Cryptocurrency and peer to peer bitcoin trading have proven to become a financial boon for emerging economies in Africa. Since their inception, these digital currencies have provided a financial platform for the underbanked which traditional banks had not been able to do for centuries.
Be it e-commerce, remittance, wealth preservation, or gray markets, cryptocurrencies, in general, have provided a much larger avenue for the Africans who were severely limited before the launch of bitcoin. Another sector where cryptocurrencies are revolutionizing African economy is through peer to peer finance.
There are several restrictions set to an Average African that we take for granted. For example, the usual spending allocated to Nigerian debit card is about $100. Also, there is a limit of money which you can take with you while flying abroad–usually less than 5 thousand euros.
Amid these seemingly relentless impositions of arbitrary rules, peer to peer finance gives them the liberty they yearn for and deserve. Such is the growth of P2P finance in Africa that Paxful grew by 46% in trade volume compared to the same term last year.
We decided to reach out to 33 cryptocurrency experts and asked them the following question:
What do you think of the potential of cryptocurrency and peer to peer bitcoin trading to bootstrap African economies?
We received some amazing answers, full of insights, that you can read below.
Ofir Beigel – 99 Bitcoins
“Leapfrogging” worked for cellular phone adoption in Africa. While it was not feasible for African governments to create and maintain landline infrastructure, it was possible for most Africans to purchase and use cell phones. This demonstrates that technology which is useful, affordable, and can certainly spread in Africa.
Indeed, the prevalence of cell phones lays the technological basis for widespread cryptocurrency adoption in Africa. However, this does not guarantee that such adoption will occur.
The fact is that cryptocurrency is of interest primarily to those with financial and/or technical knowledge as well as considerable wealth. This demographic is not typical of African countries. Whereas the advantages and functioning of a cell phone were readily apparent, cryptocurrency is a more complex and subtle technology.
This explains why it has not yet caught on even in Zimbabwe; a country which has been recently ravaged by hyperinflation and operates without a national currency of its own.
For ordinary Zimbabweans, despite the presence of at least one Bitcoin exchange (Golix.com), Bitcoin is too expensive, complicated, and mysterious for widespread adoption. In neighboring South Africa however, we see far more adoption, with this country leading Google searches for Bitcoin on a percentage basis.
South Africa, while generally poor and uneducated, nevertheless contains occasional “pockets” which approach 1st world levels in terms of wealth, education, and financial sophistication. It’s clear that at this stage of its development, cryptocurrency presents certain entry barriers of knowledge and wealth.
If further developments in cryptocurrency are sufficient to substantially lower these barriers, then yes, it could see widespread adoption across Africa. This would certainly accelerate economic development.
Alternately, if Africa is able to bootstrap itself, in terms of economic development and education, then average Africans should be able to adopt crypto as-is.
It seems that the first scenario – the development of a simple yet “must-have” crypto killer app – is far more likely to occur within the short to medium term.
James Song – Shadow Foundry
Blockchain is mechanically straightforward but lots of people fail to understand how revolutionary it is as a technology. Once people do figure it out, it will change everything–especially in Africa.
Cryptocurrencies, for instance, can be more than just money. At Shadow Foundry, we issued our own cryptocurrency to track academic achievement for students, and we also developed “blood tokens,” which are a digital token, just like bitcoin, that show what blood type you are, so emergency health workers don’t need to run blood tests.
These are just some of the disruptive technologies we are working on–things that even the poorest, most undereducated people in Africa can leverage to create significant wealth and lifestyle improvements for themselves.
Cryptocurrency starts with a wallet, which is a private-public key pair. These are long, complex strings of letters and numbers that can simply be described as “a complicated username and password.” But just as your username and password link an email account to you, a crypto wallet can link digital tokens to you.
And just as Shadow Foundry did with blood tokens, there can be health and other kinds of data linked to you, through your wallet. I think this particular concept can be the foundation for revolutionary change in the African milieu.
How? Because, when transaction and other data can be linked to you, we can start building predictive models of you–whether, for instance, you are creditworthy, whether you highly-knowledgeable beyond your education level, or whether you are someone who buys books instead of alcohol.
This means Africans can start trusting Africans without knowing them. One of the biggest problems today is that it is harder for an African to travel to another country in Africa than it is to travel to Asia or Europe. Cryptocurrency wallets can change all of that.
As far as peer-to-peer bitcoin trading, I don’t think that will have much of an economic effect. At Shadow Foundry we do have a division that works on OTC bitcoin transactions–which is the buying and selling of tens of thousands of bitcoin–and I think that will remain a niche market that Africans won’t benefit significantly from.
