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Could Bitcoin Become the First Pan-African Currency?

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Pan African Currency

Bitcoin is the world’s first truly global currency that anyone can use to make payments and transfer funds. In Africa, bitcoin has so far been growing primarily in South Africa, Kenya, Nigeria and Ghana and is currently being used mainly as an investment and for private international remittances. But does it have the potential to become the first pan-African currency?

Here are some reasons as to why people believe that Bitcoin, will be the leading global currency.

  • Anyone with Internet access can use bitcoin
  • Bitcoin is not controlled by any government or central bank
  • Payments and money transfers take less than 30 minutes
  • The cost of a bitcoin money transfers is minimal
  • Transactions are transparent as they are publicly recorded on the blockchain
  • There is a fixed supply of bitcoins, so hyperinflation cannot occur

Bitcoin remittances in Africa

While, in theory, bitcoin remittances make sense in Africa the reality is that there is the (partly) costly challenge of exchanging the received bitcoins into local African currency. For this reason, bitcoin remittances are currently not the cheapest way to remit funds into Africa, according to a report by US bank Citigroup. However, as exchanges are expanding and the bitcoin economy is growing in Africa, bid/offer spreads will tighten and bitcoin remittances will become a viable way to transfer money across borders at a low cost.

There will be an increase in money remitted to sub-Saharan Africa from people in the diaspora. Western Union and MoneyGram have been the main beneficiaries of it. This is one of the key reason why so many people in the bitcoin economy believe that bitcoin will succeed in Africa, as the costs of cryptocurrency-based remittances are substantially lower than using the before-mentioned expensive traditional Money TransferOperatorss (MTOs).

So far, consumer bitcoin remittances into Africa have only really taken place on a small scale as can be seen in the video by BitcoinFilm.org below. But as the bitcoin infrastructure improves in Africa, the trend for bitcoin remittances will undoubtedly be positive.

 

Bitcoin as a store of wealth and as a spending currency

Once bitcoin volatility reduces (which arguably will take quite some time) bitcoin will very likely become a viable store of wealth. Furthermore, as merchant adoption increase both globally and in Africa (as seen in South Africa), Africans will be able to use bitcoin as means of payment across the continent. The reality is, however, that it will take a substantially amount of time for this to occur.

In fact, bitcoin adoption correlates to some degree with Internet penetration in Africa. It is not surprising that the countries with the highest Internet penetration are also those spearheading bitcoin adoption on the continent. As affordable access to the Internet spreads in Africa, so will bitcoin as a store of wealth, a means to transfer money and as a spending currency.

To answer the question in the title of this article: YES, bitcoin could become the first pan-African currency. This could occur once internet penetration reaches the majority of the continent and global bitcoin adoptions increases, to the extent where it becomes globally recognized as legal tender. Whether that will happen or not, remains to be seen and, if it does, it will take a long time.

 

 

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The Top 5 African Countries That Are Embracing Bitcoin

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African Countries

Bitcoin tends to polarise opinions between sceptics and believers, with almost no room for the middle ground. However, there’s a substantial demand for bitcoin and other cryptocurrencies in many Africa countries.

Do a quick search on Google Trends and you will see three African countries in the top ten of global search interest for the term “bitcoin.” This is a testament to the embrace of bitcoin in a number of leading African economies.

In this guide, you will discover the five leading bitcoin economies in Africa that have the most demand for digital currency as well as the most active local cryptocurrency communities.

South Africa

south africaBitcoin is popular among South Africans. According to their search interests on Google, they top the ranking for bitcoin. One particular group bitcoin appeals to is millennials. South Africa has a lot of them. Young people between the ages of 15 to 34 years old make up 20.6 million people – 35.7 percent of the total population, according to Statistics South Africa’s 2018 mid-year population estimate report. Combined with the fact that the country has one of the highest internet penetration rates in Africa, the country has become a sweet spot for many cryptocurrency exchanges.

