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The State of Bitcoin in Kenya

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state of bitcoin in Kenya

Since the early days of bitcoin, many believed that the digital currency would end up banking the unbanked in developing regions such as Africa. While bitcoin adoption in Africa has made some commendable steps forward, its use as a payment method is yet to have a far-reaching impact. Despite this, the African continent has seen the establishment of some well-known bitcoin economies of which Kenya is one of the most prominent.

In this article, you will gain an insight into the state of bitcoin in Kenya and learn about the challenges that bicoin startups are facing in this East African economic hub.

The Bitcoin Ecosystem in Kenya

Kenya is one of the African nations where bitcoin use has continued to gain significant momentum, which has led to the development of a thriving local bitcoin economy.

As more African countries awaken to the adoption of bitcoin, only Kenya, Nigeria, Ghana, and South Africa provide promising bitcoin ecosystems that incorporate bitcoin liquidity, local bitcoin communities, startups, and meetups.

Kenya’s bitcoin ecosystem boasts regular meetups, a co-working space and accelerator focused on blockchain technology, is home to several bitcoin startups and exchanges, is experiencing an increasing demand for bitcoin and a community that’s well-versed in mobile money usage.

BitPesa – Kenya’s Leading Bitcoin Startup

There would be no talk of bitcoin in Kenya without the mention of BitPesa, its leading local bitcoin startup. Nairobi-based BitPesa was launched in 2013 with the aim to provide businesses and individuals with a cheaper alternative of making international payments to and from Africa by leveraging bitcoin as a payment method. The use of bitcoin has enabled BitPesa to lower payment costs in and out of Africa by 50 percent.

BitPesaSince its establishment, BitPesa has been able to raise more than $10 million in funding from leading venture capital firms that are focused on blockchain technology to expand to other markets. The venture capitals that funded BitPesa include Draper Associates, BitFury Capital, Blockchain Capital and Digital Currency Group.

With over 17,000 transactions and more than 6,000 users, BitPesa’s current operations are in Kenya, Tanzania, Nigeria, Senegal, Democratic Republic of Congo, Uganda, and the United Kingdom. The payment platform allows businesses to process payments in over 30 currencies across borders.

Initially, BitPesa started its operations targeting private individuals who were looking for alternative means of remitting money. However, they have since changed their model and have started to offer their services to businesses. Changing their model to focus on B2B clients and enabling them to make cross-border transactions has not only seen their expansion into other African markets but has continued to shape the BitPesa success journey enabling it to raise further funding in 2017.

Despite the strong growth of BitPesa’s trading volumes in Africa, however, it has been forced to seize KES payments due to the pushback of the Kenyan central bank against bitcoin and bitcoin-related startups in September 2017. Unfortunately, BitPesa is not the only bitcoin startup facing difficulties when it comes to banking in Kenya due to the central bank’s very clear negative stance on the digital currency.

Central Bank of Kenya’s View on Bitcoin

Following an embroiled court case between BitPesa and Safaricom – Kenya’s largest telecommunication network – in December 2015, a statement warning the public about the use of bitcoin was issued by the Central Bank of Kenya (CBK) across various newspapers. In part, the warning stated:

“virtual currencies such as bitcoin are not legal tender in Kenya and therefore no legal protection exists in the event that the platform that exchanges or hold the virtual currency fails or goes out of business…”

In the eyes of the CBK, the anonymous nature of bitcoin payments makes it, “…susceptible to abuse by criminals in money laundering and terrorism financing”.

Following this directive by the CBK, no known directive or clarity has been offered on the use of bitcoin or on any other form of digital currency.

However, it has become known that the Central Bank of Kenya has communicated to local banks not to perform any business whatsoever with bitcoin startups. Following this communication, several bitcoin startups such as BitPesa had their bank accounts shut down. This, of course, poses a challenge to new and existing bitcoin startups who want to operate in the country.

Kenya’s Blockchain Hub

The opening of a blockchain-focused startup incubator and co-working space by BitHub.Africa in 2016 in Nairobi made Kenya the first of a kind in the East African Community to house one.

BitHub AfricaBitHub.Africa was founded in 2015 by John Karanja, a former employee of BitPesa. His desire was to create a space that would help drive the adoption of blockchain technologies and solutions in Africa. BitHub.Africa has a co-working space, an accelerator for startups that are interested in creating blockchain solutions, and provides consulting and advisory services for

BitHub.Africa has a co-working space, an accelerator for startups that are interested in creating blockchain solutions, and provides consulting and advisory services for organisations that are interested in blockchain technology.

Blockchain Technology in Kenya

Unlike bitcoin, blockchain technology is very welcome in East Africa’s largest economy. As BitcoinAfrica.io reported on September 14, several industries in Kenya are implemented blockchain solutions to improve their services.

The National Transport and Safety Authority (NTSA) announced that it will be mandatory for Kenyan vehicles to have electronic stickers. The electronic motor identification service will ensure that all drivers have the stickers on the windscreens of their cars and will be detected by use of special gadgets. This move will help in the recovery of stolen vehicles and rid Kenya of unsafe old cars. The service will operate on a shared blockchain platform that will link key state agencies like the Kenya Police and the Kenya Revenue Authority together.

