Many economists and analysts predict that the biggest hub for blockchain development and cryptocurrencies will be the poorest continent in the world: Africa.
We live in a time period where technology and science rule everything. Everything we do, be it work, hobbies, or leisure, is already deeply embedded in this world of computers and the internet. Besides, the rate at which everything around us evolves has become expansive, meaning there’s no one particular line of development that we can physically observe; every direction that we look at is moving forward at incredible speeds.
The financial world is certainly one of those directions. And recently, there has been one particular development that brought a major overhaul to the system. It’s called the blockchain and we’re going to tell you everything about it, including how it will change the course of one of the poorest continents in the world and vice versa.
A peer-to-peer technology
In 2008, an article called “Bitcoin: A Peer-to-Peer Electronic Cash System” was published by Satoshi Nakamoto – a person or a group of people with this alias. According to the article, a world of fiat currencies was full of shortcomings such as financial intermediaries, third party checkers, and security risks.
By creating Bitcoin, they set out on a new course to revolutionise the currency market. Bitcoin and thousands of other cryptocurrencies are embedded in the blockchain which is itself a system of connected computers and other devices. Every single transaction happens between the two parties only and not anyone else. When it comes to proving the operations, the connected devices do a perfectly sufficient job.
Besides avoiding the double-spending with peer-to-peer transactions, blockchain offers the most secure and fast payments that are also anonymous. Plus, its users are not restricted by time or geography – transactions can take place from one part of the world to the other.
So, a new Fintech was born in 2008 and after some time, it started to attract attention. In 2016, cryptocurrencies became more widely acclaimed by the world governments and in 2017, Bitcoin made headlines with its $20K price surge. Therefore, the world already knows about cryptocurrencies and their surrogate system – blockchain.
Africa – a new hub for blockchain and cryptocurrencies
Many economists and analysts predict that the biggest hub for blockchain development will be the poorest continent in the world – Africa. And even though some of the critics point to the drawbacks of cryptocurrencies such as terrorism funding, money laundering, etc. this technology still proves beneficial to many poor nations.
Africa has seen some of the worst humanitarian and economic catastrophes over the centuries and it’s about time that it saw some relief. Many countries on the continent including Kenya, Ethiopia, Zimbabwe, and others are already testing blockchain platforms, while some of the private establishments such as Kenyan Forex brokers have already started using crypto payments for their services.
According to Global Risk Insights, African countries now have more opportunities to embrace blockchain-powered currencies than ever before. With blockchain and cryptocurrencies, those nations can incorporate various innovations like more accessible public services, increased transparency in politics and business, and digital currencies with fast and convenient payments.
As we mentioned above, one of the most avid crypto-implementers in Africa is Kenya. And it’s not alone in those efforts; the Red Cross is also pushing blockchain in Kenya and Ethiopia to support its humanitarian aid remittances. Cryptocurrencies in the Kenyan financial environment can have a beneficial effect on small and medium businesses: they can finally accumulate credit scores and get loans for their investments.
Many companies and entrepreneurs in the country are involved in a race of crypto mining with their powerhouse hardware and software. Bitcoin, Ether, and other cryptocurrencies are then used for different purposes such as crowdsourcing and business funding.
Another example of this trend can be seen in South Africa where Bitcoin is used for financial transactions. Even the country’s central bank recognises the importance of the new Fintech, stating that Bitcoin can greatly reduce transaction times.
Rampant informal markets
One of the biggest contributors to blockchain’s popularity in Africa is the continent’s informal market. From East to West, more than two-thirds of the Sub Saharan region is covered with black-market jobs and industries. And since blockchain has no official governing body, it fits perfectly in this environment. In fact, employers and entrepreneurs, in general, can even create new jobs that specifically revolve around cryptocurrencies.
But the most important and crucial difference that blockchain makes is the ability for private citizens to finally get their bank accounts. The majority of unbanked people currently reside in the poorest African communities. Besides, while currency crises are soaring in many African countries, high inflation rates constantly undermine the citizens’ purchasing abilities.
With cryptocurrencies, people can have access to online retailers and transactions, making global online services available to them. And they’ll also be able to accumulate credit scores and get loans in Bitcoin or any other form.
Opposition from Zimbabwe (Africa)
However, despite the fact that blockchain is having its moment in Africa right now, there are still those countries that outright oppose this Fintech. For example, the Zimbabwean government has openly expressed its concerns with cryptocurrencies. While the Bitcoin ATMs have already appeared in the country, the government still banned its banks from using the crypto exchanges.
And to take those concerns even further, other African governments are suspicious of blockchain’s use for many illicit purposes. Because cryptocurrencies are so anonymous, they can be used to fund global terrorist organisations, as well as other criminal groups, encourage money laundering, drug trafficking, and so on.
However, one thing is clear as crystal: cryptocurrencies are bound to flourish in Africa. The continent is covered with the black market and informal industries; the countries are submerged in monetary and Forex crises, and the population has limited access to the banking system. All of those features contribute to the rise of Bitcoin and other cryptocurrencies on the African soil.