The online multi-asset broker, eToro, reported a 671 percent increase in new users trading between January and November 2017, and a 574 percent increase a year before. LocalBitcoins, one of the largest peer-to-peer (P2P) bitcoin marketplaces in the world, saw over 600 percent increase in trading volume between January and December 2017, according to data from CoinDance.

The latest report by Ecobank on the state of cryptocurrency regulation in sub-Saharan Africa shows only two – South Africa and Swaziland – have a favourable stance on cryptocurrencies. The bank analysed 39 African countries.

The South African Reserve Bank has stated that virtual currencies pose no significant risk to financial stability, price stability or the National Payment System.

Africa’s second-largest economy has been struggling to stand on both feet for the past two years; the economy has refused to grow. In light of this, bitcoin has become a haven from the political and economic turmoil.

Nigeria

buy bitcoin in nigeriaIn Nigeria, many local traders and activists believe this is an opportunity to liberate themselves from a flailing economy using digital currencies and blockchain technology.

The main driving force for Nigeria’s strong bitcoin adoption could be tied to the prolonged dollar shortage in the country in 2016 and 2017. The government had devalued the currency and inflation was at rising rapidly. Bitcoin was a viable means for Nigerians to work around the lack of access to foreign exchange and also preserve their money from being eroded by inflation.

In the week of August 19, 2017, LocalBitcoins’ trading volume crossed the 1 billion naira mark (about $360 million) in Nigeria. The exchange’s weekly trading volume has not traded less than that amount since then. Local crypto exchanges have also been on the rise in the country giving more people access to a broader range of cryptocurrencies.

Zimbabwe

ZimbabweThe situation in Nigeria is not too dissimilar from Zimbabwe. A cash-strapped economy, failing currency and depleted foreign exchange markets saw locals turn to bitcoin as a store of value. Golix, the leading crypto exchange in Zimbabwe, says it processed bitcoin transactions worth around $1 million during October 2017. The price of bitcoin had once risen more than double the average price in other countries in 2017.

However, in 2018, the relationship between financial regulators and crypto businesses have been strained. The Reserve Bank of Zimbabwe (RBZ) decided to ban all local financial institutions from servicing cryptocurrency businesses. There have been court cases and more back and forth between the country’s leading crypto exchange, Golix and the RBZ, but as it stands it is difficult for local exchanges to operate within the country’s borders.

Young Zimbabweans – desperate to overcome the foreign currency and liquidity challenges plaguing the country – have found innovative ways around the ban though. Recently, Cryptogem Global defied the ban and opened a branch in Zimbabwe’s capital, Harare. Remitano and LocalBitcoins have also been servicing crypto fans in Zimbabweans.

Kenya

KenyaA Citibank research in December 2017 ranked Kenya among countries with the largest bitcoin holdings worth $1.63 billion, approximately 2.3 percent of the GDP.

The East African country has one of the highest bitcoin trading volumes in Africa. The weekly trading volume on LocalBitcoins jumped by almost 429 percent in 2017 and has only dipped by 19 percent this year despite bitcoin losing two-thirds of its value.

Also, local innovators have launched cryptocurrency systems to support payments and cross-border transactions, as embodied by initiatives like BitPesa.

Kenya is also one of the few countries in Africa with a Bitcoin ATM. Others are Zimbabwe, South Africa, and Djibouti.

Ghana

buy bitcoin in GhanaGhanaians began the year 2018 with a statement from the Bank of Ghana (BOG) cautioning the public about the use of bitcoins.

The central bank also expressed an interest in introducing cyber security guidelines to guide the use of digital currencies in the country. The central bank presented a bill referred to as Payment Systems and Services Bill to the Ghanian parliament. The BOG also hailed the potential of the technology behind bitcoin, blockchain.

A report earlier in 2018 shows Paxful, one of the prominent P2P exchange in Africa, monthly bitcoin volume in Africa is now around $40 million. The company’s most active locations are Nigeria and Ghana, the second and third largest markets respectively.

