With a high unemployment rate, a youthful population, smartphone penetration rates and good financial services infrastructure fuelled by mobile money, the number of eager Kenyans willing to try their luck at making a fortune by trading in virtual currencies increased.
Motivated by the best lifestyle shown on the internet by early cryptocurrency investors in the west such as Cameron Winklevos who is worth $3bn (£351bn), Michael Sawyer (£269bn), Tim Drapper (£176bn) and Brian Armstrong (£760bn) thousands of young Kenyans wanted to make money.
The eagerness of Kenyans to trade in cryptocurrencies was so great that Kenya currently leads in Africa in terms of crypto adoption and is ranked fifth in the world ahead of some of the most developed countries such as the US, China, Russia, Germany and the UK according to Chainalaysis.
The top four countries when it comes to crypto adoption, according to the firm that conducts an annual review, are Vietnam, India, Pakistan and Ukraine.
Another survey from US company Finder says that 16 per cent of Kenyan adults or an estimated 4.8 million people in the country own some form of cryptocurrency or have tried to trade in cryptocurrency that is above the global average.
Additionally, according to The Mastercard New Payments Index survey, 43 per cent of Kenyans have said they "plan to use cryptocurrency in 2022, with more than 69 per cent noting that they are more open to using crypto than they were a year ago."
This mad rush to cryptocurrency trading has caught the attention of not only Kenyan investors, but also scammers who have created get-rich-quick ponzi schemes masquerading as cryptocurrency trading platforms. The losses have been colossal.
"Last financial year, Kenyans lost around US$120 million ($14 billion) in cryptocurrency fraud? Many of your readers get caught up in these scams, and they end up suffering on their own because they don't get this information," ICT CS Joe Mucheru recently told a meeting of crime journalists.
"When you research these issues, you can also give people guidance on how they need to invest and protect themselves," said CS.
Interestingly, all this tremendous growth in the use of cryptocurrencies in the country has taken place over the course of just seven years and despite a tough stance from the CBK on the trading and use of crypto.
But beneath this façade of growth and a display of Kenyans eager to adapt to the changing times is a dark secret. Unlike other countries where cryptocurrency trading is regulated and governments actually earn taxes from those who buy and sell crypto, Kenyans buy and sell cryptocurrencies online with other users directly.
Also known as peer-to-peer crypto trading or P2P, this is the act of buying and selling cryptocurrencies directly between users, without a third party or intermediary. A number of websites and mobile applications such as Paxful, Binance, Local Bitcoins and Coin Desk currently allow P2P trading in Kenya where traders can use platforms such as Mpesa.
In P2P trading, all a user needs to do is sign up and log in to an app of their choice, then look for a person who in most cases operates with a pseudo name selling whatever crypto they want and at a price of their choice and then lock a sale.
Whilst this looks easy on the eye, in reality it means that if you're looking to buy cryptocurrency using a P2P platform, you'll essentially be sending money to a person you don't know and hoping they'll send crypto coins to your crypto wallet for you can use in commerce.
According to the government, such anonymity is used by criminals to launder money or get money to support activities such as terrorism.
One of the cases currently being investigated by Interpol involving a senior politician and three Nigerians who had moved $25bn into the Kenyan financial market has put the spotlight on cryptocurrencies. This is because some of the money was used to buy $5bn worth of bitcoins to make them untraceable. The money was frozen in March by the Assets Recovery Agency (ARA).
"A few years back, we had issued a warning to all Kenyans and even people outside our borders that we saw significant risks from cryptocurrencies, not because it was unregulated, but because of services it supported, most of which were illegal transactions," said CBK Governor Patrick Njoroge in March.
Those lucky enough not to be scammed when trying to change Kenyan shillings into crypto coins are confronted with an even bigger challenge. They need to decide which cryptocurrency trading platform is safe and which is a scam. And even if they are able to get to a real cryptocurrency trading platform, they still need to figure out how to trade to make money.
These two issues demonstrate the catch 22 situation that Kenyans have found themselves in. On the one hand, a digital currency is being touted as the future of money and commerce that will be without government control or global fluctuations, and on the other is a reality that many people still have no idea what cryptocurrencies really are.
Apart from Bitstream Circle, some of the cryptocurrency trading platforms that had operations in Kenya but collapsed under mysterious circumstances in recent years include Velox 10 Global, CG and Nuru Coin which single-handedly disappeared with Sh2.7bn of investors' money according to investigators . Chainalalysis currently ranks Kenya third in Africa when it comes to cryptocurrency fraud in Africa after Nigeria and South Africa.
According to experts, among the red flags traders should look for in fake cryptocurrency trading platforms are excessive marketing, promises of guaranteed returns, celebrity endorsements, nameless team members and free money. "Scammers sometimes create fake cryptocurrency trading platforms or fake versions of official crypto wallets to fool unsuspecting victims," says technology security company Karspersky. "Initially, the website may allow you to withdraw a small amount.
Since your investments seem to be yielding good results, you can invest more money in the website. But when you later want to withdraw your money, the website either closes or rejects the request, the company warns.
English (UK) 
Norsk bokmål 
Svenska 
Dansk 
Kiswahili 