Why Bitcoin is the Future of Money in Africa?

For bitcoin to be a currency in Africa, its retail, and banking sectors must adapt and adopt new technologies. For Africa’s finance industry to fully benefit from the revolutionary properties of Bitcoin, payment infrastructure is a necessary component of the ecosystem. Barely any retail trades are done using cryptocurrencies, even well-known ones like Bitcoin using the official Bitcoin Storm site. In addition, bitcoins’ average transaction fees are lower than credit cards. Because no transaction fees are associated with using Bitcoins, these low costs would make Bitcoin more attractive for daily spending scenarios.

Adoption of bitcoin in Africa:

Banks in Africa have been slow to adapt because they are concerned about security issues related to transmitting money over the internet. However, it has resulted in lower credit card transaction fees than what Bitcoin could bring.

Bitcoin can cut out the middleman from financial transactions, lowering costs for businesses and individuals. In addition, it would provide more direct access for merchants to their customers, promote economic growth, and reduce dependency on foreign aid in countries with underdeveloped banking infrastructure. However, using virtual currencies such as Bitcoin is still relatively new, and many obstacles will need to be addressed before mainstream adoption on the scale of Africa can occur.

In South Africa, all transactions by regulated financial services providers are recorded and subject to specific reporting requirements. It is to protect consumers and ensure transparency in the financial system. Furthermore, according to the budget for 2022, the country is poised to make a regulatory framework to safeguard investments subjected to bitcoin. In addition, the growing popularity of cryptocurrencies has brought a debate within Africa as to whether central banks should become involved in regulating them.

Bitcoin resolves the challenge of soaring remittance fees in Africa:

According to Africa’s central bank, the Bank of International Settlements, African nations have received $52.3 billion in remittances in 2017 alone. However, the bank also said that fees charged for sending back money to Africa increased over the last decade.

In 2016, the cost of sending $200 to sub-Saharan Africa was around $7 compared to $32 in 2007. It is an increase of 225 percent over just five years. The report highlighted many reasons for this: regulations and financial service providers charging high fees, stricter know Your Customer (KYC) requirements and Anti-Money Laundering (AML) procedures.

According to a study by Cambridge University, there is also a chance that bitcoin could lower remittance costs as it doesn’t require a centralized authority or banking infrastructure to operate. The study further noted that Bitcoin was cheaper than Western Union, MoneyGram, and similar service providers. Over time, as the adoption of cryptocurrencies increases, more Africans will likely turn to virtual currencies to transfer funds across borders.

Africa can take benefit from blockchain in supply chain management:

They are characterized by diverse activities, systems, and processes involving various people and organizations.  The sharing of information between participants in the supply chain is still done using traditional methods, including faxes, which are slow and hard to track. Blockchain technology allows companies to quickly share information through a secure network that all participants can trust. It will allow businesses to have a better overview of the processes taking place along their supply chain.

In Africa’s agriculture industry, blockchain technology can be used by users to improve food safety. In addition, the technology could help reduce post-harvest loss as it will allow farmers in remote locations to access new markets via modern communication networks like mobile phones. Blockchain technology will also ensure that farmers are rewarded fairly for the products they generate, allowing them to track shipments easily.

Africa’s fintech industry is multiplying, with experts predicting it could be worth $50 billion by 2025. Companies like IBM and Microsoft, already heavily investing in blockchain technology, see Africa as a vital part of the global blockchain ecosystem. It has the potential to become one of the largest markets for blockchain technology on the planet.

Africa’s finance industry is still developing, but Africa is taking steps towards its progression towards adopting virtual currencies and related technologies such as blockchains. The continent has a large unbanked population, but other industry sectors also invest in the decentralized blockchain. The African Development Bank and an alliance of 18 financial institutions created Aldiss, a proof-of-concept for bank consortiums to improve cross-border payments.