Kenya’s Banking crisis is a Testament to Bitcoin

This week, the 3rd Kenyan bank in 8 months was placed under receivership for 12 months by the Central Bank of Kenya. The country’s Banking regulator says, Chase Bank of Kenya misreported its loans resulting in a social media triggered bank run. Kenya’s short banking history is littered with banks that fell to the wayside. Here is a list

@Owaah on twitter

I unashamedly drained my Chase Bank account the morning of the bank run. I would do it again with any other bank. Fraud is not patriotism.

Victims ranged from individual customers, other smaller lenders, and Small and Medium size businesses. Depositors were spotted queueing up at Rafiki Deposit taking Microfinance, a non-banking financial institutions that holds funds with Chase bank. As part of a banking sector clean up process, Governor Njoroge has clamped down on 2 other banks since taking office last year, Imperial Bank and Dubai Bank, rendering even more deposits inaccessible.

Bitcoin Pesa A collective conscious is now taking root, questioning the state of the banking sector, and rethinking the role of custodians of their money. A glimpse of the spirit of the times, this meme making rounds on Kenyan inter webs:

The new bank in town: Sox Bank Limited – your bank on the move No charges on withdrawal


What is wrong with Kenyan Banks?

The truth is, Kenya’s Banking crisis stems from the fundamental architecture of how banks work. Conventional wisdom will have you think a 100,000 KES deposit at a local bank is held in a vault for you. In practice, however, when a bank holds your money, you cede control, and become an unsecured creditor holding IOUs or promise to pay. There is no 100% guarantee they will have it for you in cash when you need it.

On the other hand, with physical cash in your sox, or under your mattress,  you have 24/7 access to your money, you are in control. The fanfare around transition to electronic money from cash, is turning out to be not so great after all. Dominic Frisby says We should fear a cashless world

Kenya’s present woes are part of a larger pattern that is increasingly repeating itself across the globe. Most recently in Uganda’s mobile money shutdown, Cyprus’ 2013 banking crisis, Greece 2015 EU default crisis, the UK financial crisis of 2007 and now Kenya.  Despite being miles apart Europeans, Ugandans and Kenyans exhibited a similar reaction, human beings will naturally seek to avert crisis. That is why,

In Cyprus

As Cypriots heard the news of the tax, they started lining up outside of ATMs to withdraw money.

In Greece

the lines forming at petrol stations and in front of the shrinking number of bank machines that still contained cash highlighted the scale of the disaster facing Greeks

In Uganda

many users emptied out their mobile wallets as soon as platforms went live.

In Kenya

Chase bank kenya

Chase Bank depositors were Thursday stranded at various branches as their efforts to withdraw their money were met with closed doors.

Why Bitcoin?

Bitcoin is the only true form of electronic peer to peer cash. Possession is ownership. When you hold bitcoins, you are in full control of your money, just like cash. Bitcoin gives back to the people, full control and ownership of their electronic money, by taking out the need to trust a bank to hold and redeem your funds.

Bitcoin is designed around the idea of using cryptography to control the creation and transfer of money, rather than relying on central authorities

While I sympathize with Kenyan depositors who now cannot access their hard earned money, I am taking away lessons from this event(s). We cannot trust banks with our money. We, the people need to think critically about what a bank balance really means, then, take a look at Bitcoin and the promise of a better tomorrow.




  1. […] но гораздо выше в развивающихся, как, например, в Кении, где за последние 8 месяцев произошло целых 3 случая, […]

  2. […] This risk is much smaller in developed economies, but much higher in developing countries like Kenya, where there have been as many as 3 separate bank runs in a span of 8 months. The same thing […]

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