I do think bitcoin is a good way for Africans to transport large amounts of money around Africa safely, and I think Africans are already using lots of bitcoins to invest abroad without the hassle of bringing thousands of bills to the bank at home–which we all know is an incredibly dangerous and time-intensive activity. In this way, cryptocurrency will reduce the friction Africans have with doing business globally.
You don’t have to worry about losing money when converting to dollars, then losing more when you convert those dollars to another local currency. You just trade in cryptocurrency, like bitcoins, and use the market rate. That’s the future.
Javad Afshar – BlockchainBTM
Many African countries are using digital currency for means of everyday transactions. Kenya, for instance, has adopted electronic transactions for many years and over 90% daily transactions are through digital currency.
It’s important to differentiate between bitcoin and other forms of cryptocurrency. Although bitcoin is not a suitable vehicle for daily transactions, because of high fluctuations, other stable coins can be adopted in commerce.
This secure means of transaction will enhance the African economy and will reduce fraud and use of counterfeit paper money.
Tom Alford – TotalCrypto.io.
According to the World Bank, more than half of the population in Sub-Saharan Africa are unbanked and high levels of financial exclusion are commonplace across the continent. This lack of access to financial infrastructure has resulted in a booming African remittance market, standing at $40 billion in 2018.
The average cost for Africans to send money back to their families is the highest in the world and stands at ~10%. These horrendous fees are placed into context when you consider that remittance payments for Libya, Comoros, and Gambia make up over 20% of national GDP.
It is clear that remittance companies are siphoning off a tremendous amount of money which could be creating wealth effects in local African communities.
Quite simply, cross-border remittances are signficantly cheaper with cryptocurrency. A $200 remittance payment to Africa would incur a fee of ~$20, whereas it would cost ~15 cents using Bitcoin or nothing at all with a cryptocurrency like Nano.
This illustrates how cryptocurrency creates value and would enable African economies to signficantly increase value capture to further power economic growth.
Peer-to-peer Bitcoin and cryptocurrency trading also open up additional commerce opportunities to people in Africa by enabling anyone with a smartphone to receive payments from anywhere in the world.
This means that peer-to-peer cryptocurrency allows the unbanked to accept cross-border payments for goods and services and actively participate in this $11.5 trillion digital economy (~15.5% of global GDP). This opens up new channels for economic growth to African entrepreneurs and equips them with a key tool to build and scale online businesses.
This empowerment could have a drastic impact on African economies by allowing African-based companies to capture global value, create new domestic employment opportunities and power wealth trickle-down effects to local communities.
Richa Joshi – Project Hydro
A general overview of the different countries in Africa shows that the majority of people living in these countries are unbanked not minding the growth of mobile phones.
With the easy to use nature of cryptocurrency wallets, peer to peer bitcoin trading and transaction could help facilitate wider financial inclusion as demonstrated by Bancor in Kenya.
Also, cryptocurrency and peer to peer bitcoin payment in Africa could help fight fiat hyperinflation.
The unstable and unpredicted nature of inflation in some African countries calls for better penetration of cryptocurrency and peer to peer bitcoin trading as citizens of these countries could take refuge in bitcoin and other widely accepted altcoins against suffering the inconsistent nature of Fiat.
This was better established with the bitcoin boom in Zimbabwe when their inflation went off the roof.
Cryptocurrency and peer to peer bitcoin trading could further be instrumental in helping citizens of countries in the continent to enjoy faster money transfer and beat high bank charges. The developing rate of bank operations in Africa has made it sometimes difficult to achieve immediate transfer of cash from one person to another.
Sometimes sending funds from one person to another take as long as 24 hours or more to deliver, this could be attributed to a whole lot of system issues, network backlogs and many others, however with the speed of transaction in p2p payments of cryptocurrency, it is evident that cryptocurrency has a lot of growth potential in Africa.
Also, transactions made with p2p bitcoin trading and cryptocurrency do not attract transaction charges and monthly charges traditional banks in Africa attach to payment.
Cole – Boss Crypto
The potential for Bitcoin or another form of digital currency to bootstrap any economy afraid of interference on a government or regime level is explosive.
In the west, we are privileged (for the most part) to trust our governments and our banks yet we have to understand that we are not the global average. The strength of a decentralized monetary system comes from its ability to avoid control and corruption.
While Bitcoin and other digital currencies have been extremely volatile compared to the global standard (USD) so far if you live in a country where you cannot count on the strength of your own monetary system it may be a safer bet.
On top of that, it is likely the volatility will decrease over time, and has already done so over the past few months. Combine that with the fact that we have just experienced an 84.34% correction the odds are continually swinging in the favor of adoption.
