For starters, he recommended getting a trusted crypto broker who understands the market trends.
“To get started, you need just one shilling. I would not recommend that you go and buy directly because you may not understand the market trends of when to buy and when to sell when it is a bull or bear market, and it can get very technical at times. Get in, work with someone who’s done it before, learn, get the confidence, and start building up your portfolio yourself,” he explained.
The exchange house should give you a platform (App) that is easy to use – able to sell, buy, check trends, history and mine your coins.
“One piece of advice I always give is to build a community of people with the same investment ideas, risk appetite, and objectives, and then together, you will win,” Nanjero said.
He explained investing in crypto takes the same principles of investments — short-term (0-6 months), mid-term ( 1 – 2 years) and long-term (over 10 years).
For example, Bitcoin and Ethereum, which are very easy assets to liquidate, may suit for months zero to six, and other coins for six months to a year or longer.
“Bitcoin and Ethereum are different because they have spent a lot of time building the trust element around their brand.
“They have built a strong distribution network. You can go to Portugal, have a coffee, and pay via bitcoin.”
He noted that the coins have a sound business developed through continuous innovation.
“Ethereum and Bitcoin right now are working on a technology that will make them cheaper to mine, which is critical because one of the cheapest expenses in this industry is mining,” he said.
Opportunities in digital currency
Nanjero added digital currency presents an opportunity for the youth to build and add value to traditional industries.
He said the creative industry can exploit the trends in digital currency to maximise value for artistes.
“Right now, an artiste does not need to distribute his song physically to a club or a radio station. You can take your digital asset, put it up as an NFT, and make money out of it.
“We want to build a platform where any creative, someone in Samburu who has a piece of art, can put that piece of art in an exchange house and make money out of it.”
He said it is through innovation that the foundation for the future generation is built.
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In separate news, TUKO.co.ke reported about Lindah Kiyeng, who is the Chief Executive Officer (CEO) and founder of a PR firm, Lindah Kiyeng Communications.
Kiyeng started the business immediately after graduating in 2017 with KSh 10,000 and today boasts a net profit of up to KSh 500,000 per client.
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