The Rise of Cryptocurrencies in Africa
In recent years, Africans have begun to embrace cryptocurrencies as a more viable option for exchanging value than their often unstable local currencies. Blockchain analytics firm Chainalysis reveals that this trend is powered by decreasing trust in traditional financial systems, high transaction fees, and frustrating regulatory hurdles.
Fast-Paced Transactions: Speeding Through the Red Tape
Take, for example, Abolaji Odunjo, a mobile phone retailer in the bustling heart of Lagos. When faced with the cumbersome process of paying his suppliers in China, he shifted gears and turned to Bitcoin. “It’s like going from a bicycle to a rocket!” he exclaimed, adding that utilizing crypto has allowed his business to thrive despite fierce inflation. Who wouldn’t want to escape the chains of their local currency?
Cutting Costs, One Transaction at a Time
Many African businesses are finding that transaction fees associated with cryptocurrencies are significantly lower than those of traditional banking systems. In fact, while remittance costs in Sub-Saharan Africa average around 8.9%, often soaring to 20% in countries like South Africa, Bitcoin fees rarely exceed 3%. It’s safe to say that the market is full of opportunistic math for entrepreneurs!
Growth Statistics That Speak Volumes
The numbers don’t lie. The total transfers to and from Africa have skyrocketed, exceeding 600,000 monthly transactions. Between now and June of last year, transfers under $10,000 surged by 55%, totaling a cool $316 million. Nigeria, South Africa, and Kenya are leading the charge in this burgeoning crypto revolution.
Global Connections: Family Matters
Whether it’s sending money back home to support relatives or simply assisting in purchasing groceries from afar, cryptocurrencies have become the lifeline for many families with members living abroad.
One user shared, “With Bitcoin, sending money home isn’t a luxury; it’s a necessity. And when I save on fees, I can send even more!”
The Cold Hard Truth on Fiat vs. Crypto
2020 is shaping up to be a record-breaking year for digital transfers to Africa, with expectations of soaring past the $8 billion mark. For context, remittances sent to the region in fiat were only $48 billion in 2019, and estimates suggest a concerning drop to $37 billion this year. Cryptocurrencies are taking lead and flipping the script!
The Future of Cryptocurrencies in Africa
The future seems bright, albeit a bit unpredictable, for cryptocurrency in Africa. As local economies grapple with currency devaluation and instability, more businesses and individuals are likely to make the switch. Who knows? In a decade or so, we may all be tossing around “Bitcoin” as casually as we do dollars!
