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Why is Africa Using Bitcoin?

bitcoin exchange in africa

What do you know about the financial development of African region? Historically, Africa is not able to adopt fintech technologies in due course. It was always lagging behind other continents. Interesting statistics show that among 1,2 billion people that live in Africa about 900 million don’t have a bank account. And it’s not only about the lack of personal funds, but the poor financial inclusion.

Plus, the World Bank says that the remittances to Africa are the most expensive in the world. Combined with the existing financial inclusion, it in no way contributes to trade, purchase goods and currencies in an easy and accessible manner. That is what cryptocurrencies can solve by acting as a convenient alternative to both speculative assets and means of payment.

Why is it hard to do?

Due to the widening development gap between the countries, which are by the way 54 on the continent, Africa is hardly imaginable as a one single financial environment. It does also seem to be the case, when it comes to Bitcoin and cryptocurrencies. For instance, if today the quantity of crypto holders is constantly increasing in Nigeria, in Eritrea, one of the poorest countries on the continent, people are not even aware of digital currencies.

Nevertheless, the use of crypto has skyrocketed in Africa in the past years.  More and more people from relatively advanced African countries, such as South Africa, Nigeria, Kenya, to name a few, have started taking a closer look at cryptocurrency as a great alternative to fiat money.

Use cases

For instance, in 2018, in Ghana the first official digital currency, Finchcoin, was issued. The main purpose of developing the national cryptocurrency was to lead the country out of ‘enterprise territory’. Corrupt business officials made it impossible to cut through the noise with your own business in the country, thus killing the healthy competition. According to the developers, crypto will give many business owners and workers opportunities they likely wouldn’t have had, and will concurrently eliminate the problem of unemployment.

If in Ghana crypto is used as a driver of entrepreneurship, the use cases in other countries differ. For instance, in Zimbabwe crypto can become a great alternative to its national currency – the US dollar. And that’s not a typo. In 2009 the country replaced its national currency with the US dollar due to the catastrophic hyperinflation. For the record, the national bank even started issuing 100 trillion Zimbabwean dollar notes.

Still, the practice has shown that the authorities are not able to alleviate the situation. Today, the lack of fiat occurs, and Zimbabweans are forced to wait a lifetime in a line to cash out their US dollars. According to Mthuli Ncube, Zimbabwe’s Minister of Finance, crypto can assist the country to solve the cash crunch.

In April 2018, the first Bitcoin ATM was opened in Zimbabwe. It allowed people for crypto-to-cash exchanging through the cryptocurrency exchange Golix. Crypto’s volatile behaviour, when compared to country’s economy, seemed like swimming in calm waters for local people.

Drawing a line

Digital currencies have a great room for making a great impact on Africa’s financial life. The countries mentioned above should become textbook examples for other ones and tread the path to the mass adoption of the cryptocurrency and blockchain on the continent.