The cryptocurrency market in Africa has grown by more than 1,200% in the past year, and countries like Kenya, Nigeria, South Africa, and Tanzania now rank among the top 20 countries in the Global Crypto Adoption Index. Unlike a decade ago, when Kenya allowed peer-to-peer money transfers through M-Pesa, the country has not aggressively tried to prevent people from using Bitcoin. And the central banker in Kenya has not even tried to stop the use of Bitcoin. Bitcoin in Africa
Cryptocurrency is a solution for the “unbanked”
There are more than 1.7 billion people who do not have access to formal financial services, such as a bank account. These people lack the safety net of a bank account and the ability to safely store their money. Without the convenience of online payments and a secure way to store money, unbanked individuals face a myriad of challenges. Unfortunately, these individuals are often stuck in a cycle of economic disparity. Fortunately, technology has begun to provide solutions for the “unbanked.”
Many migrant workers send money home from their jobs overseas, and while they have access to the banking system, the intended recipient may not. Often, this means relying on costly money wire services to send money to their family. The poorest people tend to pay the most for these services. However, many cryptocurrencies are making it possible for these unbanked individuals to make payments instantly, even across international borders, for pennies on the dollar.
It is a hedge against inflation
The question of whether Bitcoin is a hedge against inflation in Africa is a pressing one, given that the world’s population is growing rapidly, especially in Africa. However, there is a problem with the idea that cryptos can be used as an inflation hedge. First of all, traditional asset classes like stocks and bonds are controlled by centralized authorities and are vulnerable to prejudices and pressures. Inflation, in other words, can only be stifled by a stable asset class.
There are two main reasons why bitcoin is a good hedge against inflation in Africa. One of them is its low volatility. Since Bitcoin is a digital currency, it has a low correlation with inflation. It is thus the ideal investment for people with limited time and money. Aside from this, there are also many potential risks associated with it. The biggest risks of inflation are the potential loss of capital. As a result, investing in bitcoins may not be a good idea for everyone.
It is a means of gaining access to higher education
The recent growth of the popularity of Bitcoin has provided a significant opportunity for African citizens to gain access to higher education. The Bitcoin-based peer-to-peer financial exchange Paxful has a deep understanding of the challenges facing many Africans, as many people lack access to centralized financial institutions. In addition to providing a unique means to pay for tuition and other fees, Paxful has enabled students to make payments in Bitcoin, thus enabling the purchase of education materials with Bitcoin.
The use of Bitcoin can help Africans get an education while still saving money. The Squid Game is one example of an attempt to trick Africans into believing that they can get rich using bitcoin. The reality is that Africans must be very careful to avoid being victimized by pyramid schemes, and do their due diligence. Thankfully, reputable publications have begun offering legitimate educational content. Many of these publications publish stories about world leaders, governments, and corporations that use bitcoin on a daily basis.
It is a substitute for ’employment’
African governments have not yet regulated the use of cryptocurrencies, but this could change if the African population grows in the cryptocurrency world. Cryptocurrency is appealing to Africans who do not have access to traditional banking systems, or to people in politically unstable countries, because it eliminates many procedural bottlenecks. For example, it is much cheaper to tokenize financial flows than build nation-states. This could lead to the growth of real assets, and, in turn, a better standard of living in Africa.
The use of cryptocurrencies by Africans is not limited to Africa, however. The crypto community has expanded beyond the continent and has been used to finance a variety of critical sectors such as MSMEs and affordable housing. While initially focusing on Africa, Stellar has also proved to be a cost-effective solution for many parts of the world. For example, a nonprofit organization, Stellar, is using Bitcoin to help Africans gain access to the financial markets.