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Bitcoin could be the solution to Africa’s poor financial system

May 28, 2020

A recent report suggests that the lack of traditional financial infrastructure makes Africa a place where cryptocurrencies are likely to be introduced.

The report, shared on May 27 by a Luno representative with Cointelegraph, highlights Africa’s financial infrastructure. and the role cryptocurrencies play in it.

The author of the study, which was carried out jointly by the market analysis company Arcane Research and Crypto Exchange Luno, wrote that the financial landscape on the continent plays a role in the development of appetite for cryptocurrencies in Africa:

“Although it is a diverse region, the African nations share some important similarities and trends, economic problems, from high inflation and currency volatility to financial problems such as capital controls and lack of bank infrastructure, creating fertile ground for an alternative to germination.”

Bitcoin could be the solution to Africa’s poor financial systemBitcoin could be the solution to Africa’s poor financial system

According to the report, cryptocurrencies like Bitcoin (BTC) can solve all of the above challengesAn example of the use of crypto assets in Africa are transfers, which are currently an important source of income for local families.

According to a World Bank report published in April, expatriates sent around $ 48 billion to families in sub-Saharan Africa in 2019 aloneUsing traditional money transfer services to send money to the region is said to result in an average rate of 9% for a wire transfer of just $ 200.

According to the Luno Arcane report According to the World Bank, intra-African payments often have to deal with high fees and slow processing speeds. In sub-Saharan Africa, there are fewer than 56% of commercial bank branches for every 100,000 adults This shows that traditional financial infrastructure is not only less efficient, but also less accessible in the region.

The introduction of Bitcoin in Africa has already started

The services that use Bitcoin to solve these problems already exist in Africa. The author of the report gave an example of these services, Bitpesa, a Kenya-based company that allows its users to use Bitcoin to make international payments and send wire transfers at higher rates. lower than traditional services.

Initially, Bitpesa should only be an exchange platform that allows Kenyan citizens to send money to mobile wallets without the need for bank accountsThe service was later expanded to other African countries and now has representatives in London and Luxembourg, among others.

End of January 2019The World Economic Forum appointed BitPesa CEO and founder Elizabeth Rossiello as one of the two co-chairs of the Global Blockchain CouncilThis shows how the innovation generated by this service, which enables the use of Bitcoin, has been recognized worldwide outside of Africa.

The report also mentions Paxful, a Delaware-based peer-to-peer cryptocurrency exchange or P2P that competes with local bitcoins, as another player in the African cryptocurrency ecosystem.A recent report showed that the increase in bitcoin peer-to-peer (P2P) trading on Localbitcoins and Paxful was higher than ever at the peak of the bull run in 2017 due to the surge in African demand.

Marcus Swanepoel, the CEO of Cryptocurrency Exchange, Luno, He told Cointelegraph that he believes cryptocurrency adoption will continue to grow in the region., He explained:

“The use of cryptocurrencies in Africa will continue to grow, and it is only a matter of time before digital currencies become ubiquitous. […] Given the ease with which cryptocurrencies have been introduced, I would expect African countries to be the first to make the full transition from their traditional financial systems to cryptocurrencies. “

Swanepoel claims that Luno was the first of its kind in Africa and currently has African offices in Lagos, Cape Town and Johannesburg.. revealed that these “three offices processed an average of $ 4.5 million a day to date in 2020”, and also highlighted his company’s plans to expand across the continent:

“Africa is one of the top cryptocurrency users, if not the most important one, and a very important market for us, since around three quarters of our customer base is based here. We have had high acceptance rates, particularly in Kenya and Ghana. But we are always trying to expand our reach and to welcome more customers across the continent. Education has always been a priority for us, not just buying and selling cryptocurrencies, and we will continue to do so, especially in the US areas in Africa that we know have been destroyed by damaged financial systems. “