Cryptocurrencies: What should be the issue

Saturday July 03 2021
crptocurrencies pic
By Honest Prosper Ngowi

Discussions of cryptocurrencies have become huge traction in Tanzania in the last part of June 2021. This has been largely triggered by the remarks by President Samia Suluhu Hassan that Tanzania has to be prepared for cryptocurrencies. The emerging discussions have various perspectives. Some point to the opportunities embedded in cryptos while others see challenges. I have written widely on various aspects of the Fourth Industrial Revolution (FIR), including its technologies, including Blockchain technology one of whose uses is cryptocurrencies.    


A cryptocurrency is a digital currency that can be used to buy goods and services.

It is a digital or virtual currency that is secured by cryptography, which makes it almost impossible to counterfeit or double-spend. As opposed to fiat money, cryptocurrency does not exist in physical form like paper/fiat money. It is typically not issued by central banks, such as Bank of Tanzania, which are the monetary regulatory authorities in the fiat money space in most countries.

It is a decentralized digital money based on Blockchain technology of the FIR.


It is a digital payment system that does not rely on banks to verify transactions.

It is a peer-to-peer system that can enable anyone anywhere to send and receive money.

It is a digital asset designed to work as a medium of exchange. All of the above boil down to the fact that cryptos are digital and decentralized. New as it is, there are a number of issues around it in Tanzanian type economies as partly outlined here.


There is a great need of knowledge of the currency. There is a need of knowledge of what it is, its origin and why does it exists, how does it work, number of cryptocurrencies so far and how are they produced, who is behind which crypto, opportunities and challenges embedded in the cryptocurrencies and many more. Knowledge gaps around cryptos need to be properly bridged soonest. 


There is a need for knowing implications of all that we know and that which we do not know about cryptos. This calls for scenario-based implications of the currency.

It includes implications in financial system in its totality and the role of the Central Bank, implications to monetary policy and its instruments.


The Central Bank is the leading monetary authority of a country. Cryptos do touch and are touched by the regulator in a way. Among the issues in the regulatory space is the desired regulation.

This include issues on when to regulate, how to regulate, the extent of regulation and impacts of all these.

Key issues here include avoiding regulations that will kill innovations and progress in this space.

It is all about having smart regulations. It can be a delicate balancing act to achieve smart regulations that protect the financial system and by extension the general public on one hand and ensures innovations and progress on the other.

Legal tender?

It is almost clear that discussions around cryptos is not about having it as a legal tender any time soon. Partly this is because a legal tender such as Tanzanian Shilling is only issued by Central Bank.

Cryptos are decentralized and out of the jurisdictions of central banks. Therefore, cryptos being made a legal tender in Tanzania any time soon is a very remote dream. However, it may not be ruled out dynamic as our times are.

The nearest that Tanzania can go in the very near future is officially recognizing cryptos. Some countries might have criminalised it, recognized it and some have been indifferent letting their citizens to transact in cryptos at their own peril. 

Ways forward

As correctly ordered by the President, the need to be future-ready in the cryptocurrency space cannot be overemphasized.

We should be fully prepared in all aspects of the currency to avoid being caught with our pants down as a country.  Among the starting point in being ‘crypto-ready’ is having vibrant, intelligent, sober, diverse and constructive free discussions around cryptocurrencies in Tanzanian context.

Tapping the brains of experts - including practitioners on the ground - is very important. Among other things, there is a need to manage change and expectations. Learning from countries and individuals who are ahead of the learning curve in this game is a must so as to avoid re-inventing the wheel.

The author is an Associate Professor of Economics at the Mzumbe University Dar es Salaam Campus College