Furthermore, Kenya’s health sector will make use of blockchain technology through the installation of a smart platform that will enable all public hospitals to monitor important patient data such as a patient’s health history as well as for the use of public health and hospital management.

In the insurance sector, America Insurance Group (AIG) has partnered with banking group Standard Chartered to launch a pilot using blockchain technology where it ran cover offers for their policyholders across America, Kenya, and Singapore. The pilot saw the two companies process real-time payments for their clients on a unified blockchain-powered platform that linked their agents and financial institutions.

Needless to say, industry in Kenya is discovering the benefits of blockchain technology for itself and many more applications using the distributed ledger technology are expected to follow.

Bitcoin Adoption in Kenya

One of the major setbacks bitcoin adoption has faced in Africa is the high cost of the Internet and a lack of Internet connectivity. As it stands, Internet penetration in Africa is at 18 percent, which is substantially lower than the acceptable global average rate of 30 percent. Many rural areas in some African nations are quite distant from cable stations making Internet connectivity expensive and inefficient.

Besides being one of the two countries in Sub-Saharan Africa with leading telecommunication development, Kenya’s Internet penetration stands at 66 percent which is the highest in Africa. This has made Nairobi – the capital of Kenya – a hub for many tech startups and is famously known as Silicon Savannah. Moreover, in Africa, according to data from McKinsey, Kenya leads in the adoption and use of mobile payment with 86 percent of houses having active mobile money accounts.

While these elements make Kenya a conducive environment for bitcoin startups, there are a handful of entrepreneurs that have adopted the use of bitcoin in providing solutions in the region. Besides BitHub.Africa and BitPesa, Umati Blockchain, BitSoko, Belfrics Kenya, and Remitano are other startups that are making use of bitcoin in Kenya.

paid in bitcoinBitcoin merchant adoption in Kenya, on the other hand, is nothing to write home about. Currently, there are only a handful of companies in Kenya that accept bitcoin payments for their services as stated by CoinMap, a platform that gathers and lists traders that take bitcoin. These include two tech companies, two travel agents, and three e-commerce shops.

According to several members of the bitcoin community in Nairobi, bitcoin use is prevalent among the youthful tech-savvy generation who receive bitcoin payments for their freelance work or are buying them for investment purposes.

The Future of Bitcoin in Kenya

With a bitcoin-unfriendly central bank, international bitcoin startups are finding it hard to break into the Kenyan market and homegrown startups are struggling to get off the ground. Nonetheless, bitcoin adoption is on the rise in Kenya as can be witnessed by trading volumes on LocalBitcoins.  Even the national media has been reporting about bitcoin, which has boosted bitcoin awareness in the East African nation.

Should the Central Bank of Kenya change its view on the use of cryptocurrencies, Kenya would have the potential to become a leading global bitcoin economy as the country benefits from a well-educated driven young generation of entrepreneurs and developers in Nairobi’s Silicon Savannah who are very capable of developing new bitcoin and blockchain business solutions if they were to receive the regulatory stamp of approval and support from local authorities.

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Paxful’s #BuiltwithBitcoin Initiative to Fund Rwanda Water Project and Afghan Scholarships

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Paxful Fund Rwanda Water Project

Peer-to-peer bitcoin exchange Paxful has announced a new development in its #BuiltWithBitcoin charitable initiative. The company is launching a Rwandan water tank project that will be spearheaded by AnthemGold, their new initiative member; additional classroom resources for the Rwandan nursery school that was built as the first #BuiltwithBitcoin project, and award more than $15,000 scholarships for female Afghan refugees to pursue their careers in the United States.

Paxful’s scholarship beneficiaries include Susan Naseri who is interested in non-profit work and law; Dunia Azizi, who will pursue a mathematics degree; and Farzana Nawabi, who is working towards a bachelor’s degree in nursing. The beneficiaries were chosen by Zam Zam – a non-profit organization partner for the program – based on the personal essays they wrote describing the hardships encountered while getting an education, migrating to the U.S. and blending into the American society while pursuing their careers and raising families.

Susan Naseri, one of the beneficiaries, said: “As a recipient of the Zam Zam Water scholarship, I’d like to express endless gratitude and appreciation to Paxful and everyone involved in the donation process. Receiving this scholarship is not only an immense honor and privilege; it also eases my financial stress significantly. I’m beyond humbled and thankful for this scholarship; thank you eternally for helping me expand my education and fulfill my dreams.”

Paxful Expansion and Partnership

Paxful Fund Rwanda Water ProjectFor the initial scholarship, winners were given $5,000 paid in two installments each of $2,500. Zam Zam Water will continue running the scholarship as an annual program. In addition, both Paxful and Zam Zam welcomed AnthemGold to the #BuiltwithBitcoin initiative after the virtual currency provider contributed enough bitcoin to construct a 35,000-liter water tank as well as fund the cultivation of more than 80 sustainable community gardens and 30 goats for two villages in Rwanda.

