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Is Africa the Next Big Market for Cryptocurrency?

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Africa Next Big Market

Bitcoin and blockchain technology are ripe for mainstream adoption in Africa. Banking systems across the continent are expensive and/or outdated. Many Africans do not have access to these banking systems or basic financial utilities. The lack of economic infrastructure paired with inadequate financial education has left many Africans without bank accounts. There is a need for a secure way to make digital payments and loans. Many Africans also do not have a place to store their hard-earned salaries.

We have already seen cryptocurrencies attract a large audience and active users in Asian and Western countries. Is Africa next?

Reasons Why Africa Might be the Next Big Market for Cryptocurrencies

Africa Next Big MarketIt’s hard to expect wide cryptocurrency adoption in a continent where a significant percentage of the population do not have bank accounts, but several indications show that cryptocurrencies will survive in Africa. Many people in Africa, suffer from rapidly inflated currencies, which is always a terrible thing.

Although there are still African countries with a strict stance on cryptocurrency, Africa has increasingly shown itself to be open to the idea of blockchain and cryptocurrency.

Many countries in Africa realise the potential economic improvement that comes with blockchain and cryptocurrencies, and have started experimenting with the technology, or welcomed many blockchain startups to do business within their borders. South Africa’s central bank is actively studying cryptocurrency and encouraging blockchain innovation.

Cryptocurrency Advantages and Disadvantages for Africa

Cryptocurrency is not under the regulation of governments, nor is it issued by the central banks. This can cause it to have both advantages and disadvantages for Africa. 

Advantages:

  • Easily accessible, anyone can get involved with cryptocurrencies, and make use of them. All that is generally needed is an internet connection. There is also no age barrier, so anyone can participate.
  • Making payments using cryptocurrency is fast and easy. Although it is not always as user-friendly as a simple bank transfer, it is fast and usually very easy to transact with cryptocurrencies.
  • You don’t need to share your identity or whereabouts or the details of the transactions made between you and the beneficiary. Privacy is one of the main attractions of cryptocurrency.

Disadvantages:

  • Many people are not aware of how to use cryptocurrency, and this leaves them vulnerable to scams and hackers. In order for Africa to become a leader in cryptocurrency adoption, we need to ensure that cryptocurrency is easy to use, transact with and understood by the general population.
  • There is a possibility of losing your private key or wallet. There is also the possibility of accidentally giving away your private key. There is tremendous risk involved when dealing with cryptocurrency. When you lose your wallet, you can’t simply just phone your bank, and ask them to return the money. You either find the lost wallet or say goodbye to your funds, forever.
  • The two main cryptocurrencies are Bitcoin (BTC) and Ethereum (ETH), but their prices are volatile. Speculation and uncertainty can cause prices to increase or decrease. In the long run, this will affect real-world adoption, especially in Africa. Imagine being paid your salary in Bitcoin (BTC). Today your salary could afford two new TV’s, whereas tomorrow, you can only afford one new TV.

The Case for Cryptocurrencies in Africa

As we have come to know that new technology often creates a chasm between those who have and those who do not. Cryptocurrency presents a massive opportunity for Africa. Africa definitely seems to be the next big market for cryptocurrencies. There are already numerous exchanges in Africa, which allow easy access to cryptocurrencies to many Africans. But much still needs to be achieved before widespread adoption of cryptocurrency in Africa.

This article was contributed by South African freelance writer and blockchain developer Leigh Williams. 

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4 Reasons Why Black Lives Matter Should Start Accepting Bitcoin

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Black Lives Matter

Systemic anti-black racism is prevalent across the globe. A series of events in the US have catalysed countrywide protests, bringing more eyes to one of the biggest movements against racism, the Black Lives Matter (BLM) movement.

In this piece, we explore the reasons Black Lives Matter would benefit from adopting bitcoin as a method of accepting donations.

Bitcoin Is A Peaceful Protest

black lives matter bitcoinAttempting to resist a system that oppresses you, while leveraging the tools employed by the same system, can be counterproductive and undermine. For movements like Black Lives Matter, it is imperative to utilise systems outside of traditional resources that are not tainted with the prejudice that disenfranchises BIPOC.

In the United States, the black community has long complained of unsatisfactory access to traditional financial services. While there is no shortage of research papers and statistics on race issues, given the current climate, it is important for us to contextualise and understand how traditional financial systems underserve black people in the US.

A study by McKinsey & Co published shows a direct link between weaker financial power and a lack of access to financial services like banking. For instance, predominantly white counties have an average of 41 financial service providers, while black ones have 27 of these financial firms. Further, banking in these black counties is mostly more expensive as compared to white-counties.

