This archive report was first published on 23 May 2020.
On May 23, 2020, the world was grappling with the COVID-19 pandemic, which had led to the closure of international borders and a significant decline in foreign currency reserves. This had a ripple effect on economies, causing currencies to weaken.
However, the demand for digital currencies, also known as cryptocurrencies, was on the rise. Despite a brief dip, the market steadied and surged, with many digital currencies reaching pre-pandemic highs.
Bitcoin, the most popular digital currency, saw a significant increase in usage, particularly in developing countries. Argentina, Chile, Venezuela, and Morocco were among the countries that recorded a new all-time high in bitcoin adoption.
So, what makes digital currencies so resilient? They use a tamper-proof technique called encryption to control the creation of currencies and verify transactions. This is made possible by blockchain technology, a platform that enables secure and transparent digital transactions.
Think of blockchain as a digital spreadsheet that records every transaction as it happens. This allows users to quickly and easily trace products and transactions back to their source.
Blockchain technology has far-reaching applications, extending beyond digital currencies to sectors such as shipping, healthcare, farming, food safety, entertainment, and education.
The pandemic has accelerated the adoption of digital currencies, partly due to the discouragement of banknotes and coins as they can spread the virus. Digital currencies are also demonstrating strength and resilience in tumultuous times, unlike traditional currencies.
Major organizations, including IBM, Oracle, Microsoft, Amazon, and American Express, are now relying on blockchain as the bedrock of their business processes.
Even before the pandemic, the future of blockchain and digital currencies looked bright. The LinkedIn platform had identified blockchain as one of the hottest hard skills for 2020.
The Kenyan government had also formed a task force to guide the adoption and implementation of blockchain technology. However, the implementation of the task force's recommendations remains to be seen.
Despite the Central Bank of Kenya's cautious stance on digital currencies, Kenya has a growing list of companies expanding their footprint in the cryptocurrency market. It's only a matter of time before the CBK softens its stance.
