Although opinions about the widespread adoption of cryptocurrencies in a developing region like Africa spark different opinions among experts, national authorities, users, and citizens of various African nations, the crypto boom is happening, so we might as well give it the space it deserves and get informed so we know how to better interpret it. When the crypto market was embryonic in many nations worldwide, it was commonly perceived as an unsafe space, particularly complex, and full of uncertainties that may have pushed many early-bird investors away. However, despite the rough beginning, the crypto world earned the admiration of users of all nationalities and became a hot topic in online and offline communities. Crypto possibilities are now discussed in a variety of industries, among multiple groups, and at a government level in many countries and it is safe to say that many eyes are now paying attention to how the crypto industry has been unfolding.
With so many unlocked potentials, the crypto ecosystem is fascinating not only to those who have a particular interest in finances but also to those who are willing to understand how such technology can impact our lives from now on. We are entering an era of popularization of crypto solutions and it is only a matter of time until we start interacting even more with daily uses of crypto-based solutions. Among developing economies, Africa has the fastest growing rate of crypto adoption and the third-fastest growing crypto market worldwide. Many countries inside the continent have already been benefiting from crypto alternatives that have been slowly making their way into the routines of African citizens and this trend is only starting. Here are some real-life examples of how crypto technology already created positive changes in the African continent:
It amplified access to credit for small entrepreneurs: owners of small and medium enterprises can truly benefit from the less time-consuming and safer atmosphere that cryptosystems may offer. In Kenya, a company named Pezesha became the first African company to come up with a peer-to-peer framework that provides loans for those who need a helping hand to boost their business. The company uses blockchain technology to dribble the disadvantages of conventional contracts offered by traditional banks. Furthermore, their platform allows investors to easily send stablecoins which are then transferred into Shillings (Kenya’s national currency) before appearing in the receiver’s account.
It facilitated international transactions and remittances: since the second half of 2020, Africa received over US$105 billion in cryptocurrency remittances. The number is associated with a jaw-dropping growth of 1200% compared to the same period between 2019 and 2020. This growth percentage is even more surprising if we consider that the past two years of crypto history in the African continent were filled with national bans and movements against the implementation and legitimization of crypto alternatives. However, as many African citizens navigate scenarios of instability in their professional and financial lives, cryptocurrencies will likely continue to be used as an alternative to cross-border transactions, as the time and cost of crypto-based exchanges are way more attractive than that of traditional services. It is worth mentioning that, in Africa, a big percentage of international remittances is designed to cover costs with education, household matters, and healthcare. It is expected that the total amount exchanged by African citizens in crypto form will reach around US$580 million by the end of this year. Many African-focused companies such as Pesabase, Luno, and Quidax, offer safe platforms for users from Africa to trade crypto assets.
It made community currencies possible: the use of community currencies got a special place under the spotlight during the COVID-19 pandemic once the economic downturns severely affected the conditions of marginalized neighborhoods. With banks being crashed with demands for loans and the value of national currencies downfalling, many of these communities stopped in time and did not develop for a while. In Kenya, the Red Cross implemented the groundbreaking Sarafu initiative, a blockchain project to stimulate these communities to regain their strength for a sustainable growth journey. Community currencies became an alternative payment option for services and goods that can be used instead of fiat currency in moments of crisis and lack of available paper cash going in and out of these regions. Every Sarafu new user declares on the platform what kind of products or services they are willing to trade and are awarded digital community tokens to start trading with those in need. On the other side of the transactions, buyers can send requests for what they need and pay via a simple SMS. Sarafu’s USSD (Unstructured Supplementary Service Data) enables offline payments so those who offer and those who need can trade with no limitations. The project’s kickoff was in a community named Kongowear, on the east coast of Kenya, but has already expanded to more local communities with the support of the Danish Red Cross.