Moreover, despite being underserved, black people are overcharged by banks in the very few situations where services are available. 

There are several other examples mentioned in the report that paints a vivid picture of the extent to which black people are unbanked. Other examples cited in the report include requiring higher account balances and difficulty in accessing loans.

This is where bitcoin can come in.

Bitcoin knows no race and does not discriminate. Everyone anywhere can get a bitcoin wallet and purchase bitcoin online. 

By leveraging bitcoin, progressive movements like Black Lives Matter can send a powerful message, addressing the underlying racism prevalent in traditional financial services. With enough steam, it may eventually aid to break down the archaic financial systems that continue to aid in the oppression of minority groups all over the world.

If there is any single reason for Black Lives Mater to accept bitcoin donations, it is because using bitcoin is another form of protest.

Bitcoin Is Censorship-Resistant

Black Lives Matter may find favour in the eyes of regulators and payment processes like Paypal. At this point, it will be almost suicidal for anyone to consider cutting payment channels to the movement. However, if historical precedence is anything to learn from, it is all fun and games till it is not.

WikiLeaks, the famous, was banned by PayPal in 2010 for violating its policies and terms of service.

Before then, over $1 million of donations towards WikiLeaks had come through PayPal. Black Lives Matter may be different from WikiLeaks. However, any loophole that provides an avenue for censorship must be sealed moving forward to secure the future financial backing of the movement. 

Accepting bitcoin as donations would provide a viable alternative, especially given its censorship-resistant nature.

Private Donations 

Sometimes people prefer to give privately without revealing their identity.

Between bitcoin and traditional online payment methods, bitcoin allows for more private transactions. To factor in the privacy-conscious crowd who could be interested in donating to the movement, Black Lives Matter is likely to benefit from accepting bitcoin.

Even though the anonymous nature of bitcoin has been at the centre of debates, Bitcoin’s pseudonymity makes it undisputedly a more privacy-conscious financial tool than PayPal or bank payments. 

Access to a Wider Audience

Black Lives Matter

PayPal may seem like the ultimate financial tool for many, but that is not the case in many places. In some parts of the world, people are unable to use PayPal due to the unavailability of service in their region.

Bitcoin is a universal payment method that is accessible by anyone, anywhere in the world. In every corner where there is connectivity, people can use bitcoin as money. BLM will open up donations to people from all parts of the world.

While there still are people in the Bitcoin community who hold ideologies that belong to past centuries, there are also a lot of people in Bitcoin who support BLM and other movements around the world that fight against oppression. By allowing people to send donations via bitcoin, BLM opens up to bitcoiners around the world who support Black Lives Matter.

In a world where tools that aid human sovereignty have evolved to the point where there is revolutionary money, free from traditional systems, movements like BLM can harness innovations like Bitcoin to further their cause.

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Zimbabwe’s New Foreign Currency Regulations Could Affect Bitcoin Trading

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Zimbabwe’s New Foreign Currency Regulations

Zimbabwe’s newly introduced foreign currency regulations threaten peer-to-peer bitcoin trading via messaging apps.

New Foreign Currency Regulations

The Zimbabwean economy – which has been hit by hyperinflation – endures an ongoing shortage of foreign currencies. Authorities blame illegal foreign currency dealers for exacerbating the situation thus hastening the fall of the local currency. Several regulations have been introduced in the past few months to arrest the situation.

A recent directive by a unit within Zimbabwe’s central bank to outlaw advertisements relating to foreign currency trading has sparked off a panic within Bitcoin trading communities.

The latest decision comes in the wake of a sharp depreciation of the Zimbabwean dollar against the US dollar. Economists blame the country’s biting foreign currency shortages for the local currency’s free fall.

The central bank has pegged the exchange rate at 1 USD for every 25 Zimbabwean dollars towards the end of March. However, the black market rate is now 1:80 or higher.

Financial Intelligence Unit Onslaught

On June 15, the Financial Intelligence Unit (FIU) of the Reserve Bank of Zimbabwe circulated a document that is threatening to freeze bank and mobile money accounts of those caught putting up any advertisements relating to foreign currency trading in social media chat groups.

The FIU alleges it is aware that some WhatsApp groups have mushroomed for the specific purpose of promoting and facilitating ‘illegal’ foreign currency dealings.

