Cryptocurrency has been a big topic and widely accessible across the Western hemisphere and Asia for a few years now, but when looking at market access and possible new interest potential Africa has quite a lot growth opportunity for the cryptocurrency markets.
More and more countries in Africa have started to see the promise of the use of Cryptocurrencies and digital currencies 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 Cryptocurrency trend.
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A 2018 report from Citibank found that South Africa took the sixth place globally for the highest amount of bitcoin holders per capita, Kenya came in the fifth and Nigeria came in third, therefore confirming the high 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 have led to an emergence of people to move towards technology to solve these issues. For example, as long as there is an internet connection or smartphone ownership- people and businesses can easily make global transactions via blockchain with no geographical restrictions and with the freedom of not having to rely on access to an actual bank.
There has also been a significant rise in bitcoin mining, which has allowed businesses and bitcoin mining farms to make profits and create employment within this field, even though 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, and this year a physical mining shop in South Africa called Bitmart was opened. As well as offering a Bitcoin ATM, the Bitmart retail store sells all the hardware and components for any miner to get started.
Where are cryptocurrencies most popular?
The use of cryptocurrency has also allowed people to access digital money without the risk of inflation or political turmoil affecting their assets. 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, as well as allowing the freedom of being able to continue to make international digital payments with the lack of ready money circulating in the economy. In May this year, 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 completely in control of their finances with no government interference.
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, with the aim to allow ‘consumers to buy, hold, and spend cryptocurrency right from their smartphone through a suite of blockchain-powered apps.’
And in Ghana, another new cryptocurrency named Finchcoin has been introduced, becoming the first official digital currency of Ghana with aims to open cryptocurrency exchanges and a Finchcoin-based bank in the country.
However even though there has been so much momentum regarding cryptocurrency in the African markets, are there any potential risks that could slow its growth? Of course one of the main concerns is the future governmental regulation of cryptocurrencies. Mainly due to government policymakers worries about money laundering and tax evasion through digital currencies, due to the fact, 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 Morrocco, 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. But generally, there is the feeling that governments are unsure of what to do and make of the new technology and how to regulate it. Holders of cryptocurrency will have to play a waiting game to see how governments can encourage digital currency based innovation and whether it remains legal for use.
However, for a lot of African holders involved with BitCoin and other cryptocurrencies the benefits outweigh the risks, it allows owners personal economic control and supports small businesses and societies. Which in turn will help grow continual economic development if governments can adapt to the fast-paced technological changes of cryptocurrencies.
For now, though the use and development of cryptocurrency continue to grow in Africa, and it will be interesting to follow which country on the continent will become a frontrunner in cryptocurrency use.
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