Cryptocurrencies are enjoying a covert boom in Africa, making the continent a leader in the ongoing financial revolution. This year, crypto enthusiasts accounted for more than US$40 million in monthly transactions on Paxful cryptocurrency marketplace. Interestingly enough, more than 50 percent of the proponents of cryptocurrencies are under the age of 30, making the younger generation both the early adopter of cryptos and a group that promotes their use as a way to combat inflation and the unfavorable geographical obstacles in their countries.
Taming Inflation Beast
Countries leading the charge here are Nigeria, Ghana, Kenya and South Africa, Botswana and Zimbabwe. All of these countries face various economic issues often caused by the government meddling in the affairs of the financial and banking sectors. Yet, the innately decentralized nature of cryptocurrencies makes it possible to circumvent some of the government’s more severe mistakes, with the added bonus of fast, secure and transparent payment.
Bitcoin is at the forefront of these efforts and it is hardly a single common link between countries – one of the main trends plaguing all of these economies is high inflation, with South Sudan’s rate reaching 102 percent between September 2017 and September 2017, according to the World Bank. Double digits are reserved for countries such as Ghana, Malawi, Mozambique, Zambia, and others. For Emmanuel Tokunbo Darko, vice president of marketing at ICOWatchlist.com, Bitcoin emerged as a way out of galloping hyperinflation in his native Nigeria. In Zimbabwe, for example, more tech-savvy among its population see Bitcoin as a way to phase yourself out of the currency system whose banknotes are currently rocking numbers going as far as $100 trillion.
Foreign Remittances Are Lucrative Opportunity
The rise of cryptocurrencies in Africa runs is spurred by yet another technological trend that facilitates their adoption: increased availability and access to mobile technologies. The GMS Association predicts that Africa will have 725 million mobile phone subscribers by 2020, making it much easier for Africans to plug into cryptocurrency matrix a and reap its benefits. There is a generational moment here, with millennials and other youngsters being more willing to make their baby steps in the crypto world simply because they are already using mobile tech on daily basis.
Another key factor driving the popularization of cryptos in Africa is traditionally high reliance of African population on foreign remittances from their compatriots who are working abroad. Instead of using bank services with their hefty transaction price tags attached, both the senders and receivers are increasingly turning to virtual transfers and mobile wallets. Some see this as an opportunity to get rich in the process, as evidenced by Kenya’s BitPesa service which organized its business around making crypto-based transactions run as smooth as possible. According to LocalBitcoins, trading volume in this segment has reached $1.8 million in December 2017, promising to fill the coffers of everyone involved in this line of business.
No Control, No Regulation
The government’s response varies from country to country, ranging from ignoring the trend to joining those you cannot beat. In Tunisia, eDinar is digital currency issued by the government in response to emerging crypto trend, while Senegal is also preparing to launch its eCFA currency. Yet, the government’s bewilderment at the unstoppable crypto wave is best summed up by the statement issued by the Nigerian national bank regarding the popularity of Bitcoin, stating that they cannot regulate it “just the same way no one is going to control or regulate the internet. We don’t own it.” Judging from this, one can safely say that Africa’s economic future will be less cryptic as long as the continent remains enamored with its cryptocurrencies.