Parts of the statement reads:

“The FIU, in collaboration with the police, banks, mobile money/mobile money service providers and relevant regulatory agencies, has embarked on an exercise to identify and take action against individuals who create, advertise on or participate (actively or passively) in WhatsApp groups or other platforms for illegal foreign currency trading.”

The statement goes on to list the steps authorities will take against those caught on the wrong side of these regulations.

Panic in Crypto-Related Chat Groups

ICE3X Launches Debit Card

Some within the cryptocurrency trading communities have suggested that this directive encompasses bitcoin trading as well. Bitcoin trades, just like with the so-called foreign currency black-market trades, are often initiated in social media chat groups.

Moreover, bitcoin-to-fiat trading is typically conducted in foreign currencies like US dollars. Although, there are trades where local mobile money is the preferred method of payment.

Consequently, some traders are now taking precautions by replacing their local WhatsApp phone numbers with foreign ones. The use of foreign phone numbers helps to masks the real identity of traders and their bank accounts from being targeted.

Yet others are adamant that bitcoin—which the central bank has not recognised as currency—is, in fact, a digital asset. As such, it is exempt from the FIU directive. However, the broad terms used in the FIU statement suggest authorities are trying to go after all platforms where foreign currency is exchanged.

Still, others are not overly worried insisting that FIU lacks the capacity to achieve this kind of surveillance and policing. In any case, they say Whatsapp messages are protected with end-to-end encryption. 

BitcoinAfrica.io reached out to FIU to get clarification on the some of the issues raised by bitcoin traders. However, we did not receive a response at the time of publishing.

No Crypto-Specific Regulation

Zimbabwe, just like many of its counterparts on the African continent, does not have regulations that specifically govern cryptocurrency trading. The country’s central bank has in the past issued press statements advising the public against dealing in cryptocurrencies.

At the same time, it banned financial institutions from facilitating the movement of funds between fiat to crypto and vice versa. These decisions culminated in the shutdown of Golix, a cryptocurrency exchange in 2018.

However, since then there has been an apparent rapprochement by the central bank concerning its blockchain technology. For instance, in its last monetary policy statement, monetary authorities again touted the potential of blockchain technology. They even encouraged financial institutions to adopt this.

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Chainalysis and A&D Forensics Partnership to Boost Access to Cryptocurrency Investigative Technology in Africa

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A&D Forensics

Institutions in Africa can now access cryptocurrency investigative technology following a partnership between Chainalysis and A&D Forensics.

Chainalysis and A&D Forensics Partnership

From romance-related crypto scams to shady ICOs, Africa has had its share of illicit investment opportunities. Fortunately, there is a light at the end of that dark investment tunnel. With Chainalysis Reactor, financial institutions, governments, regulators, and cryptocurrency exchanges can identify and stop scam propagators from harming consumers.

“By partnering with Chainalysis, we are providing the African cryptocurrency ecosystem with the investigative technology that it needs to fully understand blockchain activity,” said Senior Partner at A&D Forensics, Adedeji Owonibi.

Chainalysis Reactor is an investigation software by New York-based blockchain analysis company Chainalysis. The software connects institutions to cryptocurrency transactions allowing them to stop criminal activity.

One of the initiatives culminating from the partnership is a plan to work with cryptocurrency training specialists. These specialists will assist regulators, compliance officers, investigators, and analysts to perform blockchain analysis to derive actionable intelligence using Chainalysis Reactor.

A&D Forensics is a Digital and Financial Forensic firm based in Nigeria. One of the services the company offers is blockchain intelligence on crypto-related criminal activities.

How Chainalysis Reactor Works

ChainalysisChainalysis Reactor has a search feature that can tell users which entities are linked to a given wallet and the related cryptocurrency addresses. Moreover, the software scans thousands of forums and darknet websites for relevant intelligence.

Chainalysis Reactor connects cryptocurrency transactions to activities taking place in the real world. Also, users can use the “watch” feature to keep tabs on the future transactions the party of interest carries out.

Another important feature that the software provides is the ability to follow the money. With powerful visualisations, users can create the path of funds under investigation. Additionally, the software can link any suspicious activity identified along that path to real-world entities.

The Chainalysis software is a powerful tool that could benefit many institutions. For example, regulators can track the funds raised during an ICO to confirm that the money was used in the right way. Institutions interested in this software can request for a demo on the Chainalysis website.

Trust is imperative in the cryptocurrency industry now more than ever. With crypto-related scams cropping up now and then, consumers are becoming jittery. Therefore, the Chainalysis and A&D Forensics collaboration could offer transparency in the African cryptocurrency space to encourage government adoption and increase consumer confidence.

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