Cryptocurrencies are still a relatively new form of online currency, with bitcoin being the most well-known. Cryptocurrencies are relatively secure but can be vulnerable to attacks like everything else online. There is a hot debate between whether cryptocurrencies will take off as a widely-used currency or whether investments will fail. Cryptocurrency operators have become targets of scams that make it a weary choice. However, it has gained more stock following the announcement by Facebook in 2019 that it would be creating its own cryptocurrency.
There is a lot of detail that we could go into about the history of bitcoin, but for the sake of this article, we will be discussing why cryptocurrencies are popular in Africa and how it is shaping African financial services.
Why is Cryptocurrency Popular in Africa?
Bitcoin, in particular, appears to be extremely popular in Africa. Countries like Nigeria and South Africa are amongst the top 10 countries that search for Bitcoin on Google – according to an Arcane Research Study. One reason for the popularity of cryptocurrencies in Africa is that digital currencies are easily accessible and offer a viable solution to the proportion of adults with no access to banks; the scarcity of banks means that 1 in 5 Africans already rely on cryptocurrencies.
The financial sector, including the South African Reserve Bank (SARB), faces the extreme loss of shares to the growing popularity of Bitcoin trading in South Africa. Bitcoin is decentralized and not under government control, unlike the centralized banking system. This has prompted the banks to take action, with the SARB not allowing cryptocurrency to be exchanged to take money out of the country, as it bypasses the usual exchange rates.
In countries like Zimbabwe and Venezuela, where there is high political unrest and inflation, crypto is a means of consumers storing assets externally. It’s important for consumers to feel that their money is safe, and having access to it in the face of government collapse is a large draw for crypto.
You probably know Akon as the hit artist responsible for “Lonely” and “Smack That”, but he also has a vested interest in Africa. He is creating Akon City in Senegal, which will be a futuristic city that only accepts Akoin – a digital currency created by Akon. The city will be the first of its kind in Africa and will pave the way for a potential crypto revolution that has already begun setting roots; crypto is transparent and will allow the people of Africa to take control of their financial future.
There is a lot of uncertainty as to whether cryptocurrencies will fully take over the African financial sector, but with waves already being made and a history of political volatility, it’s certainly feasible. There is, however, work to be done to regulate crypto as a legitimate currency. Only time will tell, but for now, the growing use of Bitcoin appears to be positive.