The rise and popularity of cryptocurrencies have come as a welcome sign for the African continent that has been plagued by rampant inflation caused by central banks for many years.
Combine this with a growing generation of tech-savvy population and it’s not hard to see why cryptocurrencies are fast becoming a substitute for traditional banking in Africa.
The rise and popularity of cryptocurrency have had a direct impact in a country like South Africa where at least 15 trading venues have opened over the past year. As the price of Bitcoin and other cryptocurrencies peaked last year, there was an increase in trading volumes recorded in peer-to-peer marketplaces.
In November 2017, Luno, a global exchange wallet reported over 2000 BTC transactions in Africa with an estimated 37% of those transactions occurring in South Africa.
Below let’s have a look at a few factors that are helping cryptocurrencies fast become a substitute for traditional banking in Africa.
First, the threat of government crackdown is low in Africa with many states choosing a hands-off policy so far. Most though have been quick to warn interested investors of the dangers that accompany investing in cryptocurrencies.
Second, thanks to disastrous banking policies, many African states suffer from high rates of inflation e.g. Zimbabwe, Nigeria, South Sudan and many others. The decentralized nature of cryptocurrencies makes them perfect substitute for fiat currencies.
Thirdly, the increasing use of computing technology and mobile phones are making it easy for the population to familiarize and get used to cryptocurrency and its underlying technology. There are new businesses that use the blockchain technology coming up every day.
A good example is BitPesa, a payment and money transfer platform based in Kenya that has roots in over 60 banks in Africa and has seven mobile wallets on it.
These three factors combine to make Africa suitable for cryptocurrencies and it’s easy to see why cryptocurrencies are fast becoming a substitute for traditional banking in Africa.
What other factors do you think are behind Africa warming up to cryptocurrencies as a substitute for traditional banking? Let us know in the comment section below.