It is impossible to speculate on the bottom of a bear market however we can safely say that today betting on Bitcoin is a better bet than any time in the last 12 months. The situation in Africa calls for strategic thinking and the need for trust.
The beauty of Bitcoin is that it’s out of the hands of governments or the intervention of national regimes. It is infinitely divisible, incredibly easy to transact and becoming more and more stable with every passing day.
Ola Haukland – Bitspace
Bitcoin could be an essential component in improving the financial stability of African societies and individuals. The decentralized nature of Bitcoin makes it so that people can engage in trade without the involvement of corrupt opportunistic governments.
It also gives humans who have never received a valid ID instant access to a global type of money, as cryptocurrency is completely ID agnostic.
The transfer of economic power from state to individual essentially helps create a bottom-up economy which serves regular people instead of a small political elite. This is especially true for people from countries such as Zimbabwe, who are all too familiar with the horrors of hyperinflation.
They now have a viable escape, especially if mainstream-user targeted applications are successfully developed and adopted. The ability to use Bitcoin will primarily reward financially responsible individuals, and put economic chains on malevolent politicians whose ability to take excessive loans will become heavily limited.
Winston Nguyen – Bitfalls
The BIGGEST advantage crypto presents to African economies is the opportunity for capital investment from international investors.
Nigerian cryptocurrency remittances platform SureRemit raised over $7 million USD from investors around the world in early 2018, highlighting the viability of crypto-based funding methods to fuel innovation and economic growth in African states.
The rise of the initial coin and the decentralized future economy makes it possible for projects to prosper regardless of their geographic location. There are two billion people in the world without access to basic financial services and 30% live within Sub-Saharan Africa.
African economic structures also suffer from systemic inflation. South Sudan, Egypt, Ghana, Malawi, Mozambique, Nigeria, Zambia, and Zimbabwe all report double-digit inflation rates. South Africa, Kenya, and Nigeria are TOP 10 in the world for the highest number of Bitcoin holders per capita.
This goes to show how popular crypto is in the African region. The regions where Crypto is most widely used all share similar characteristics: corruption, unreliable state-issued currency, and limited access to financial services.
Cryptocurrency, which is completely independent of fiat currency inflation, offers Africans in regions with unstable state currencies with a reliable means of storing value. These factors make cryptocurrencies like Bitcoin highly attractive to African individuals and startups alike.
Until now, VC options for African-based startups have remained limited, with local economies stifled by irresponsible fiscal decisions, corruption, and reliance on international aid.
Crypto holds the potential to establish a transparent, fertile ecosystem for economic stability and growth within African states.
Steve Good –The Coin Chat
The un-banked across the globe has been a huge ongoing issue for a very long time. With the introduction of blockchain and cryptocurrency, we have opportunities to create a variety of methods and means to create or unlock wealth for people all over the world and to create a level and equal playing field for all.
One of the biggest challenges for those in places such as Africa is the challenge of having access to banking services where often times there isn’t even a bank anywhere nearby. I have seen this first hand having traveled to places such as Rwanda, Uganda, and Kenya in very rural areas.
But when we can provide anyone with access to trading and access to funds, we can invigorate an economy or region that is otherwise distressed.
Paxful, in my opinion, has created the beginning of such an infrastructure by enabling so many people to be able to trade and access bitcoin.
With bitcoin being the underlying currency for digital currency, it means that we can enable anyone to either spend their crypto directly to local currency through various card services.
We can also enable them to trade from gift cards and loyalty programmes to effectively have access to money that would otherwise be unspent.
With the introduction of many wallet software packages as well, we are seeing the doors unlock where anyone from anywhere in the world can trade their bitcoin to currencies and then spend these currencies locally or wire that money to a friend or family who needs funds as well. Its exciting times seeing how all of this develops!
Tim Dierckxsens – Arkane Network
Disruptive technologies always have an enormous room to grow in emerging markets. Just look at how Africa skipped several technological evolutions and has been dubbed the mobile continent ever since.
Mobile and WiFi access has changed the shape and form of life in Africa and I’m convinced that blockchain technology could do the same. Blockchain and decentralized networks offer an alternative to support microtransactions at a fraction of a cost since cryptocurrency is not bound by geography.
Sending crypto can thus be a great way to transfer value from one person to another. Companies like Bitpesa are providing valuable solutions to do business in Africa and are bringing blockchain technology to transfer funds into these emerging markets.
The next step is for people to use blockchain wallets and transferring crypto to each other without any friction.
Wael Mahmoud – BelcoBTM
Africa is a promising market with huge potential in the cryptocurrency industry. Bitcoin provides a safe haven for economic instabilities in the majority of African countries.
