Cryptocurrency has been a big topic and across the world, especially in Asia for a few years now.
However, when looking at new areas of market interest, Africa has a lot of growth potential for cryptocurrency.
In this article we’ll explore what relationship African countries have had so far with digital currency. We’ll also examine the future crypto opportunities in Africa. Let’s begin!
Cryptocurrency in Africa today
More countries in Africa have seen the benefits of using cryptocurrencies as a way forward for small business owners and entrepreneurs.
Botswana, Zimbabwe, Ghana, South Africa, Kenya and Nigeria are the main countries to have caught onto the digital currency trend.
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A 2018 report from Citibank found that South Africa took the 6th place globally for the highest amount of Bitcoin holders per capita.
Kenya came in 5th and Nigeria came in 3rd which confirms the popularity of digital currency use.
Yet there are many reasons why cryptocurrency use has become so popular throughout Africa.
Limited access to traditional banking methods, unstable national currencies and limited employment positions has caused people to move towards technology to solve these issues. Crypto and blockchain technology can help to resolve a lot of these problems.
With 54 countries making up the African continent, it’s the 2nd highest populated continent after Asia. This means that there’s a lot of potential for economic growth.
The International Monetary Fund has also forecasted that by 2023, economic expansion in Africa will grow to 4.1%. This growth prediction mixed with high inflation rates in some African countries is the ideal mix to fuel crypto adoption.
Cryptocurrency in Africa 2019
Regarding general cryptocurrency ownership, South Africa has emerged to be the leader globally with 10.7% of internet users in South Africa owning a form of cryptocurrency. These figures were gathered from a recent 2019 report featured in ‘We Are Social’s – Global Digital Yearbook’.
South Africa’s 10.7% figures compared to the rest of the worlds average of 5.5% of internet users, really shows that South Africans feel more confident with crypto ownership.
The report also showed that Kenya and Ghana were the other African nations listed within the top 45 countries worldwide where citizens owned and bought cryptocurrency.
This 2019 report shows just how many cryptocurrency opportunities in Africa there are. It also supports the fact that so many people there are seizing the chance to own cryptocurrency, as a way to fulfil their investment goals.
These goals could be for personal financial gain or for business reasons such as transferring services or funds.
As long as there is an internet connection and smartphone ownership, people and businesses can easily make global transactions via blockchain. With digital currency there are no geographical restrictions and people don’t have to rely on access to a physical bank.
Bitcoin Mining in Africa
There has also been a significant rise in Bitcoin mining in Africa. This has allowed businesses and Bitcoin mining farms to make profits, as well as create employment within this field.
However, there is still debate on how environmentally sustainable and energy intensive this process is.
In 2016 a Ghanaian firm called Ghana Dot Com opened one of the first main Bitcoin mines in the country. Then in 2018 they opened a physical mining shop in South Africa called Bitmart. Besides offering a Bitcoin ATM, the Bitmart retail store sells all the hardware and components for any miner to get started.
Most Popular Cryptocurrency in Africa
The use of cryptocurrency has given people access to digital money without the risk of inflation or political turmoil affecting their value.
For example, due to recent political unrest and inflation rendering the Zimbabwean dollar defunct in 2009, Zimbabweans turned to Bitcoin in order to invest and protect their assets value.
Turning to Bitcoin also allowed Zimbabweans the freedom of being able to continue to make international digital payments, even with the lack of ready money circulating in the economy.
In May 2018, the Zimbabwe government placed a temporary ban on all virtual monetary trading in the country.
This has now been lifted to the relief of many crypto traders. Only with access to cryptocurrencies are the owners in complete control of their finances with no government interference.
Crypto ownership remains the most popular in South Africa though, with the country having the highest number of owners. Although there are no strict laws on crypto besides tax regulations, the South African Reserve Bank is trying to change that.
They want to provide measures that offer legal protection to user and Bitcoin holders. For now though, with not strict crypto laws in place, there remains a lot of enthusiasm for digital currency there- especially for Bitcoin.
Other cryptocurrencies in Africa
Although Bitcoin remains the most popular cryptocurrency in Africa, new cryptocurrencies have been created in Africa.
The most recent to be launched in Senegal is called AKoin, founded by the rapper Akon. He created it with the aim to allow ‘consumers to buy, hold, and spend cryptocurrency right from their smartphone through a suite of blockchain-powered apps.’
In Ghana, another new cryptocurrency named Finchcoin has been introduced. This has become the first official digital currency of Ghana with plans to open cryptocurrency exchanges and a Finchcoin based bank in the country.
The Risks of cryptocurrency
Even though there’s been much growth regarding cryptocurrency in the African markets, are there any potential risks that could slow this progress?
One of the main concerns is of any future Government regulation of cryptocurrencies. Many Government policymakers are concerned about money laundering and tax evasion through digital currencies, especially because all blockchain transactions remain anonymous.
Another worry is how Governments can assimilate cryptocurrencies into their countries existing economies without causing destabilization.
As already mentioned Zimbabwe placed a temporary ban on Bitcoin earlier this year which caused confusion and alarm to Bitcoin holders.
However, apart from Namibia, Algeria, Egypt, and Morocco, no other African countries have placed an official ban on Bitcoin. Although many countries such as Tanzania are looking to set out regulations on the use of cryptocurrency.
Generally, there’s the feeling that Governments are unsure of what to do and how to regulate this new technology. Holders of cryptocurrency will have to play a waiting game to see how Governments react.
The best outcome would be if politicians can encourage digital currency based innovation, and if Governments allow crypto to remain legal for use.
However, for a lot of African holders involved with Bitcoin and other cryptocurrencies, the benefits outweigh the risks.
Digital currency allows its owners to have personal economic control and supports small businesses. In turn this will help to fuel continued economic development, especially if Governments can adapt to the fast-paced tech changes of cryptocurrencies.
For now though, the use and development of crypto continues to grow in Africa. It will be interesting to follow which country on the continent will become a frontrunner in cryptocurrency use.
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