For over six years now, the interest in cryptocurrency trade has been rising in Kenya’s Silicon Savannah that now see it as the future of value exchange.
The online trade that runs on blockchain technology is here with us, but the ride has not been easy for newbies who have lost huge sums of money.
A lack of regulation in an online market thriving in a struggling economy has given fraudsters the confidence to exploit the crypto information gap among traders, and the need to trade in the safest possible ways has never been as urgent.
“Many Kenyans still lack information about crypto buying and selling, the dynamics and how they can avoid scammers. They buy the trap of getting high returns in a short time and end up losing their cash,” says Bryan Adams who has been in the scene for over three years.
However, this has not deterred Kenyans from utilising their innovation to try to bridge such gaps and making the trade more enjoyable.
The reality is that cryptos give you the liberty of buying value in fractions, trading it or simply hedging it inspires many. If you feel like one Bitcoin (Sh1 million) is too much for you, you can split it and buy 0.0001 (Sh100) of it.
REDUCED COST OF OWNERSHIP
This reduces the cost of ownership and does not require you to spend out of bounds. Using a crypto converter, you can find out the price of any cryptocurrency in any currency and invest accordingly.
Armed with this knowledge, Joshua Mutisya teamed up with his Russian friend Dmitrii Surkov to concoct Totalcoin, a crypto solutions platform that offers affordable mobile crypto banking, secure trading platform and exchange services for various digital coins across the globe.
A notable feature of Totalcoin is the ability to transfer cryptos between users on the platform using phone numbers. This pushes away the mistakes users make when they have to copy addresses with long characters in order to transfer crypto.
“We realised that most crypto exchange platforms push a couple of transaction costs to customers, who, in lack of affordable rates, had to bear with the charges,” the computer systems engineer explains.
The duo targets new crypto investors who want to buy or sell, store, send or receive, deposit or withdraw digital value online, without being scammed.
Their competitive advantage comes when customers are able to send, receive, deposit and withdraw for free and charge only 1 per cent when buying or selling.
On the platform, Kenyan users can use M-Pesa to buy or sell Bitcoin, Ethereum, Litecoin, Ripple and other major global cryptos, using their mobile numbers as identity.
‘SEAMLESS, SECURE ENVIRONMENT’
“Customers can also transact using Paypal, Western Union, Payoneer and other world digital payment modes. We allow them to exchange different coins in a seamless and secure environment,” says the Kenyatta University computer engineering graduate.
He gives the analogy of the present Kenyan market place when you can’t purchase a suit at Sh10,000 and expect to sell it at Sh15,000 in the next few minutes or hours. You are also not allowed to buy in pieces, you have to pay for a whole set at once.
“But in the crypto world, you can buy a small percentage of Ethereum and sell it immediately at a profit. Also, contrary to the value of physical currencies which are centrally controlled in terms of issuance and value, cryptos are regulated by the market forces of demand and supply. You can’t sell below or above a certain cap set by these forces,” expounds the 35-year old.
Launched in Kenya in August 2019, Totalcoin has over 27,000 global users, 15,000 of which are active with 400 trading daily in Kenya, with a plan of expanding to Uganda, Tanzania, Rwanda, South Sudan South Africa and Nigeria. The total number of Bitcoin transactions in Kenya are estimated to be worth over Sh150 million, according to the Blockchain Association of Kenya.
Chairperson of Distributed Ledger Technologies and Artificial Intelligence Taskforce Prof Bitange Ndemo says cryptocurrency platforms make purchases faster and more affordable.
"Kenyans are now using cryptos to buy vehicles abroad. There is a big capacity for their use in Kenya, especially for Kenyans in diaspora who wish to send cash to their families back in the rural areas," he says.
He adds that the use of digital currencies is a real threat to commercial banks since, just like the early stages of the internet revolution, nobody will be able to stop crypto use.
"Early challenges that will be experienced will be the creation of cash out points in remote areas, where people can withdraw money sent from any part of the world."
But Kenyans are still getting conned in such platforms that promise to offer immutable, secure and trusted online marketplaces.
Kubitx’s business investments manager George Mwakisha believes the only way for newbies to avoid scams is through getting the right education.
“New investors need to be taught how to trade, get in the right forums and interact with experts. I know of two cases where a trader lost Sh10 million and another Sh3 million all because of the get-rich-quick mentality,” he told the Daily Nation.
Mr Mutisya warns new investors that they must interact with trusted people they know in person to avoid losing their money.
“It is normal for newbies to lose money to online fraudsters but we saw that as an opportunity. We have an escrow service where a third party holds and regulates payment of the funds required for two parties involved in a given transaction.
“If you are selling Bitcoins to a user paying using MPESA, the Bitcoins are held for up to 15 minutes to validate the transaction. If the MPESA money is not received within that time, the transaction is cancelled. For those who steal from unsuspecting buyers, their wallets are frozen and money reversed in less than five minutes.”
Escrows are very crucial in the case of a transaction where parties who are strangers are involved and a certain number of obligations need to be fulfilled before a payment is released.
They help make transactions more secure by keeping the payment in a secure escrow account which is only released when all of the terms of an agreement are met as overseen by the escrow entity.