Speaking of the initiative, AnthemGold’s CEO, Anthem Hayek Blanchard said: “I am grateful to participate in a project that builds sustainable and essential projects for communities in need. We hope to use Zam Zam’s knowledge to provide people with the building blocks needed to foster and grow.”

Paxful’s announcement comes after its May announcement regarding its investment expansion in Africa by electing a new African Regional Director and building an incubation hub for blockchain technology in Lagos, Nigeria. The hub is expected to launch in the fourth quarter of 2018 and will be a co-working space that will provide services such as mentorship, advice on ICOs, and individual and corporate blockchain training. Paxful will also be sponsoring various crypto-focused events in Nigeria and plans to hold talks with similar events in Kenya, Ghana, and Cameroon.

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Crypto-Finance Platform Nebeus Enters the Africa Market

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Nebeus
Image by Nebeus

Cryptocurrency users in Kenya, Uganda, Tanzania, Rwanda, South Africa, Nigeria, and Ghana now have full access to the suite of Nebeus services. The “crypto bank” Nebeus enables users to buy and sell cryptocurrencies, enjoy remittance services, and access crypto-collateral loans, among many other services related to crypto-finance.

Opening access to Crypto-Finance services in Africa

Nebeus is a London-based fintech startup that runs a P2P exchange platform, offers crypto-collateral loans and incorporates a user-friendly bitcoin wallet. Nebeus was founded in 2014 with the aim of delivering a cheap, convenient and highly efficient service that catered to the demands and challenges of the evolving cryptocurrency landscape.

The crypto-finance platform will take advantage of local telcos and mobile money to penetrate these new markets, according to a company press release. Mobile banking has enabled African countries to leapfrog many developed nations by tapping into a previously unbanked segment of the population. The success of mobile money platforms, such as MPESA in Kenya, has attracted a number of fintech and blockchain companies to the African market.

The pay-in and pay-out corridors for the trading service include MPESA in Kenya, Airtel mobile money in Uganda, mobile money (Vodacom, Airtel, Tigo) for Tanzania, mobile money (MTN) Cameroon, Mobile Money (MTN) for Nigeria and MasterCard, Verve (Cards) and online banking for Nigeria. The established network of local payment partners will provide access to crypto-services for a population of over 400 million people.

Nebeus also aims to play a greater role in serving the African remittance market, which is estimated to receive billions of dollars annually. The company’s objective is to become the focal provider for this section of the African economy.

Alex Lempka, Nebeus’ Director of Communications, said: “Cryptocurrencies have a potential to make a significant impact on developing countries in many ways by providing a bridge into the global economy. Nebeus is looking forward to playing a major role in that by providing necessary infrastructure for all participants”.

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Golix Relaunches ICO and Expands Into Kenya, Uganda and South Africa

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Golix Launches ICO

Zimbabwe’s digital currency exchange, Golix is relaunching its token sale, which was planned for mid-May but abandoned after the Reserve Bank of Zimbabwe issued a cryptocurrency ban which was later overturned by the Harare High Court.

The exchange, which has been operational for three years, has also announced that it has launched its services in Kenya, South Africa, and Uganda as from Friday 1 June 2018.

“As part of our strategy starting from Friday 1 June, people in Kenya, South Africa, and Uganda will be able to start trading from Golix. This is one of our plans to be the leading exchange in Africa, which inspired by the vision to provide financial autonomy in the continent, ” said Golix’s Head of Growth, Panashe Tapera.

Out of 54 countries in Africa, only three have local cryptocurrency exchanges while the rest are still to realise the potential held by the blockchain technology.

Golix has set its target to avail its services across the entire African continent to address the cryptocurrency infrastructure shortage which has slowed down the adoption of digital currencies.

Golix Lead of Special Projects, William Chui, stated that the token sale was an initiative they set afoot to enable instant remittances and international payments through cryptocurrencies.

The Token Sale

“Since from onset our main agenda is to provide financial autonomy in Africa. The GLX token is going to be used to facilitate and realise this agenda. People from respective different countries will be able to buy the GLX token from the exchange using their fiat currencies. The GLX token will be used to buy other Altcoins in the exchange, all this will be done at zero transactions fee.

“The GLX token will also be used to facilitate remittances and international payments at lesser fees, compared to current banking methods. This cascade immensely towards contribution of GDP growth in African countries,” said Chui.

The GLX token, an Ethereum ERC20 token, will be available for purchase from Friday 1 June 2018 10 AM UTM/GMT on the Golix token sale website, tokensale.golix.com.

Potential buyers can use bitcoin (BTC) and ether (ETH) to buy the GLX token, which has been priced at $0.05612.

1,274,240, 097 tokens will be availed but only 637,120,049 are going to be sold during the token sale and the public will only be able to buy half of the tokens.

*Disclaimer: This post is informational only. Readers should do their own due diligence before taking any actions related to the mentioned company, product or service. BitcoinAfrica.io is not responsible, directly or indirectly, for any loss or damage caused by or in connection with the use of or reliance on any content, product or service mentioned in this article.*

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