King of crypto surviving the winter crash
The castle was sparsely spread out in a wide sitting area, with an open kitchen on the first floor of an apartment building in the middle of Mwolem, in Nairobi’s Eastlands.
The King was stretched on a comfortable sofa with stuffed throw pillows propping his back as he keenly followed the recent Manchester derby. And as Man United pressed against City early on the game, he told me, as a matter of fact, “We are winning this, we have shown a lot of brilliance in this match.”
A Hewlett-Packard laptop remained on adjacent to his imposing 48-inch TV screen tracking up-to-the-minute Binance crypto trade.
The seesawing graph of volatility trailed from the middle of the screen and made epileptic swings that edged up, at some point almost getting to the top before posting jaw-dropping, sharp dips.
On the wide TV screen, Jack Grealish is on the air so high that he pins De Bruyne’s cross right into Man Utd’s net, putting the rivals, City, on top. So much for the brilliance, I wince. Being an Arsenal supporter I would have preferred a draw or a United win to slam much-needed brake on City who are breathing down our necks as we challenge for the Premier League for the first time in almost two decades.
The King shows no emotion, sort of calm confidence that you can only get once you are used to shattering disappointment. Or alternatively, confidence in trends; Man Utd had won their last six matches since losing to Spanish side Real Betis in mid-December tie and purging the ghost of Roro-Cristiano Ronaldo.
And the King of Crypto, who believes in statistics, and has five Rubik’s cubes displayed in front of the TV in all shapes and complex sizes like the trophies of the glory of his intellect is calm to the end.
In the end, quick strikes from Bruno Fernandes and Marcus Rashford settled the derby in favour of Man Utd and the King was pleased, confident in his predictions. That is what it takes to be a King of Crypto!
When I tell him I want to do a story about Cryptos and how the roiling market crash across the globe has hit roughly 4.25 million Kenyans—the 8.5 percent of our population that trades it—he becomes hesitant. He does not want to be in the news, he says, asking me not to use his name. I tell him I do not see the reason why I should not name him but he insists and I have to make a choice whether the story would still be worth it without his name.
In my ten years of journalism, I have used anonymous sources all the time for sensitive stories but never for such a case. But he is the only one I know who has been trading crypto for years and I feel his story will resonate with millions of users and even us outsiders trying to understand the fascination with imaginary money, so I tell him I’ll call him the King of Crypto instead.
Gaining confidence, he asks if I will take tea and I follow him to the open kitchen where he prowls for a clean sufuria and places it on a 6Kg meko gas which hisses out blue flames of burning liquid petroleum gas.
The King discovered crypto in 2017, he says, from his girlfriend who bought Dodge coin, created by Billy Markus and Jack Palmer in 2013 as a ‘joke’ and dubbed the first ‘meme coin’.
At the time, he also thought this whole crypto business was a joke until his girlfriend showed him her account and he saw more money than he was making in his eight-to-five job.
“Nilijua hii story 2017 kwa dem yangu, sijui alibuy Dodge coin ama nini, na nilijua ka ashamake dough, yeye sijui nani alimuingiza kwa game. Alnisho cheki account yangu, naangalia ndio nacheki, nakumbuka stuff alikuwa anafanya haikuwa inamake sense mpaka nikaona dough hivi na macho, nikakuwa curious, nataka kujua vile hii stuff inawork,” he says swallowing his almost inaudible voice against the hiss of LPG and appeal of Lauryn Hill’s Miseducation in the background.
He pulls the memory from so long ago that you can see him visualise the absence of this girl, who appears missing in his life on account of the few utensils in his kitchen, a washing machine and a disused fridge that is simply moulding inside.
On the wall there is a mural of the King and his cub and another of a smoking rasta done in brightly coloured strokes, but nothing of his queen. He calls her ‘mamaa’. With fond emotions, he explains how she helped him set up his first account at Binance since she had met the know-your-customer (KYC) requirements and sent him a few Bitcoins so that he could get a feel of what was possible.