For example, M-pesa (a mobile phone-based money transfer service) has become one of the most usable apps in Kenya; Binance, one of the leading crypto exchanges, is expanding in Africa by opening Binance Uganda. There is a huge demand for financial innovations including cryptocurrency in African countries.
I was born in Egypt, one of the most popular countries in North Africa, and I know for the fact that the number of people buying bitcoin as a store of value is increasing dramatically, especially after the country floated the Egyptian pound and put extreme measures on international wire transfers. A lot of people there started to use bitcoin to move money in a low-cost and efficient way.
One of our short-term goals at BelcoBTM, a cryptocurrency kiosks company, is to install bitcoin ATMs in Africa, especially after the new ATM software update started to support different African languages and currencies.
A lot of people ask me about the effect of Bitcoin current price on the cryptocurrency industry: The sales volume in BelcoBTM Kiosks in November spiked at least twice since April while Bitcoin price falls under 4k – there is a huge demand right now in crypto market everywhere.
Asaf Fybish – Guerrilla Buzz
In my opinion, I see great potential in the rise of bitcoin trading and cryptocurrency in African economies.
Take Bancor for example, who are currently operating in Mombasa and running a field-testing for the Bancor Wallet on the POA Network to enable zero-transaction fees and fast payments for local transactions.
The easiest places to integrate bitcoin payment are the places where the regulation is none-intrusive and the technology is still considered to impact the lives of millions, therefore can be easily adopted.
Also, citizens of countries battling high inflation are likely to opt for cryptocurrency and adopt it faster than any other country.
Another great example to the rise of awareness around cryptocurrency on African countries is Ambacoin, who are taking an active part in the Amazonian revolution. In places of instability, people are looking for technology to close the gap and help them live a better life.
Henry Stanley – ICOAxiom
I think that there is a huge potential for cryptocurrencies and peer to peer bitcoin trading to bootstrap African economies.
Individuals with talents and skills can build out platforms and applications, and through cryptocurrencies, they are able to secure resources now given the global nature of cryptocurrencies that they weren’t able to tap into before.
As these companies develop and grow, it will have a positive impact on the local African economies.
Lindsley Medlin – NJ Blockchain Center
Cryptocurrency and peer to peer trading, whether bitcoin or other cryptocurrencies, will help bootstrap African economies by eliminating the fraud and confiscation involved with sending money through the current political channels.
By utilizing cryptocurrency, donors can send money directly to recipients without any intermediaries. This reduces the ability for governments and other corrupt players to siphon off funds in the process, including banks that take fees for processing the transactions.
The transparency provided by the underlying blockchain technology will allow the donors to see where the money is going and how they it is being used.
Whether the sender is an individual or a foreign agency, the ability to track donations will provide the insight needed to make sure support is going where it is intended and where it is having the most positive impact.
By sending money on a peer-to-peer basis, the senders have more specificity to where the money is deployed.
Under the current process, even after the funds are processed through government agencies and only a small portion makes it to the recipient, the donor is still at the mercy of the intermediaries to decide where the money is deployed, which might not be exactly what the sender desires.
The ultimate result is a faster transfer of funds, reduced fees, and fraudulent confiscation, and transparency to see where and how the money is deployed, leading to better tracking of the results.
Steve Russo – Krypti
There is emerging acceptance of not only Crypto, but Bitcoin specifically in African countries. Just looking at South Africa, Swaziland, Zimbabwe, Nigeria, Ghana and Kenya, for example, you will see rapid adoption and growth. Kenya, Djibouti.
South Africa and Zimbabwe are currently featuring Bitcoin ATMs. While still today, the financial regulators and crypto businesses have still been at odds, exchanges such as Paxful, a high profile P2P exchange and Cryptogem Global, continue to see trading volume increases.
There will continue to be a trend fueled by local economies that have cash challenges, combined with the devaluing of local currency and shrinking foreign exchange market, that will embrace bitcoin, and other Cryptocurrencies, as a method to secure and store value. Paxful’s CEO Ray Youssef clearly stated that Africa is Ahead of Western Countries with regard to adopting P2P Finance.
Today, there are still roughly 1.7 billion global unbanked adults. While approximately two-thirds of them possess a mobile phone, we would expect this to help facilitate additional access to financial markets and services, thus adding to the digital currency boom.
The ability to manage Peer-to-peer finance is allowing individuals the ability to both manage and control their own money. It allows them to do it in a way that they want to and not how someone else demands. Digital currency allows individuals to begin their journey to truly financial independence.