There are also several local bitcoin and blockchain startups, such as Bitland and BTCGhana.

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South African Man Beaten And Tortured to Give Up Bitcoin Holdings

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A South African bitcoin trader was reportedly drugged, beaten, and tortured by assailants who wanted to gain access to his bitcoin holdings.

Facebook Invitation Led to Torture and Bitcoin Theft

According to local media, the incident happened on November 16 after the victim was invited by a man he met on Facebook to give a presentation on cryptocurrency. The same man who had invited him was present when the victim arrived with six other people in the room.

Identified only as Andrew, the victim trustingly entered the residence of his attackers in the afternoon. It was at this point that someone approached him from the back and covered his face with what is presumed to be a drug-stained cloth that knocked him out.

cryptocurrency tax regulationsAfter regaining consciousness he woke up in a different house and was surrounded by two women and three men. According to a report from the Meadowlands police, the victim was stripped of his clothing, tortured and assaulted.

Andrew also stated that the gang demanded his bitcoin password and his FNB (First National Bank) account details. All the while threatening to kill him and burning him with a hot iron if he failed to give up the information. He was at first reluctant to give up the information but gave in after they continuously tortured him.

After finally giving the details, he transferred R 800,000 ($57,789) worth of bitcoin to the account they provided him with. He also transferred a further R 100,000 ($7,224) from his bank account to their account. Apart from the bitcoin holdings and the money on the victim’s account, the robbers also got away with R 3,000 ($216.53) in cash, two laptops, and two Apple iPhones.

After the theft, the gang of robbers blindfolded Andrew and dumped him off at Kliprivier Road in Johannesburg. He is currently in the intensive care unit recovering after sustaining burn wounds on his body.

Crypto Related Crimes Are on the Rise

Unfortunately, the downside of cryptocurrencies gaining so much popularity means that people who trade in it are vulnerable to attacks. Cryptocurrency theft is a lucrative business for criminals especially since it is difficult to trace transactions.

This is not the first crime and will be a far cry from the last, as scams involving digital coin are being reported more often and violent attacks on known bitcoin holders have increased since 2017.

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Middle Eastern Bitcoin Exchange BitOasis Launches in Egypt and Morocco

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BitOasis

Dubai-based digital asset exchange BitOasis has announced that it has now opened its doors in Egypt and Morocco, expanding its operation to North Africa.

BitOasis Expands Into North Africa

BitOasisBitOasis has been serving the Middle East as one of the first exchanges to offer cryptocurrency trading for local currency and has now decided to expand into North Africa to provide Morrocans and Egyptians with the opportunity to buy bitcoin (BTC) and other digital assets.

Despite the recent rise in interest of cryptocurrencies in Africa, Moroccan and Egyptian markets rarely make the news. While markets like South Africa, Nigeria, and Uganda have cryptocurrencies exchange services set up shop, the North African countries have largely remained underserved.

Part of the reason Morocco did not previously have any exchanges could be because transactions using digital currencies are considered de facto illegal. A year ago the Moroccan central bank, and the country’s Foreign Exchange Office, Office des Changes, declared that transactions using digital currencies such as bitcoin constitute a violation of the country’s exchange regulations.

Cryptocurrency enthusiasts in Egypt have been facing similar issues. From the Central Bank of Egypt asserting that no organisations have authority to trade bitcoin, to Dar Al Iftaa classifying cryptocurrencies forbidden by Islam, bitcoin has had no easy ride in the North African country. Still, there has been a growing interest in Egypt for blockchain technology as well as cryptocurrencies.

BitOasis is now an excellent alternative platform to peer-to-peer exchanges to buy bitcoin in Egpyt and Morrocco. Moreover, Egyptians and Moroccans are now also able to trade LTC, BCH, BSV, XRP, XLM, ETH, ETC, and ZEC.

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