A pan-African currency, like the CFA Franc in West Africa? The question needs to be asked!
This is a very important question and one that opens up others, hence its importance. Bitcoin is, first of all, the first truly international currency. Without geographical boundaries, without physical emission, without single holder. Bitcoin – to reduce it to just that – is indeed the international cryptocurrency par excellence.
Anyone can use bitcoin as their own currency, and anyone can send and receive it. Without using any bank or any institution. Looking closer, even 10 years after its appearance, bitcoin is still incredible in idea, right?
Today, we are going to focus more on the African continent because we often hear that this is the last frontier that bitcoin must cross.
However, let us remember that bitcoin is already present in Africa and with more intensity in certain English-speaking regions such as South Africa or Nigeria. Given the enthusiasm of French-speaking Africans for bitcoin, we cannot see - very soon - a massive, if not real, adoption of bitcoin among African populations.
➡ If the subject interests you, you can read the article to better understand why the use of bitcoin in French-speaking Africa is still timid.
Bitcoin: Unequal use within the continent
In Africa, bitcoin has seen growth mainly in South Africa, Kenya, Nigeria and Ghana. The latter mainly use bitcoin as a sort of safe haven against state currencies. It is more from an investment perspective – quite similar to those we see in Europe – that Africans in these countries use bitcoin.
Yes, we are not surprised to know that the majority of bitcoin holders (African or European - there is no distinction to be made) seek to make profits with their bitcoins. The headlines talking about people becoming millionaires thanks to a few bitcoins certainly have something to do with it…
Even more, it is also to counter international sending and money transfer companies in Africa such as Western Union with commission rates of around 20% that Africans seem to prefer bitcoin.
(I will reserve the enormous advantage of transferring money to Africa in bitcoin rather than in fiat currency for a future article.) Please note, however, that avoiding the 20% commission is already an advantage in itself.
Moreover, what is all the more interesting to emphasize here is that beyond cryptocurrencies, it is also and above all the technology which underlies it (the blockchain therefore) which is revealed in Africa.
New blockchain-related projects in Africa continues to grow and the entire eco-system around bitcoin continues to strengthen and expand.
From there, we come to ask ourselves this famous question:
Does bitcoin have the potential to become the first pan-African currency?
Even within this growing eco-system, there are of course many supporters of the Bitcoin cause. Many people are convinced that bitcoin could eventually become a pan-African currency in its own right.
Here are some reasons why some people are convinced that Bitcoin will be the world's leading currency:
- Anyone with Internet access can use Bitcoin. But more and more Africans have the internet and a smartphone.
- Bitcoin is not controlled by a government or central bank. This allows, for the first time, Africans to have access to international online payments.
- Payments and money transfers take less than 30 minutes and have far fewer taxes and fees than their traditional counterparts.
- The cost of a bitcoin money transfer is minimal.
- Bitcoin receipts are direct. There is no middleman who has to make a transfer. The person receives their money directly without having to travel.
- Transactions are transparent because they are publicly recorded on the blockchain
- There is a fixed supply of bitcoins which means hyperinflation cannot occur. For this reason, Bitcoin appears much more monetary stable than official currencies.
All these reasons support and strengthen the use of bitcoin on the continent. We could even add other reasons that are more political, but we would certainly be getting off topic.
What you need to understand is that the reasons for preferring bitcoin to official currencies are numerous and relevant. Moreover, they are also at different scales, in all regions of the world, and not just in Africa.
Bitcoin fund transfer in Africa
If we say that these are advantages that apply at different scales in Africa and elsewhere, it is for a very specific reason.
The African continent is the one that receives the most funds from the diaspora. The transfer of money to Africa constitutes a considerable financial windfall. It is common practice for an African emigrant to send money to his family back home.
It is therefore a challenge in itself for the continent to "work" the money sending mechanism.
Let us emphasize once again that money transfer fees are significant, not to mention scandalous.
For this reason, the transfer of money in Africa in bitcoin appears to be a real boon for Africans residing in Africa and for those residing abroad. Both parties indeed win in the bitcoin transfer in Africa.
As exchanges expand and the bitcoin economy grows in Africa, bid/service differentials improve and bitcoin remittances will become an even more viable way to transfer money abroad cheaper.
In the whole business of money sent to Africa by people in the diaspora, only Western Union and MoneyGram have been the main beneficiaries.
This is also why so many people in the bitcoin economy believe bitcoin will succeed in Africa, as the costs of cryptocurrency-based remittances are considerably lower than those of the expensive traditional Money TransferOperators (MTOs) cited upper.
So far, Bitcoin remittances from consumers in Africa have only really happened on a small scale.
There are companies that have appeared on the continent to challenge these large companies such as Nexus bank, BitPesa or even BitMari.
One thing is certain though, when bitcoin infrastructure improves in Africa, the trend of bitcoin remittances will undoubtedly be greater.
Bitcoin as a store of wealth and as a spending currency
Once bitcoin volatility decreases (which will likely take some time), bitcoin will most likely become a viable store of wealth.
Additionally, as adoption by merchants and stores increases both globally and in Africa, Africans will be able to use bitcoin as a payment method across the continent and elsewhere in the world.
However, as I write these lines, we know that this will take time... Everything could be accelerated, however, with massive projects like Facebook cryptocurrency for example.
Furthermore, remember that the adoption of bitcoins correlates to some extent with Internet penetration in Africa.
It is no surprise that the countries with the highest internet penetration are also the ones driving bitcoin adoption on the continent. As affordable internet access becomes more widespread in Africa, bitcoin will become a store of wealth, a means of transferring money and a spending currency like any other.
To finally answer the question in the title of this article: YES, bitcoin could become the first pan-African currency!
This could happen once all or a majority of these elements are in effect:
- More legal, strong and legal use in other regions of the world. This will certainly impact usage in other regions, particularly Africa.
- Legal tolerance on the part of African governments and the acceptance of cryptocurrencies within economies.
- Stronger internet penetration on the continent.
- A disclosure of knowledge and information on the subject of bitcoin and cryptocurrencies (this is also the goal of Zonebitcoin ;).
However, I would like to reiterate the assertion that bitcoin could become the first pan-African cryptocurrency.
We cannot predict the future and even less that of cryptocurrencies, but the ideal would certainly be for Africa to create its own first pan-African currency with advantages and greater flexibility than bitcoin.
Indeed, many crypto-enthusiasts remain convinced that bitcoin and blockchain could solve the continent's development challenges.
And you know what? This ideal is emerging little by little. Indeed, more and more cryptocurrencies made in Africa are appearing and I invite you to take a look at these fantastic opportunities to consider.
-> The best cryptocurrencies in Africa: an overview.
So maybe it won't be bitcoin that will be the pan-African currency, but maybe it will be another cryptocurrency...Who knows?