With all this being said, both Speed of transactions and security are going to be required and will play a key role. MicroToken Exchange®, or MTE, is one way to facilitate end-to-end security, protecting data in rest as well as in transit.
The world both demands and requires a digital asset wallet, such as the KryptiWallet for example, secured by an unassailable architecture such as MTE, for the entire crypto ecosystem to flourish.
Miko Matsumura
Broadly speaking, decentralization serves those who the current system does not serve well.
If you take a case study like Zimbabwe, what you will see is hyperinflation and a collapsed currency, the Zimbabwe dollar. There are Trillion dollar notes floating around that are worthless.
The second observation about Africa’s opportunity with Bitcoin is based on the Blockchain technology, which is all about distributed verification.
This kind of verification works especially well in nations where the government may have issues proving that it is transparent and fair (it may or may not be, but the citizens don’t trust it for historical reasons).
We are at the beginning of a new frontier, and Africa is proving that innovations like cryptocurrency can reduce extreme poverty through the integration of technology.
Mervyn Maistry – Konfidio
Cryptocurrency and peer to peer trading have great potential for African economies. Cryptocurrency has already had an influence on the economic activities in African countries, especially in countries like Zimbabwe where hyperinflation has rendered their local currency worthless.
Cryptocurrencies are providing alternatives, where governments are failing. The people have the option to turn to cryptocurrencies as an alternative means to exchange or store value.
We think that cryptocurrencies are going to enable peer to peer trading of important resources, like energy and internet connectivity, in areas that are underserved.
African economies often lack the necessary infrastructure for certain economic activities but we believe that this presents an opportunity for them to innovate and leapfrog instead of playing catch up.
Cryptocurrencies and their applications are going to breed new kinds of entrepreneurs. They are enabling new fundraising mechanisms, as well as introducing new financial networks to engage with.
We believe that Tech-savvy Africans will grab the opportunity to take part in the 4th Industrial Revolution. These new tools are leveling the playing field and we can only imagine the solutions that are going to come out of Africa.
Ian Khan
Africa is a beaming with potential and this is partially because it is a great test bed for technologies that take a longer time to develop, prove and commercialize in some other developed parts of the world.
As Africa enters a new era of growth and embracing technology, the success of Rwanda, South African, and other nations to embrace technology is widely known. We have also seen a huge penetration of digital money transfers through cases such as M-paisa, which now has been adopted in many countries around the world.
To grow African economies in the era of Bitcoin, Digital Cash or Cryptocurrencies, a quite pragmatic approach must be taken. Cryptocurrencies over the last 2 years in particular have been extremely volatile and have fluctuated in value quite significantly.
The emergence of over 1000 cryptocurrency in the last few years has also shown the pure chaos in the digital cash arena where regulation, consumer safety, and security are essentially non-existent, in particular.
As we head into 2019 and beyond, the role of Crypto is definitely being seen as a pivotal movement to create a democratized non traditional form of payment that can be adopted. Will economies of Africa survive by trading in Crypto or investing in them?
Perhaps yes and if this continues there is a possibility that some African economies would heavily rely on cryptos to function the financial system to a significant nontraditional extent, however, the risks can be significant.
Cross border trade, international imports and experts, acceptance of Bitcoin or for that matter any digital currency in other markets and so on is an unpredictable element until the industry does not adopt standards. This not because the industry can be regulated y some government agency but to offer protection and consumer rights to businesses and individuals using these forms of currency.
The guidance for businesses right now is to watch the emergence of crypto and even if businesses want to accept them as a form of payment to exercise caution and not rely 100% on crypto payments.
The next 2 to 3 years will be pivotal in understanding where the industry is headed and Africa through its sense of initiative could be far ahead when regulation is developed.
Emilie Jerard
With the continuous market hikes and downfall, cryptocurrency still has a greater potential among the investors. I personally believe that not every cryptocurrency has the potential to survive or succeed but a legitimate cryptocurrency like Bitcoin stands better than all others due to its increased investors and improved coding system.
Similarly, other forms of cryptocurrencies are also gaining value with an increase in their transaction speeds. This obviously makes their future bright!
Cryptocurrencies are now making a serious impact on uplifting the world’s struggling economies. African banks and companies are taking a keen interest in peer to peer bitcoin trading due to the rapid increase in their market cap year after year.
Although peer to peer bitcoin trading is not going to replace any major currency soon but it could definitely serve as an alternative asset for a longer time.
It goes without saying that peer to peer bitcoin trading has become a power in itself as it plays a vital part in keeping a financial check on governments and banks, therefore, African economies can be easily prevented from money laundering or potential corruption.
