Bitcoin representation.[Photo/Bizna]
The Central Bank of Kenya (CBK) has warned against Bitcoin investments.
Bitcoin is a digital currency that uses encryption techniques to regulate the generation of units of currency and verify the transfer of funds, operating independently of any central bank.
The governor addressed the Press at CBK headquarters in Nairobi on Wednesday stating that Kenya’s central bank shares this position with many peers he has been engaging around the world.
This is a reinforcement to the December 2015 public caution and it may be a blow to daring Kenyans who have chosen this path risking their money in the little understood online craze.
Bitcoin traders’ meetings have been growing in popularity in Nairobi. Bitcoin rose to $17,000 (Sh1.7 million) creating more interest and speculation but has embarked on a free fall, including losing a third of its value in a day.
It is now valued at about $10,000 (Sh1 million) which means an investor who bought one bitcoin on December 7 when the value was at its peak stand to lose Sh700,000 should he or she choose to sell it today.
It has been estimated that Kenya’s bitcoin holdings were about 2.3 per cent of the gross domestic product (GDP) or the annual national output hence making it among countries with the largest bitcoin holdings.
Kenya’s GDP stood at Sh7.1 trillion meaning Kenyans have risked about Sh163.3 billion in this cryptocurrency. This is enough to sustain the ministry of Health for about three financial years.
The largest bitcoin holdings as a percentage of GDP are in Russia (five per cent), New Zealand and Nigeria (four per cent each). In Africa, South Africa tops followed by Kenya.
Njoroge noted that they have been looking into bitcoin and what it means for those who may want to put in their money.