Born in 2009 at the end of a financial crisis, Bitcoin has been evolving at an exceptional rate. This type of virtual money is truly a worldwide revolution. Since its creation, it has spread like wildfire around the globe and particularly in Africa, where its value has risen the most.
November 27th of last year, when Bitcoin’s value had not yet reached $10,000 on the global market, the Zimbabwean trading platform was showing values of more than $17,000. Now, it seems that many economically unstable African countries are all for Bitcoin.
A Solution for the Development of Africa
The backbone of Bitcoin is, of course, Blockchain technology, which is winning over many big investors. This technology has made billions of dollars in capital gains in Africa, much like everywhere else in the world.
With the weakness of most African currencies, the use of Bitcoin and Blockchain technology could allow them to overcome their economic weaknesses. The use of such technology improves the functionality of existing financial transactions, while also providing new ways to manage personal and public finances.
The corruption that runs rampant in developing African countries could be greatly reduced, and even possibly eradicated, with the adoption of Bitcoin as a common currency.
Thanks to Blockchain technology, all transactions are secured and are registered permanently. It also helps to eliminate fraud and provide the instant transfer of funds throughout the network.
A Means of Financial Inclusion
The use of cryptocurrencies favors the participation of all its network’s members, as well as limiting other forms of financial exclusion. It also helps to significantly reduce the cost of transactions fees.
Recently, Bitpesa, a Bitcoin trading platform, has managed to reduce international transactions fees by 75%. The company is already present in Kenya, Tanzania and Uganda and manages to process transactions in about 2 hours, as opposed to the usual 12 days.
Bitcoin, and the Blockchain technology behind it, allows all its user access to almost instant financial services. And now, this type of system is becoming more and more reliable when compared to traditional banking institutions.
Good Governance in Africa
The adoption of Bitcoin could significantly contribute to the development and empowerment of the African people. It can help reduce discrepancies in information, which is often the source of injustice and the abuse of power throughout the continent.
A reduction in the amount of corruption could restore the people’s faith in state authorities and helps improve the ability of governments to lead their countries. Moreover, the weak legal structures of developing countries could potentially be bettered using cryptocurrency.
In a recent 2017 edition, the Wall Street Journal mentioned a huge increase in Bitcoin users in Sudan, Kenya and Southern Africa. Three countries who see Bitcoin as a way out in the face of their financial uncertainties.
Managing Director of the IMF (International Monetary Fund), Christine Lagarde sees the positive of using Bitcoin to help bail out developing countries.
Given their economic instability, many developing countries, in Africa and around the world, could benefit from the adoption of cryptocurrencies.
Bitcoin could eventually be used as a replacement to any country’s currency, even the American dollar. Lagard calls this phenomenon Dollarization 2.0.