Experts say conditions on the continent are great for virtual currency
Interest in cryptocurrency, a form of digital currency, is growing steadily in Africa.
Some economists say it is a disruptive innovation that will blossom on the continent.
Cryptocurrency is not bound by geography because it is internet based; its transactions are stored in a database called blockchain, which is a group of connected computers that record transactions in a ledger in real time. The difference between cryptocurrency and, say, Visa or Mastercard, is that a cryptocurrency is not now regulated by government and doesn’t need middlemen, and transactions rely on the internet, which means they can happen anywhere in the world.
“Africa is rarely mentioned among the largest markets for cryptocurrency, but it may be set to steal a march over other markets,” says Rakesh Sharma, a business and technology journalist.
Mr. Sharma says that citizens of countries battling high inflation are likely to opt for cryptocurrency, because “with their paradigm of decentralization, cryptocurrencies offer an alternative to disastrous central bank policies.”
Stealing a march South Sudan’s inflation rate was 102% between September 2016 and September 2017, according to the World Bank. Other countries with double-digit inflation rates include Egypt,
Ghana, Malawi, Mozambique, Nigeria, Zambia and Zimbabwe. It is no surprise that some of these countries are among the main Bitcoin economies in Africa. The main Bitcoin countries are Botswana, Ghana, Kenya, Nigeria, South Africa and Zimbabwe, according to gobitcoin.io, a website dedicated to Bitcoin news in Africa. The BBC adds that cryptocurrency is gaining ground in Uganda.
That African governments are not now regulating cryptocurrency may be a factor spurring its growth on the continent; however, there is no guarantee that governments will not change their current mindset. Rather than simply not wanting to, governments may be powerless to regulate cryptocurrency, the Nigerian central bank indicated recently. Currently tackling the country’s 12% inflation rate, the Nigerian apex bank announced that it could not control or regulate Bitcoin, “just the same way no one is going to control or regulate the internet. We don’t
Fearing a collapse of the banking industry or arbitrary appropriation of money by the government, Africans without access to banks and who live in politically unstable countries could be attracted to cryptocurrency. “Bitcoin transactions help to eliminate the procedural bottlenecks that plague traditional banking and financial services,” Mr. Darko explains.
Alas, even the benefits cryptocurrencies offer an economy, it is not without its negatives; a glaring example being PONZI SCHEMES….
But despite some analysts likening Bitcoin and other cryptocurrencies to a Ponzi scheme, many Africans are taking the risk to invest in them.