Africa: A Continent Embracing Bitcoin and Blockchain

Developing countries will be the first to see true bitcoin and blockchain potential in the coming years. In the developed world, having a bank account and credit card is very common. When you need to transfer money to a friend there are plenty of services like PaPal that can be easily used. 

However, in Africa most of people don’t have bank accounts in the first place - nearly 326 million people (80% of Africa’s adult population) are unbanked.. According to a 2014 report from Enhancing Financial Innovation and Access, a nonprofit backed by the Bill and Melinda Gates Foundation that aims to promote financial freedom in Nigeria, just 36 percent of the local population has access to traditional banking services.

People in Africa find it extremely difficult to conserve their resources because of the unusual inflation ratio. Governments continue to plunder the riches through inflation. South Sudan registered an unimaginable inflation rate of 295 percent last year.

Investors are actively looking at alternative class assets in high-inflation countries, like gold and bitcoin. The cryptocurrency has proven to be the best-performing currency so far. Assets such as gold, are correlated with country’s stock market (among other things). So when the market goes down assets seems to flow in the same direction. Same is the case with housing market. Bitcoin on the other hand is largely uncorrelated to other asset classes, which makes it a very attractive option for investors. One thing that keeps investors on their is the volatility that Bitcoin has, which mainly because the currency is still in its infancy stage. It has only been around for 8 years.

Bitcoin has the potential to build a remittance system that can lift the unbanked population of Africa out of poverty. Blockchain, on the other hand, can deliver the infrastructure to provide property rights and financial inclusion to the disenfranchised.

Peer-to-peer payment processors like MPesa and Bitcoin are tremendously helping people transact money in Africa. To put this in context, three-quarters of Kenya’s adult population is now registered on MPesa nearly one third of the country’s GDP is now transacted through MPesa. 

While the early adopters of bitcoin came from Europe and North America, more recently digital currency adoption rate in Africa and Asia is skyrocketing. Bitwala, a Bitcoin-based remittance app, revealed that the number of sign ups on their website from the developing countries is coming closer to those in the US and the EU. 

Their daily website visits show a similar trend. Bitcoin users in North African countries are a growing proportion of Bitwala’s user base, making up 4.4% of visitors, up from historically 2% and surpassing Switzerland.

Blockchain is getting part or our daily life. More countries and companies all around the world are starting to adopt this new technology, which will bring us a better and safer world. But what is the blockchain? How does it work? Here you can find a good blockchain guide published by the website cryptimi.com.

We can already see blockchain revolution taking place on Wall street and major financial institutions. Most of the major banks such as UBS, Goldman Sachs, JP Morgan, Credit Suisse, Barclays and most recently the Commonwealth Bank of Australia have started with different applications of the blockchain technology. 

International transfers to Africa are the most expensive in the world at a whooping $4 billion. Businesses in Africa also end up paying high fees to transfer funds abroad and even domestically as the majority of banks charge anywhere between 10-19% on any transfers to, from and within African countries.

Imagine being able to move assets across borders by paying negligible fees - removing barriers like intermediary banks, prohibitive costs, interminable waiting periods, and regulatory restrictions. The economic development of many African countries is dependent on the success of local small and medium business. If they can receive financial support and cut down the transaction fees, they will likely prosper.

Another underlying African problem that blockchain can solve is corruption. Corruption at government level is an everyday thing in Africa. Governments are known for internal theft of funds, rigging elections, mismanagement of foreign aid and what not. 

Blockchain has the potential to create us re considerable how we can elect government, give money, buy houses invest and anything else that requires a paper for documentation. Blockchain technology has clearly moved beyond its initial purpose (bitcoin) and is serving other legal markets. It is important to understand that bitcoin transactions are completely anonymous. The publicly available blockchain ledger keeps record of all the transactions.

This transparency is enough for providing loans and aid to anyone with an internet connection. Extremely beneficial for small and medium businesses. The publically available blockchain can also allow you to trace the money back to its destination, which in turn will reduce the corruption considerably.

African governments tagging bitcoin as a tool for terrorism and money laundering are living in denial. They are not in favor of transparency that the currency brings. Studies by UK government looking into the best channels for laundering money has consistently found the risk of Bitcoin being used as very low.