A 2013 graduate, the King says he went at it with a curious mind, looking for the patterns behind Crypto in the same way he approaches any challenging task, with numbers. If you want to solve a Rubik’s cube, he says, you set up the colours on one side and try to arrange the other faces without dismantling your first one.
In the same fashion he looked for a pattern and was first directed to read white papers on Bitcoin, something he now reckons was a means to scare his interest but which worked the opposite for him and many well-educated Kenyans who were not deterred by a little complexity on the workings of money.
The Bitcoin story starts with the famous Satoshi Nakamoto who wrote the code that would change the idea of money. It was just after the collapse of the global money system in 2008 that this invisible person using a pseudonym gave the world an alternative way to transact goods and services without the politics of governments and their central banks. Through a distributed ledger system called blockchain anyone on earth could send and receive authentic money on their phones and computers without controls by central governments, manipulation by banks and profit-sapping brokers.
But most Kenyans were not interested in the anarchic counter establishment theories that founded the currency, much as they related to the 2008 crash that was largely a news event here. The King says the white papers meant nothing to him, most of which he read went on and on about the companies behind it, the source of their funds, vision, and an awful bunch of things which he could not relate to. He reckons he didn’t need all that as he was just a typical Kenyan looking to make money.
“Come on look, mimi nafanya kazi hii Kenya, as much as niko interested na hii stuff hauwezi soma hizi vitu zote. Na saa zi ngingine siwezi interpret, huyu msee anasema ako na hii vision ntainterpret aje?” he says.
Kenya, a country where 5.7 percent of the labour force was out of work in 2021, the fortunes promised by this cryptocurrency, with one bitcoin going for ($20,000) or Kes2.4 million at its peak, is a natural magnet for thousands for millions of youth.
Joining the Crypto bandwagon is a no-brainer in a country where the average monthly income is Kes76,080 ($634) with 18.8 million people or 34.3 percent of the population living below $1.9 (Kes220) a day, according to the World Bank macro poverty outlook 2021. Popular cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), Tether (USDT), Binance Coin (BNB), and US Dollar Coin (USDC) have attracted 4.25 million Kenyans, 8.5 percent of the country’s total population investig Kes2000 on average.
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In January 2018 Bitcoin hit $19,783 an unprecedented boom then suddenly in a month lost about 65 percent and by September the coins had shed 80 percent of their value. It was a pure bloodbath as scores counted losses with almost valueless ledgers running on computer screens.
The King says he lost money during the collapse having been a late investor just months before the crash. He says he did not even know how to exit at the time and watched helplessly as his money went up in smoke. But he says he learned his biggest lesson the only pattern here was the gullibility of those making an entry and money was made from these sharp rises and fall of prices.
“Mimi niko there for the technical bit, for, how do we call it, for volatility hio tu ndio the good thing about crypto. As in personally, that is what I like when you make losses you make losses, when you make money, you make money, as in, haitake time ati siju kugrow nini,” he says.
“Man nimelearn, I have witnessed two crypto winters, I was here in 2017 and sisi ndio wasee tuliingia na hio euphoria. Bitcoin ilikua $19,000. Hio time mimi sikujua I needed to exit, hakuna shit nilikua najua, wasee wanawaambia mnawezamake dough that is all I knew, life ni hard hii Nairobi, wewe ekelea dough,” he says, recalling how gullible he must have been to take his hard-earned money and throw it away vide some crazy website.
The King says he counted his losses but decided to learn about crypto and the technicalities behind it earnestly, in the process drawing tough lessons about euphoria, stock markets and Elliots wave. “Elliots what?” I ask. He laughs jerkilly. “Ni kutrade patterns, scientifically,” he says, recovering from his fit of sputtering humour. Ralph Nelson Elliot discovered in 1930 that stock markets were not random chaos but traded in repetitive patterns.