On the other hand, the usage of Bitcoin has eliminated the function of middle man in financial transactions thus causing lower taxes and charges among the potential investors. Such positive impacts of Bitcoin trading can surely take the African economies to a newer growth level.
Ken Chester – CultureMesh
I work at Mannabase as their Director of Diplomatic Engagement (essentially I liaise with embassies here in New York and down in DC), and we’ve developed and administered the world’s first blockchain-based documentation of an entire village in Uganda, collecting biometric details of hundreds of undocumented residents of Rhino Camp, providing them with a digital identity, and distributing Universal Basic Income (UBI) on a weekly basis.
Since we’re advised by UBI presidential candidate Andrew Yang, we likewise believe that basic income is a human right, and we’re determined that our Manna token can be accepted by everyone in the continent of Africa as a means of not only survival, but a means to thrive.
The people of Rhino Camp had only one smartphone in the entire village, so we gave people accounts to receive basic income based on a photo we took of them, their name, and DOB.
Now we’re working on face and voice recognition technologies so that any of these villagers could potentially go into a larger city and exchange Manna for Ugandan Shillings much like one might use Western Union for remittances. We already have our African Initiatives Liaison, Khaliku Kaba on the ground in Rhino Camp to troubleshoot solutions.
That’s on the low-tech side of Africa. On the higher end, as more and more people have smartphones, we’re also verifying people in the cities based on one’s social graph, through our partner, BrightID.
In short, crypto will reform the African financial system, but we believe it must be from the bottom up, through initiatives such as a UBI.
Otherwise, it’s hard to imagine people who are subsistence farmers or who are living on less than a dollar per day to buy cryptocurrencies in an exchange. Give people the funds, however, and they’ll seek out methods to use them.
Lynn Liss – Akoin
I believe that the full potential of African economies can be unlocked through the creation of a trusted and more stable cryptocurrency, a uniting currency that can be attached to the value a user places on peer-to-peer trading of goods and services.
Our Akoin currency will be based in an ecosystem that opens up innovative, revenue-generating opportunities and stimulates and supports youth entrepreneurship, economic stability, and growth across Africa and the world.
As we think about the job gap projected in Africa heading into 2030, we know that entrepreneurs — and the companies they will build — are going to be critical to creating opportunity.
With cryptocurrency and supportive platforms to learn, earn, save and spend those currencies, we can create abundance and inclusion. And this can happen right from a smartphone through blockchain-powered apps.
Crypto removes the barriers and levels the playing field. As our co-Founder Akon has said, it could indeed be the savior of the African economies.
Jude Regev – Jointer.io
For the unbanked and underbanked of the world, which includes many nations on the African continent, cryptocurrency truly provides a way to gain and retain value. Digital currencies also offer individuals the opportunity to take charge of their own monetary assets.
While I see cryptocurrency – including Bitcoin, Ethereum, IEOs- as a means to raise funds, stablecoins will be the true way to bootstrap many African economies by creating a network of strength in trading around the country.
There is currently a solution that would allow African nations to create, for free, a branded currency immune to inflationary instability whilst providing a payment type that is stable and without complex systems and processes for conversion and acquisition.
Jaspar Casey – Blockdata
There is a huge opportunity for cryptocurrencies to positively impact African economies. Some of the primary advantages of cryptocurrencies like bitcoin are greatly reduced transfer costs and increased transfer speeds. These advantages are particularly pronounced when sending money across borders.
Bitcoin and other cryptocurrencies are already impacting African economies through remittance payments. Remittances are payments made by migrants to their family living in their home country. Globally, remittances total $700 billion per year.
People in Egypt and Nigeria receive over $45 billion a year in remittances. A number of companies in Africa are providing remittance services through blockchain and crypto – going up against giants like Western Union and MoneyGram.
Examples include BitPesa (Kenya), SureRemit (Nigeria), and Centbee (South Africa). There is substantial academic research that demonstrates the link between remittance payments and economic growth. Moreover, there is motivation from the United Nations.
In the UN’s Sustainable Development Goals, UN Member States have pledged to reduce transfer costs from an average of 7% to less than 3% by 2030. Cryptocurrency payments will certainly be a huge part of this effort to reduce transfer costs.
Crystal Rose Pierce – Sense Chat Labs
In terms of mobile payments, Africa is arguably the most innovative region on the planet. The biggest impact cryptocurrency will have on the financial markets is in developing nations where the majority of the population have difficult banking situations, and fees are too high in traditional banks.
We have already seen a positive economic impact from companies in Africa enabling free or low-cost peer-to-peer transfer cryptocurrencies. Apps like BitPesa are helping create more access to Bitcoin transfer. The M-Pesa in Kenya is an example of how an entire economy can be affected.
