In comparison to other African nations, Kenya has the highest adoption rate of digital currencies.
As per the United Nations, Kenya has the biggest percentage of its population owning cryptocurrencies in Africa, indicating the nation’s vulnerability to the developing collapse of the digital currency market.
Around 4.25 million Kenyans, or 8.5 percent of the population, own digital assets, according to a study done by the United Nations Conference on Trade and Development (UNCTAD).
With 8.4% of its people possessing crypto assets, the United States ranks sixth among developed economies, trailing only the African country.
Kenya has the biggest global peer-to-peer (P2P) cryptocurrency trade volume and the sixth-highest overall transaction volume. It is the top-ranking African nation among the top 10 most populous countries in terms of blockchain-related transactions and cryptocurrency holdings.
Massive BTC Holdings in Kenya
In January 2018, Kenya’s Bitcoin holdings exceeded 3% of the country’s GDP, a noteworthy amount, since more than 10 other ‘countries’ have GDP investments in digital assets at a comparable level.
Kenya has long had significant exposure to digital assets. Due to the global health crisis in 2020, the nation’s struggling citizens turned to regional crypto assets for assistance with their financial problems.
The adoption of Bitcoin in African countries has significantly increased in recent years. At this point, many Africans began to understand the benefits of cryptocurrency for real.
According to a survey from Arcane research, countries in Africa are among the top nations in terms of Bitcoin acceptance. South Africa, Nigeria, Uganda, Ghana, and Kenya are some of the best nations in Africa.
Kenya Has Kept Bitcoin as Reserve Currency
In the world, Ukraine leads with 12.7% of its population having access to cryptocurrencies, followed by Russia with 12%. With rates of 9.2 percent and 10.3 percent, respectively, Singapore and Venezuela complete the top 5.
The cryptocurrency market, known for its sharp price swings, has lost more than 50% of its value since November of last year as investors have shunned risky investments due to worries about rising interest rates and inflation.
The Central Bank of Kenya has chosen to use cryptocurrencies as its reserve currency in the interim. The bank’s decision, according to media reports, is the result of its efforts to address the nation’s escalating financial crisis.
The absence of foreign currency reserves as well as a rise in money transfers, according to Central Bank Governor Patrick Njoroge, were two factors considered when making the decision.
Does Kenya Favor Bitcoin or CBDC?
Over the past few years, shilling, the nation’s official currency, has lost a sizable portion of its purchasing power against the US dollar. On that topic, Central Bank Governor Patrick Njoroge suggested that Kenya’s economic problems might be alleviated by using bitcoin last year:
“Our decision to shift to Bitcoin is both tactical and logical. Our currency has always been the punching bag for the IMF, which always claims that the Kenya Shilling is overvalued… We are losing too much simply because someone at IMF woke up on the wrong side of the bed. Bitcoin will put an end to this.”
The Central Bank of Kenya (CBK) stated earlier this year that a possible CBDC may improve cross-border payments and provide some advantages to the domestic banking system. The organization even published a discussion paper to investigate community support for such a product.
However, it is important to note that bitcoin and CBDCs are quite dissimilar types of assets. CBDCs would be fully regulated and distributed by monetary authorities, giving customers less anonymity while the main cryptocurrency remains decentralized.
