A while back I was having a conversation with a friend regarding the future of cryptocurrencies in Africa. We agreed that more people are becoming aware of digital currencies such as bitcoin, and its potential to solve some of the problems that plague the continent’s financial ecosystem. However, we had different opinions on how long this momentum can continue and whether it will penetrate the mainstream.
A major hurdle, of course, would be the prevailing regulatory climate which has seen bitcoin effectively banned in a number of countries. His view was until African governments changed their position on bitcoin, the adoption of the currency will be a very slow process. I, on the other hand, saw things differently. It was my belief that what will fuel the continent’s great leap to a bitcoin economy, will be crypto-solutions from startups leveraging blockchain technology.
Bitspark’s new venture in Nigeria
A prime example would be the launch of Bitspark’s new money remittance service to Nigeria. The Hong Kong-based company announced the new venture this week as part of a wider strategy to gain a foothold in the continent. Nigeria currently receives an annual $21 billion in remittances from around the world making it a top market for money remittance services.
The cryptocurrency service provider has created an end-to-end remittance platform that uses blockchain technology to facilitate transactions.According to Bitspark’s blog, their new remittance channel into Nigeria will be 14.4% cheaper than its competitors. The new payment service will, therefore, reduce the cost of transactions. This, in turn, will help to save Nigerians receiving remittances hundreds of dollars over the course of the year.
Bitcoin as a Safezone
With inflation being a persistent problem in Africa, as is being witnessed in Kenya and Nigeria, bitcoin can be a medium that protects user’s wealth. Interestingly, the CEO of Africa Digital Marketplace, Hermann Djoumessi expressed something similar in an interview with CoinTelegraph.
“Bitcoin should be the “fly to safety” currency for all. However, one needs to remain careful and needs to start to understand that paper money as we know it is about to disappear. Therefore, one needs to have and carry a mix of cryptocurrencies and should always play one against another when times changes.”
But while commercial application of bitcoin technology may convince people of the financial sense, the support of regulators is still needed. Remember, the success of any bitcoin startup also depends on factors such as energy, data centers, financing, education, infrastructure, etc. This cannot happen without the support of local governments.
What next for Bitcoin startups?
Bitspark will join other startups like Bitwala, BitPesa, and Remitano that are carving out their niche in the African payments space. According to a research report, there is significant interest for crypto-solutions in three countries, namely, Nigeria, Ghana, and South Africa. Most of this stems from using bitcoin for payments but also using bitcoin as an investment due to the price rally we have witnessed in the last twelve months.
It should be interesting to see how the convergence of bitcoin and businesses will shape the African financial and regulatory system in the coming year.