The Central Bank of Kenya says it will be adopting Bitcoin as its reserve currency. Head of the bank, Patrick Njoroge said that adopting Bitcoin was a move taken to bring the currency out of recurrent debt and because of the shortage of foreign reserve currencies.
He added that the increasing demand by the IMF to devalue the country’s currency, the Kenyan Shillong has made the country’s money to lose value increasingly and only Bitcoin can bring the nation out of debt and set it on a path to prosperity.
U.S Dollar Loses Reserve Currency Status
The United States Dollar has for centuries been recognized as the global reserve currency, but not anymore. This is because of the rising inflation that is making it less valuable by the day, caused mainly by indiscriminate printing of dollar bills. This was worsened by the COVID pandemic that made the government print trillions of dollars in cash as a stimulus package for its citizens.
As noted above, Kenya’s choice of Bitcoin is due to a lack of alternative reserve currencies (including USD), meaning the currency is losing its reputation of being the reserve currency. In contrast, Bitcoin is fast becoming the preferred currency for storing value. This has even become preferred to gold which has been around for decades.
Before Kenya’s declaration of Bitcoin adoption, many top companies both within and outside the United States have acquired Bitcoin and part of their investments. This was driven by the rapidly increasing value of the digital asset which right now is worth over $45,000. More companies (and countries) will probably follow in the coming months as the race to acquire Bitcoin heats up.
Nigeria vs Kenya: Two Countries with Different Visions
Nigeria and Kenya are known as the top countries in peer-to-peer crypto trading. The two countries compete for the number one position in terms of trading volume on market places such as Localcryptos. However, the governments clearly have different visions for the countries. While the Kenya central bank is adopting Bitcoin as its reserve currency, the Nigerian central bank announced a ban on crypto trading in the country.
Specifically, it banned banks from transacting with crypto exchanges or individuals involved with cryptocurrency and directed the immediate closure of such accounts by the banks. This stirred a lot of controversies but the bank went ahead with the decision. Interestingly, both countries suffer similar issues with their local currencies.
It is hardly surprising though as there are bigger financial institutions such as the European Central Bank (ECB) which are against crypto. The body language however suggests that it is only a matter of time before more countries follow in the footsteps of Kenya as inflation continues to bite harder.