The King says he has observed the market is led by herd mentality and euphoria which is moved by sentiments controlled by Artificial Intelligence and social media such as Twitter. When there is consensus over a bull run, the market rallies. Add to the marketing and celebrity endorsements including his team Manchester United whose sponsors, Tezos, are a crypto company while City have partnered with OKX for their training kit to help drive up sentiment.
He tells me trading is a very emotional business that begins when you make crazy money, 50 to 60 percent growth in the value of what you put in. Then enters euphoria when everyone is joining in and you are making so much money you forget the music can stop, you forget the checks that are needed to keep you in this business. Then greed enters and you believe you can always make more until it is too late.
“Kutrade ni very emotional business, ile day unarealize bull run inawapea pesa mingi, as in crazy money you are not supposed to get in a short span of time hata kama wewe ni talented aje, ama ni hardworking aje, sometimes it is crazy money.
And then kuna hio euphoria unapata it is like you really do not care, zile checks and balances, zile zinawezakuweka usurvive kwa hii game unazilenga. Saa zingine unarealise hii stuff imechange but uko za zile unataka kubaki, it will just go back up.
Then unafika ile point uko design inaaproach stop losses yako, unasema maybe nitoe hizi stop losses because niko sure hapa ndio ita bottom, because nishahold on kwa hii winter siwezi exit the market hapa, unaelewa, unasema hii stuff haiwezi anguka, kuna vile tunaenda kurecover and you lose everything. So as in wasee husuffer, wasee wamesuffer,” he says.
He says as a player you need to understand what Bitcoin really is, this money, he explains, does not come from anywhere else. It is the players who bring in money like a multilevel marketing pyramid scheme where new entrants bring in money that is paid up to older entrants. And like a casino once you bring the money the house always wins.
“Kama we ni msee haulern, uko emotional, uko greedy. Kwanza kuingia kama unataka kumake dough, wewe ni greedy. But hakuna penye pesa inatoka, hii pesa ni wewe ndio unaloose unapea msee mwingine hakuna penye pesa inatokea. Wewe kama utosheki unaenda kwa bank unakuja unaweka pesa mpya unataka kubeat system, but hivi ndio hio stuff inachezwa, you have to understand venye inachezwa you can’t win,” he says.
I tell him that is the problem I have with this Bitcoin business… while the technology, the one on the White Paper about blockchain and shared ledgers is sound, the market is purely sentiments with nothing underlying it.
I argue that if, say you bought Nation Media Group shares and you realise that the industry is being disrupted by digital media; that they sell fewer papers and are losing advertisement to social media platforms then you sell the shares. How do you make similar investment decisions in this crypto market?
“Dollar inakua backed na nini?” he asks me like a true disciple armed with typical arguments to disarm detractors. I counter that he is throwing me off with Ad hominem fallacy, attacking irrelevant aspects rather than defending his logic. I tell him even though bitcoin is independent money, it is not being used to exchange stuff. The value should ideally reflect its use; the more people adopt Bitcoin, the higher the value and not the speculation.
“America inaprint dollars, inabackiwa na nini?” he scoffs.
And I am trapped, I have to admit that dollars are also fiction money whose printing is partly behind the current economic upheaval that has pushed up inflation after years of unconventional monetary policies across the developed world. Years of printing money for Wall Street and to give free cheques to unemployed populations and companies during the Covid-19 period caused inflation in the Western World. And correcting this by raising rates has had damaging effects on countries such as Kenya who did not commit this cardinal economic sin. By raising rates, the dollar has become scarce, and more expensive, made debt unsustainable and imports expensive and is threatening to condemn economies into crises and social unrest.
I, however, insist the greenback like the shilling is backed by the government. Kenya is already mulling the introduction of a central bank digital currency (CDBC), a virtual version of the Kenyan shilling while Nigeria has already hit the road with eNaira.
Greek economist and politician Yanis Varoufakis in his book Talking to My Daughter About the Economy explains that while the lure of removing money from the political structure is attractive, it is impractical. He argues we have removed currencies from politicians to central bankers but have only given the power of money to undemocratic institutions and rich bankers.