M-Pesa enabled micro-loans and instant remittances with the secure transfer of digital currency between people. This has disrupted – and could fully eliminate – the slow, inconsistent and expensive banking system.
Now, nearly half of the total GDP in Kenya is transacted over mobile devices through the M-Pesa and Africa is leading the way in the global shift toward digital, blockchain-based payments.
Yana Afanasieva – Competitive Compliance
I think currently African economies suffer from the following inefficiencies in financial system and bitcoins can help address and overcome that:
High cost and long execution times for sending money to and from Africa (business payments, humanitarian aid, international trade, etc). Currently it may cost up to 10-15% and 2-3 weeks to send funds to or from Africa if you use the banking system, and it’s often unclear when the payment will arrive. Bitcoin payments can be sent and traced within 1-2-3 minutes and it’s clearly visible where the transfer is and the cost is a mini-fraction of what the banking system will charge.
Reliance on USD even for intra-african trade or the trade between, for example, Africa and China. Companies would need to settle in USD, because there is not enough liquidity or stable pricing for currency pairs, which increases the reliance on USD, in some cases you would need to search for when USD is available and you would pay double convertion e.g. from an African currency to USD and then to Chinese yuan. Bitcoin can remove USD ddependency.
Better service for SMEs. Many intra-african trades within SME sector are still done in cash, which is risky, because of the risk of burglary and forgery, but SMEs are often forced to operate with cash, because they don’t have access to bank accounts or cannot afford it. Cryptocurrencies can solve this issue.
Summary: cryptocurrencies bring faster payments execution and lower costs, and if we assume that the majority of African businesses operate with low margins and suffer from lack of operating capital, lower transactional costs and faster settlements can literally make a difference whether some businesses, especially smaller traders and exporters can survive or not.
Shawn McBride – Planning Done Right
Africa sits in a unique position to use, and benefit from, cryptocurrencies like bitcoin. Africa lacks some of the infrastructure commonly found in the rest of the world but with increasing cell phone adoption there is a chance to move quickly into cryptocurrency adoption.
As such Africa may be able to bypass some of the infrastructure development needed with traditional banks (wired networks, secured buildings, etc.).
Additionally in some parts of Africa war and civil unrest are the norm. The mass adoption of cryptocurrency may provide much-needed security (via wallets and passphrases) that discourage and protect against theft of stored movies.
And Africa would benefit from having one common currency if bitcoin or another cryptocurrency can take mass adoption.
Since Africa has not developed a common currency, like the Euro, there is a lot of effort in trading among the countries and foreign exchange. Faster transactions and less foreign currency risk should increase the pace of trade leading to general economic development.
Further, if the entire world moved to cryptocurrency usage Africa would find itself in a move level position as a player in the international trade markets. There are definitely a lot of reasons moving to bitcoin could be beneficial to the citizens of Africa.
Gary Nealon – Usawa
While governments are still struggling with “cryptocurrency ” and how to regulate it, the use of blockchain itself to tokenize assets, infrastructure projects, government bonds, etc. will have a massive impact on the African economies, giving the unbanked population access to investment tools that they never had access to.
Over the last ten years, with rising inflation, most pension funds in Kenya are only providing an average return of 2.5% –which isn’t even enough to keep place with global inflation rates. Enter blockchain technology, the same technology that digital currencies like Bitcoin and Etherium are built on.
But unlike most digital currencies, with values that are largely speculative and which fluctuate widely, blockchain technology backed by real estate assets can make a huge impact in helping bootstrap African economies.
Investors now have a far more stable investment option at their fingertips and a shot at strengthening the overall economy. Most banks or pension fund managers understand the importance of diversifying their portfolios, which is why it’s common to see around 10-15% of portfolios allocated to foreign investments.
While these investments generate a return of around 6-7%, after factoring in deflation, most banks are actually receiving negative interest rates; which doesn’t bode well for the long-term viability of these funds.
Ian Balina
Grant Blaisdell – Coinfirm
The growing adoption of mobile, internet and cryptocurrency specifically for remittance payments has seen a rise in the African economy. In nations experiencing remittance fees around 10% traditionally, any improvement can serve as a vital source of income for a number of African countries.
This area is a potential market for start-ups creating new opportunities for bootstrapped African start-ups to create innovative products and solutions for the crypto ecosystem. A critical aspect of this market will be always attached to a layer of money laundering, schemes, scams, and related fraud.
Not only is there a lack of solutions and tools to help combat this new layer, but market participants lack direct incentives to do so.
Nigeria is a massive and growing market with huge potential for the future and a great opportunity for new initiatives and technology such as cryptocurrency and blockchain.
