What Is Cryptocurrency? Here’s All You Need to Know

What comes to mind when you hear the word cryptocurrency?

Money? Technology? Or is this one of those things you consider ‘mambo ya walami?

Cryptocurrency is one of the big words thrown around more and more recently. If you pay attention to what happens online, especially on the ‘social streets,’ you should have already encountered one of these terms somewhere—Bitcoin, crypto mining, Ethereum, etc.   

Even celebrities are tweeting about it, and there are tonnes of testimonies of people becoming millionaires from it.

But despite this term quickly becoming mainstream, not many people understand what exactly cryptocurrency is. However, as technical as it is, it is quickly becoming a revolution and ignoring it is no longer an option. 

Hence, today, let’s dig deeper into the world of cryptocurrency and try to answer some of our burning crypto questions together. 

What Is Cryptocurrency?

Cryptocurrency is a decentralized virtual currency. This is to mean that cryptocurrency is money— just like USD, KSH, RAND, etc. However, unlike these currencies, cryptocurrency is not tangible money you can touch and withdraw from your local ATM. 

Instead, this is money that exists only online. It is built on an online technology known as a blockchain (a distributed ledger technology) and secured by cryptography

If that sounded too technical, think of it like this, cryptocurrency is like arcade tokens or casino chips, and you can exchange them in the arcade or the casino for goods and services. Except, cryptocurrency exists only online and can be traded on a larger platform. 

Also, unlike the popular tangible currencies like the Euro, cryptocurrency is decentralized in the sense that a government or bank doesn’t control it. Instead, the transactions are monitored, controlled, and verified by the blockchain’s network or nodes.

This might sound very unreliable. However, this creates more transparency, trackability, and traceability than your regular bank transaction. 

This video gives you a more visual idea of cryptocurrency. 

The Different Kinds of Cryptocurrencies

There are literally thousands of cryptocurrencies – and the list is still growing. According to CoinMarketCap, the total value of all traded cryptocurrencies in the market as of 11th October 2021 was $2.3 trillion. 

The most popular of these are Bitcoin and Altcoin. Bitcoin is by far the most recognized cryptocurrency locally. Maybe this is because it has been in the market the longest. Others include;

  • Ethereum
  • Binance Coin
  • Cardano
  • Solana
  • USD Coin, etc. 

Why Are Cryptocurrencies So Popular?

There are many reasons why cryptocurrency supporters advocate for this type of currency. 

  • Experts believe that cryptocurrency is the future of commerce as we know it. This is one of the reasons why many people are rushing to invest as much as they can. 
  • In relation to the point above, cryptocurrency value is steadily increasing, so speculators are having field days buying and selling this currency. 
  • Many people like the decentralized nature of this currency. It is unregulated (in a good way) and has higher security than traditional currencies. The fact that there is no giant hand regulating it is a very enticing thing for many elite people. 

Are Cryptocurrencies Legal in Kenya?

Kenya has not been left behind in the fight to accumulate as much of this future wealth as possible. In fact, according to Chainalysis 2021 Global Crypto Adoption Index, Kenya ranked among the top in cryptocurrency adoption globally—coming second only to Nigeria in Africa. And this popularity is expected to increase in the coming years. 

But what is the current legal status of cryptocurrency in Kenya? 

The only time the legality of cryptocurrency was addressed by the Central Bank of Kenya (CBK) was in December 2015. CBK issued a public caveat over virtual currency trading. 

According to the official statement;

Alt: Snipped of a paragraph from the official CBK public notice in regard to the use of cryptocurrency. 

However, despite the government warning, it is not illegal to buy and sell cryptocurrency in Kenya. There is no doubt that the currency’s popularity is rising by the day. 

In fact, according to Cardano predictions for 2022 by TradingBeasts, ADA is expected to reach an all-new high in the country in the coming year. 

How to Invest in Cryptocurrency in Kenya – Complete Guide

The process of buying and selling cryptocurrency is the same for different countries. But some minor differences are there depending on the local rules and regulations. 

Alt: Image of Bitcoin. (Photo by Executium on Unsplash

If you are in Kenya, here is the process to follow. 

  • First, you will need a blockchain wallet—this is where you will store your digital assets. It is an app that you can download to your gadget, and there are many options to choose from, for example, blockchain, mycelium, etc. 
  • Once you have your wallet set up, the next step is to ensure that you secure it in case of any eventualities. Add a strong password or PIN and ensure you have created a backup phrase that will help you recover your wallet in case of anything.
  • Next is to choose your bitcoin vendor carefully. Cryptocurrency vendors are sprouting everywhere nowadays. Locally, there are companies like Binance P2P, Paxful, Kraken, etc. Once you check into any of the companies’ online platforms, there are simple steps to guide you on purchasing and loading your digital asset into your wallet. 

Once you have your digital currency in your wallet, it is now ready for use. You can choose to spend it just like any other currency or keep it for future speculation. 

Here is a video explaining the process of buying cryptocurrency in Kenya. 

A video on Trading/Buying Bitcoin, USDT, BNB, ETH in Kenya using M-Pesa

Are Cryptocurrencies a Good Investment?

Just like any other currency, cryptocurrency follows the greater fool theory of investment. It generates no real cash flow. For you to benefit, you need to sell your stack for a higher price than you bought. 

Some of the notable voices in the investment field have voiced their stand on this issue. For example, In his own words, Warren Buffett compares cryptocurrency to a cheque sleeve. 

He says that “It’s a very effective way of transmitting money, and you can do it anonymously and all that. A check is a way of transmitting money too. Are checks worth a whole lot of money? Just because they can transmit money?

However, for the elite market speculators, this can be a massive money-spinner. For example, the price of Bitcoin went from $20,000 in December 2017, then dipped to $3,200 by the end of 2019, and later peaked again, and now it is selling at a record price. 

Conclusion

So there you have it. Now you have the basic cryptocurrency information, but this article is in no way exhaustive. 

The cryptocurrency market in Kenya is on the rise, and it is crucial to keep yourself informed on what is going on in the crypto world. So it is good to keep researching and accumulating as much information as you can.