He notes the greatest danger of Bitcoins is not since it cannot be manipulated by government, it cannot also be adjusted to help deal with a crisis which may make economies worse off. Anything from cigarettes to shells, to gold, to paper to ones and zeros on a computer can be a currency, so long as we have trust in it, but this trust has to be earned and bestowed in transparent institutions with democratic accountability. Bitcoin is a dangerous fantasy of apolitical money.
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But the King belives that even if Bitcoin is just some speculative assets, it can still tell us something about the times we are living in. He says that Bitcoin is a value of human emotions, and it is better at tracking the economic sentiments well than any government figures. Which makes me agree that he is onto something, the crypto crush might have hit the four million speculators first but the winter blizzard is pummeling us all.
He says from his experience the Bitcoin crush is being driven by inflation as incomes get used up by higher cost of goods and currencies shed value. As more people struggle to make ends meet, they have less money to bring to the casino.
“You can value emotions, and that is what Bitcoin is and human behaviour is very predictable. Kuna hizi stuff, ushaiskia the golden rules, I swear unaangalia patterns za binadamu za kuthink na emotions, as in, it is just so predictable. Kuna time wasee walikua na dough, but saa hizi market imeenda chini ju wasee wanacheki, mimi sitaki hii pesa iishe na nyumba yangu ilikula investment, mara chakula, so wasee wanatoa dough.
“Tunajua market inashrink na ni vitu mingi zinapush, saa hizi nalipa rent hapa nimeinvest kwa crypto nalipa fee, but saa hizi market imeenda iki tank na unajua hii shit ya Corona haiwezi isha tu na one day ati saa hizi mmeanza kutembea bila kuvaa mask mnafikiria vitu zitarudi tu normal, wasee wanaanza kubuild from zero so it will take time na intake resources. Si angalia hata ma stocks zimekua zikianguka,” he explained.
“Unajua watu hawaaunderstand recession, ni vile tu watu hawajaanza kuigusa penye iko,” I agree with him.
“Baas this is a recession; everybody everywhere is suffering. Do you think it is going to get worse?” The King asks me. “Definitely, ni cycle, and it will take a bit of time to get back and it will hit everyone,” I tell him.
He laments how coins have dipped 90 percent, “Sasa imagine wasee walibuy coins up to Kes60,000, imagine msee anakusho bitcoin ilirise from Kes6000 ikafika Kes60,000 ukasema ikifika Kes65,000 nitabuy then inadip. Kunatime bitcoin ilikua hata Kes3000, etherium ilikua Kes10,000 ikaenda mapaka $4000 (Kes495,600), so it is just a game.
“Pia ni gambling tu but if you know the science, you might know when to exit, kama hutaki ama ile design unafeel ushatake enough beating ukiexit utakula losses unafeel it won’t go below, itaenda, hio ni markets, very predictable,” the King said.
He, however, says out of the whole experience he has learned a lot, he now knows about shares, something he had no interest in until he discovered Bitcoin. He has diversified his investment into the Nairobi Securities Exchange and has bought Safaricom shares which are also tanking.
“Wasee wamekua creative tangu nijoin NFT zimecome up, saa hii unatrade bila kuwa na account nobody owns your stuff, wewe unaenda tu unamake dough without kuenda kwa hizi vitu zinahitaji KYC,” he says.
He says fraud has, however, increased since crypto is unregulated as well as hacking and when I ask him about disgraced FTX founder and CEO Sam Bankman Fried, he says it is greed that ruins everyone in this business.
“Hii stuff ni unregulated, hakuna vile inaweza kua controlled, I mean wewe unawezakua kwa hao yako ukitegeneza because it is more of programming and stuff, si ati kuna wasee wanairun from some building. Huyo msee angekua anarun hi business yake ethically na vile inafaa, huyo msee bado angekua bilionaire, yaani ukishamake it vile alimake, hauwezi rudi chini. But then, greed ya wasee kama kawa,” he said.
