What’s the future role of Bitcoin in Africa?
Since the Central African Republic in April overtook regional cryptocurrency front-runners such as Kenya, South Africa and Nigeria to become Africa’s first nation to officially adopt Bitcoin as legal tender, crypto experts’ attention has increasingly been focused on the continent’s broader adoption.
Despite the African continent currently only receiving two per cent of the global value of all cryptocurrencies, a report by Chainalysis, a blockchain data platform, revealed that between July 2020 and June 2021, Africans received $105.6 billion worth of cryptocurrency payments, which is an increase of 1,200 per cent from the year before.
And notably, Kenya, South Africa, and Nigeria are amongst the top 10 countries in the world for cryptocurrency use. Other countries in the rankings include the US, Ukraine and, perhaps surprisingly, China.
Cryptocurrency enthusiasts have long advocated that Bitcoin has the power to revolutionise Africa’s economy as it could help give millions of unbanked individuals access to financial services.
Indeed, in nations where the current national currencies don’t work as well as they should as a means of exchange, store of value and as a unit of account; where there is unpredictable inflation and an inefficient, out-dated, and costly financial system; and where GDP is reliant upon remittances from overseas, Bitcoin could be a major part of the solution to these issues.
However, some major obstacles remain for mass adoption to be achieved in Africa.
A key challenge is the availability or lack of regulations. African regulators either “have introduced strict regulations limiting Bitcoin use or have not introduced any legislation to govern cryptocurrencies”, reports Bitcoin Magazine.
In Zimbabwe, for instance, the government introduced strict regulations against cryptocurrencies, which resulted shutting down Bitcoin ATMs.
Meanwhile, in its 2022 Budget Review, the government in South Africa said it is proposing that regulatory bodies need to be established to safeguard crypto investors.
Elsewhere, the Securities Exchange Commission (SEC) of Nigeria has published new rules relating to the issuance, exchange and custody of digital assets in the country – a move that is likely to significantly increase crypto usage across Nigeria.
For years I have been a leading voice calling for regulation of the sector. The calls by financial watchdogs and central banks for greater regulatory scrutiny must be championed as digital currencies, including Bitcoin, are set to play an ever-greater role in the international financial system.
What’s needed is a strong regulatory framework to be established and approved at an international level.
Such regulation will help protect investors, tackle cryptocurrency criminality, and reduce the possibility of disrupting global financial stability, as well as offering a potential long-term economic boost to those countries which introduce it.
Cryptocurrencies in some form or another are here to stay – and the market is only set to grow.
There can be no doubt that regulation of the crypto ecosystem is required and, I believe, it should be a priority.
The work being done by many international financial regulators, lawmakers and central banks in this area is something I fully support and champion.
Education is another key area that needs to be addressed in order to increase levels of mass adoption in Africa.
As African Bitcoin expert, Steven Weru, writes: “Educational workshops would help dispel any negative myths about Bitcoin. If people understand that Bitcoin is not a scam, but a new form of currency that is easier to transfer and is free from government-related economic depressions; adoption resistance will reduce.”
In conclusion, I believe that Bitcoin and crypto have the power to be an enormous, sustainable force for economic good across Africa.
Once the challenges are met, it has the potential to create a better, more connected continent in which more people than ever before will be able to meet and hopefully exceed their financial goals.
African nations, and individuals across the continent, have an opportunity to achieve equal status with global counterparts that are unable to see the future is, inevitably, digital.
Crypto can and will become the greatest of all equalisers.