As the new coronavirus disease hunts humans, leading to the closure of international boundaries, the taps for foreign currencies have gone dry, leading to weakened economies and declining currencies.
The demand for digital currencies, however, slid but steadied and surged. Many are now back to pre-Covid-19 highs.
The use of bitcoin – the most popular digital currency – has risen sharply, notably in developing countries. Argentina, Chile, Venezuela and Morocco are among countries that have recorded a new all-time high.
Digital currencies, also known as cryptocurrencies, use a tamper-proof technique — encryption — to control the creation of currencies and to verify the transfer of funds from one entity to another.
Digital currency is made possible by blockchain, the platform through which digital currencies are transferred from person-to-person.
Think of a blockchain as a sprawling spreadsheet on which every digital transaction is recorded as it happens. The uses of blockchain technology are interminable.
Its strength lies in its ability to allow users to quickly and easily trace products and transactions all the way back to their source.
Just as it is used to ensure water-tight digital currency transactions, its use in other sectors is huge, including in shipping, healthcare, farming, food safety, entertainment and education.
The pandemic has speeded up the use of digital currencies, partly because banknotes and coins are discouraged as they can be conduits for the Covid-19 contagion.
Digital currencies are also demonstrating strength and resilience in tumultuous times, unlike traditional soft currencies.
Blockchain is now the bedrock of business processes for many organisations, including IBM, Oracle, Microsoft, Amazon and American Express.
But even before Covid-19 came calling, the future of blockchain and digital currencies was looking bright. The LinkedIn platform regularly reviews jobs on the highest demand versus their supply.
Among them, blockchain stands at the top of the heap of the hottest hard skills for 2020. Last year, the Kenyan government formed a task force to guide it on how to adopt and entrench blockchain technology.
But evidence of the implementation of the task force’s recommendations is yet to be realised. Currency regulators around the world have, however, been cautious about adopting cryptocurrencies.
The Central Bank of Kenya (CBK) does not recognise bitcoin and other digital currencies. Morocco, Nigeria, Namibia, South Africa and Zimbabwe are among African governments that have recognised digital currencies.
Despite the CBK’s restrained position, Kenya has a growing list of companies expanding cryptocurrency’s footprint, and it could be a matter of time before the CBK softens its stance.
Here is my point: the heightened uptake of digital technologies during the pandemic period may be a tipping point for revolutionary technologies.
Buoyed by tech-drawn youthful populations, deepening penetration of mobile phones and weak local currency and business processes, developing countries are well-placed for a speedier adoption of technologies that resist stubborn economic challenges.
Mr Wambugu is an informatician; [email protected]; Twitter: @samwambugu2