NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, April 3, 2015

It’s been declared dead countless times in the West, but in Kenya’s start-up scene Bitcoin is all the rage. Kenyan companies have been attracting funding lately to build cheap Bitcoin-based remittance services that some think could give Western Union a run for its money, though others say it’s still got a long way to go.

In the Western world, to say that the crypto-currency Bitcoin has a publicity problem is to put it mildly. Bitcoin’s value dropped 43 percent in the first few weeks of this year, and was declared the worst-performing asset of 2014. For years journalists covering the tech industry have been proclaiming that Bitcoin, as a currency, is dead.

But in Africa, Bitcoin’s future is looking up. A number of start-up companies in Kenya have been attracting investment in the hopes that Bitcoin could be a new answer to an old problem: the high cost of sending remittances.

Bitcoin uses its own network to carry out money transfers without any central authority or banks.

And that is why Michael Kimani, who heads the African Digital Currency Association, said this was useful for Africans abroad who pay higher rates than the rest of the world to send their money home.

“I know people who pay 17 percent, imagine, for moving money from one country to another. Here the rates are so expensive, it makes sense to start here,” he said.