Our company launched an education program which is a new step towards financial inclusion of Nigerian people by helping fight market corruption and a great opportunity to help prevent future potential scams from succeeding.
This is going to play an effective role when it comes to receiving investments in crypto for bootstrapped start-ups from potential investors and preventing fraud and increasing market trust and transparency.
Joel McLeod – Stadivm
African economies are not fundamentally different in how they function from the rest of the world, but common themes do occur that render it a unique environment that may have interesting interactions with cryptocurrency and bitcoin trading.
Firstly, for a large proportion of the population, there is relatively little wealth available overall. People who live in poverty are generally risk-averse, and they don’t particularly enjoy paying money for something that they think they should get for free.
On the one hand, they would love the ability to make secure transactions of value without paying outrageous transfer fees and may welcome cryptocurrency with open arms.
However, they would also be very sensitive to price fluctuations, and would be unwilling to take the risk of concentrating value in an asset that they cannot be sure will retain its value.
Secondly, many countries in Africa have a loose regulatory environment or lack the ability to enforce laws restricting certain activities. In many cases, the laws on the books do not necessarily reflect the realities that can be seen on the ground. In many places where corruption exists, the population can become disheartened and discouraged by the inefficiencies that they perceive occurring around them.
Cryptocurrencies do offer unique opportunities to combat corruption and could be a tool to increase the transparency of public funds and tracking of the payment of fees. Whether or not governments would truly desire to reduce corruption is another matter.
Mark Moss – Signal Profits
Bitcoin was designed to be peer to peer without the need for banks or other financial institutions as intermediaries. This is important because there are currently 2 Billion adults globally that are “Unbanked” or having no access to banking or other financial services.
They have been left out of the finance world and miss out on lots of opportunities that other parts of the world have with access to banking.
However Bitcoin isn’t here to “Fit In” with the financial system, it is here to provide an alternative to the traditional banking system. New technologies have a way of leapfrogging or jumping over older technologies.
A great example is that many parts of Africa never got wired / landline telephones. However today, most parts of Africa have Mobile Phones with internet access, so they “Skipped Over” the telephone and went straight to the mobile phone. And this is what I see happening with Fintech / Financial systems in Africa.
Currently, many Africans do not have access to banks, BUT… they do have a mobile phone with internet access. This means that they have a bank in their hands already. Using Bitcoin they can enter the global financial markets, without ever having access to the traditional finance models.
This will be revolutionary and will bring the 2 bil adults without access to banking into the global financial system and help bring them opportunities to get out of poverty.
Kristin Beasley
Necessity is the mother of invention and opportunity. This could not be truer than in Africa where the hyperinflation rates, corruption, and civil unrest and instability are holding the majority of people on this continent hostage.
Bartering is a way of life in a cashless society. It is the only way, for people to buy food, secure shelter, get healthcare and other needs met. The revolution has arrived and the disruption is here! It’s called Bitcoin or cryptocurrency.
There are three major factors colliding that make Africa ripe soil for this relatively new, but life-altering technology.
First, Bitcoin is volatile, without a doubt, but so are many national economies in Africa. This creates a mistrust of the government and the currency, and begs the questions; “is bitcoin better?”
Second, cell phone use is common and growing exponentially, as is the use of mobile money applications. Close to 50% of adults already use some form of it. This widespread adoption allows millions to join the formal economy for the first time, launching social-political development and massive economic growth.
Third, the evolution of the internet has made people much more globally aware. We can now communicate in seconds with anyone around the world. Millennials and Digital Natives will not let us go back. Africa has found its bootstraps in Bitcoin and other cryptocurrencies and more than any other continent to date, Africa is pulling itself up.
An analysis of 18 nations in Africa prove this, Reeves (2017) identified a strong correlation between poverty reduction and mobile money transfers (remittance). We are at the beginning of a new frontier, and Africa is proving that innovations like cryptocurrency can reduce extreme poverty through the integration of technology.
Albert Magnum – Magnum Wallet
I think one of the more exciting use cases of Bitcoin is as a global currency for trade. Bitcoin offers the opportunity to promote cross border transfer of value and as such facilitate international trade.
Cryptocurrencies for strongly into the entrepreneurial model of Nigerians and a lot of Africans. Africans stand the opportunity to be early adopters and as such partakers in the wealth transfer that is happening and would happen with cryptocurrencies.
Furthermore, trading in cryptocurrencies offers a lot of income-generating opportunities for young Africans via speculation, as remittance brokers, and as technology experts.
Thank you so much to all the experts that contributed to this expert roundup! If you found out at least one new interesting thing then share this post with all your friends and followers on social media.
