Cryptocurrency is a booming phenomenon in the world of commerce and trade. But what makes it truly exciting is the way that cryptocurrency keeps payments secure without placing power in the hands of central institutions. In many ways, cryptocurrencies are perfect for Africa. It allows fast-moving, entrepreneurial activity, creative business and a dynamic approach to making and moving money. Here are a few highlights of why cryptocurrencies are perfect for Africa.
In 2014, the World Bank reported that only 34% of adults in sub-Saharan Africa had a bank account. There are a number of reasons for this. However, using cryptocurrency eliminates the use of centralized banking systems, thus allowing aspiring entrepreneurs without bank accounts to establish and finance their businesses without the cost and delay of establishing a bank account.
Africa has been at the forefront of innovative banking for decades. Kenya, in particular, pioneered the widespread use of mobile money solutions. Building on this infrastructure, Kenya’s M-PESA system recently released a Bitcoin device, leading to a huge uptake of the technology while continuing the widespread availability of innovative trade solutions for entrepreneurs in Africa.
Many African businesses and organizations access foreign capital as a source of investment. However, due to heavy fees on international transactions, most businesses find it hard to generate the necessary capital. A surprisingly large amount of otherwise-viable business ideas in Africa eventually fizzle out because of these extra ancillary costs rather than product or marketing challenges. Centralized finance institutions get in the way of entrepreneurship in many places in Africa, and the use of cryptocurrencies can resolve this issue because crypto transactions involve no added fees.
Trade deals and barriers are the bread-and-butter of how central bodies exercise control. Power-holders have seen these barriers as ways to exercise control rather than ways to enrich their nations and citizens. This phenomenon results in many countries in Africa experiencing stagnation. Switching to cryptocurrency as the main mode of payment can eliminate unnecessary charges and open the doors to global trade. Of course, it’s important to make sure that cryptocurrency trade is legal in the country where you are based.
Facilitating Local Businesses
Several African currencies are vulnerable to price changes or trading difficulties. The currencies are either too volatile in value due to macroeconomic factors and government spending or not holding their value across borders. Both make it quite difficult for African businesses to successfully expand their operations even within the continent. Adopting cryptocurrency can be an advantage because it gives you a foothold that isn’t vulnerable to economic policy shocks in the same way.
The United States Dollar is the closest we have to a fiat currency that is almost globally recognized. However, cryptocurrency is capable of truly surpassing all boundaries because regardless of the location. So if African businesses adopt cryptocurrencies in their everyday transactions, it’s easier for them to gain the global recognition they seek.