How Bitcoin is taking off in Africa

ith the most recent spike in Bitcoin prices, South Africa has seen a surge in interest. According to Google Analytics, the country rich in gold in diamonds has topped google searches for the cryptocurrency.

South Africa
In South Africa, despite a comparatively small number of Bitcoin users, the increase in interest is largely fueled by political uncertainty and the failing Rand, the country’s national currency. Corruption plays a significant role in the country’s lack of faith in its economy. Widespread allegations of profiteering from business dealings with the infamous Gupta brothers have led President Jacob Zuma into hot water, however his power and influence does not appear to be impacted. As the December election rapidly approaches, confidence in the country’s government is waning.

In such murky political and economic waters, South Africans are watching their wealth deteriorate, leaving many to seek out a solution. Werner van Rooyen, an executive at Luno, South Africa’s most popular Bitcoin exchange, noted:

“When there is a nosedive in‚ say the exchange rate for the Rand‚ you’ll often notice a downtrend in other industries like the stock market or the housing market. Bitcoin has been found as one of the assets with the lowest correlation to other asset classes.”
Despite Bitcoin’s relative instability, the cryptocurrency seems to be a more promising investment for some. In a poll conducted by Luno, 66% of users see Bitcoin as a viable investment tool. As interest spikes, it has led to a variety of blockchain and Bitcoin based startups. Even South Africa’s largest online retailer accepts the cryptocurrency. Julie-Anne Walsh‚ Chief Marketing Officer at Takealot, noted:

“Whilst this is only a small portion of our overall sales‚ the numbers of Bitcoin transactions have increased year on year since launching the service. Compared to 2016‚ we’ve seen a 170 percent year on year increase in the number of Bitcoin transactions – albeit off a small base.”
South Africa is not the only African nation wherein Bitcoin is gaining popularity, however.

Zimbabwe
In 2008, Zimbabwe saw its national currency soar to a staggering inflation rate of 89 sextillion percent. The collapse of the country’s economy, however, led to an interesting monetary system. Zimbabwe replaced its national currency with a mix of stronger, more stable international currencies. Day to day, people of Zimbabwe may utilize the South African rand, U.S. dollars, UK pound sterling, Indian rupees, Japanese yen, Chinese yuan, and several others. Under this system, it would not be unusual to make a purchase in U.S. dollars only to receive your change in Indian rupees. The need for a solution to this complex system is obvious.

BitMari, a Zimbabwe based payment platform, aims to tackle this issue, in addition to many others. Recognizing that 95% of people in Zimbabwe own a cell phone, while only 30% have a bank account, the company launched a Pan-African Bitcoin wallet able to store currency and send remittances. To promote awareness and accessibility, the company integrated features allowing users to communicate in multiple indigenous languages. BitMari co-founder Sinclair Skinner explained: “Financial inclusion creates empowerment and ultimately stronger economies.”

In Zimbabwe, it is clear that there is a promising future for cryptocurrencies, especially for those without a bank, looking to send remittances, or simply to escape the complicated monetary system.

Nigeria
Oil-rich Nigeria is on another path in its journey in Bitcoin adoption. With a complicated history and a worldwide reputation on the internet, the Nigerian government has stepped lightly on the subject.

Bitcoin first began gaining popularity in Nigeria with the notorious MMM Russian Ponzi scheme. Offering users a mutual aid fund claiming up to 30% returns on investments, a quick return, and payouts in Bitcoin or the country’s national currency, MMM became a popular resource in the country where many people struggle to find adequate employment and face tremendous interest rates from bank loans.

The popularity of this scheme has left the government slow to act on the rise of Bitcoin. In January, the Central Bank of Nigeria took a harsh stance against the cryptocurrency, denouncing its viability and even condemning it as a piece of the Ponzi scheme. However, despite the controversy surrounding MMM, Nigerians are slowly beginning to adopt the cryptocurrency mindset. Failed by the nation’s slipping currency due to the nation’s oil crisis, Nigerians are beginning to see Bitcoin as a way to democratize its monetary system.

While Bitcoin is in its infancy in Africa, the continent is certainly sure to benefit as more widespread adoption takes root. And with new developments, including Blocksteam Inc.’s plans to make Bitcoin available via satellite, adoption of the cryptocurrency is sure to accelerate throughout the continent at a rate which has the potential to leapfrog entire economies in ways not yet realized.

Featured image from by William Stitt on Unsplash