Cryptocurrencies have already irreversibly changed the way we think about money and even the role of banks. This is a fact today. We know that the creation of money can be decentralized and that what we knew about fifuciary money has been completely changed.
Controversy aside, cryptocurrencies are considered the currency of the future and have the potential to cause a real revolution in our use of money.
While most forms of hard currency are subject to government oversight and regulation, cryptocurrencies are -by definition- exempt from such restrictions.
This is certainly what “terrified” many governments, particularly in Africa where bitcoin very quickly emerged as a threat.
However, despite state bans, the use of cryptocurrencies and bitcoin in Africa continues to intensify.
With a massive population and abundant natural resources and major economic challenges, Forbes described the African continent as the final frontier of crypto investing. This remains debatable, of course, but the fact remains that there is unjustly unexploited potential in Africa...
That said, the current trend is slowly emerging. Faced with changes and an increasingly connected world, cryptocurrency is naturally heading towards Africa.
It is from there that we can ask ourselves the question of whether Africa is really ready to welcome the revolution brought by bitcoin?
Here are 3 reasons that clearly show that Africa is ready to benefit from the benefits of cryptocurrency.
1. The absence of an organized financial system pushes people to opt for cryptocurrency.
With its bloody history of colonization, political instability and civil wars, Africa's growth in banking and finance is still lacking. Despite initiatives taken by the IMF and the World Bank, financial inclusion in Africa remains extremely low.
Of course, there have been incredible technological advances such as mobile payment. This will make Africa a giant leap and even – because we tend to underestimate it – lead the rest of the world along this path.
And, what must be clarified here is that the mobile money is not a proper banking service. THE mobile money remains a financial instrument used mainly for payment. Traditional banking services are not “yet” nor perfectly exploited.
Despite sustained efforts across the continent, there is a lack of political will and resources to develop a real banking infrastructure. As a result, there remains a significant portion of the population that has virtually no access to financial services.
By financial services, we mean bank loans, international transfers, leasing, etc.
This is perhaps where cryptocurrencies will show their full potential. Already, cryptocurrencies already bring a lot of innovation and advantages. Since cryptocurrencies can be transferred and received by anyone with an internet connection, the need for a middleman or bank is eliminated.
Add to this that Internet connectivity is on the rise in Africa as well as smartphone ownership which has become very widespread.
This is how we see more and more Africans becoming interested in cryptocurrencies and using them more and more regularly.
This trend can be evidenced by the growing number of cryptocurrency exchanges appearing across the continent. The ecosystem around blockchain in Africa continues to deepen.
From Golix in Zimbabwe to the Naira exchange in Nigeria, we can expect an increase in the use of cryptos in the years to come, and see banks and their traditional services take a back seat, which in all likelihood have failed…
2. Youth and online workers with no other options.
This is certainly the second reason which can make us say that Africa is indeed ready to welcome cryptocurrencies.
Although this is the least “tangible” argument, it nevertheless can be ultimately, the strongest of all.
African startups in the technology sector are emerging with strong added values. With a community of entrepreneurs and a high rate of IT skills, it is no surprise that a growing number of young people in Africa have turned to technology.
That said, our subject concerns not technology in the broad sense but rather that of cryptography. So let's see how African youth use cryptocurrency.
It seems that it is African freelancers, that is to say those who work on the internet, with international companies who have put the first foot in the stirrup.
In fact, the payment companies of these freelancer platforms which include for example Paypal are lacking in Africa. The issue of payment being crucial for freelancers, it was necessary to find a solution.
How could an African be paid by an American or a Dutchman for a service rendered? Receiving payment in dollars is only the beginning of a long series of problems for Africans.
This is precisely where cryptocurrency has been considered a reliable option and even the only truly accessible option.
So, in directly converting dollars received into bitcoin for example, these African freelancers could then immediately enjoy the fruits of their labor. Thanks to bitcoin, they have their cash directly in their wallets. No need to make international bank transfers which are long and costly. With cryptocurrency, all these problems disappear.
This is, in all likelihood, how cryptocurrency took its first steps in Africa.
3. Cryptocurrency as a form of stable currency
Ah, here we come to the radical argument. As everyone knows and unfortunately, the African continent is no stranger to civil wars and unstable governments.
We also know that monetary policies are mostly faulty or inherited (not to mention the CFA Franc controversy) from the time of the colonies. However, we know how an unstable monetary system can lead to state bankruptcy, and we say this, deliberately omitting to mention the famines and other disasters that this can cause….
From Venezuela to Zimbabwe, we've seen how hyperinflation can decimate the value of a country's currency.
Recall that Satoshi Nakamoto, the “creator” of Bitcoin, has often emphasized that bitcoin was supposed to be immune to economic disruption due to its decentralized nature. It is not insignificant that bitcoin was created just after the subprime crisis...
Suffering from a hyperinflation of rare violence, Zimbabwean citizens have turned to bitcoin and other cryptocurrencies despite them being banned by the Reserve Bank of Zimbabwe.
For what? For the simple reason that bitcoin appeared much more stable than state currency.
Indeed, tech-savvy Zimbabweans have often mentioned that using bitcoin as a medium of exchange allows them to protect the value of their money against hyperinflation.
In a country where financial services are sketchy at best and foreign investment is minimal, bitcoin offers Zimbabweans a measure of stability (and potentially profitability) that they frankly need.
Outside of Africa, we can also cite Venezuela, which has seen the same defense mechanisms emerge among its population. Venezuelans have turned to bitcoin and other crypto currencies instead of the bolivar deemed useless.
Being free from banking and government intervention, cryptocurrencies allow citizens to freely transfer funds to or from the country with ease. It is therefore the fact that cryptocurrencies are decentralized - and therefore without any link with banks or states - which gives them such legitimacy in Africa.
In conclusion…
We see with these three arguments that cryptocurrency is already part of the reality of a minority of Africans. The popularity of cryptocurrencies continues to grow as the advantages are numerous.
Some enthusiasts even think that cryptocurrency will be the pan-African currency of the near future…
What we know is that cryptocurrencies and especially the blockchain technology on which it is based could transform Africa. Better yet, this new technology could improve many sectors, such as health, medical, transport, industry, etc.
Now, from a bottom-up perspective, it is obviously up to African governments to look into the issue in order to legislate and provide a legal framework for the exponential use of cryptocurrencies in Africa.