How Bitcoin is used in Africa

Rage Review : Africa is ready because of the high mobile phone coverage, and more users will download Bitcoin wallets on their phones. Bitx is one of the largest Bitcoin trading companies in Africa. Werner Van Rooyen from Bitx wrote in an email last year that Africa has been waiting for technologies like Bitcoin for a long time. Why have people on this continent of 1 billion people not received formal financial services for a long time?

Translation: Height difference signal is full

Factors driving Bitcoin’s expansion in Africa

He pointed out some of the factors such as the high cost of financial infrastructure, high fees that are not commensurate with people's average income, and very high fees for physical outlets such as ATMs, branches and remittance offices.

In summary, he pointed out that everyone has been discussing the “next billion” in finance, and a large part of the next billion will come from Africa.

Today, Africa continues to rise in some areas, such as the use of digital currencies, especially due to the high mobile phone coverage in Africa, which allows mobile phone users in Africa to download Bitcoin wallets on their phones.

Three other factors are helping to boost bitcoin adoption in Africa: a growing number of exchanges, such as BitX, that have been working with the public and government regulators to increase bitcoin adoption; a growing number of developers ready to create more innovative products and use cases for bitcoin (such as integrating bitcoin with physical stores and online shops); and a growing number of people using bitcoin as a means of transaction.

Werner Van Rooyen

Bitcoin Use Cases in Africa

But what use cases does Bitcoin have on the continent that makes it so popular? Here are four examples:

1. Remittance

Remittances are the most popular Bitcoin use case among Africans.

According to the African remittance data released by the International Fund for Agricultural Development, the amount of remittances flowing out and into the African continent through formal channels is US$400 billion each year. However, industry insiders revealed that this amount is only one-third or one-quarter of the actual transaction volume, because most transactions are completed through informal channels.

The high cost of sending remittances to Africa - the World Bank says sub-Saharan Africa remains the region with the highest average remittance costs, at 9.5% - makes people reluctant to send money through formal institutions such as financial institutions.

These obstacles arise in part because some parts of Africa do not have the appropriate institutional infrastructure to facilitate the flow of funds across borders, and there are no restrictions on these flows.

Bitcoin transactions can help address the challenges of import and export payments and solve the problem of monetary liquidity constraints in Nigeria.

Now, people in Africa are turning to Bitcoin, mainly because of the low cost of Bitcoin transactions, because whether you are sending money to someone sitting next to you or to an entrepreneur or individual on the other side of the world, the remittance cost is very low.

2. Crowdfunding

Given its anonymous nature, Bitcoin is also being used to raise funds to support humanitarian causes in Africa.

To ensure Kenyans have access to healthy, reliable water, for example, the Water Project launched a project last year to explore ways to fund water projects in Kenya through Bitcoin donations. In 2014, a Bitcoin donation appeal was launched to help the SOS Children's Villages project in Botswana.

Globally, the philanthropic sector has been touted as one of the biggest beneficiaries of the exploration of new technologies in financial services.

The unicoin fundraising project led by UNICEF is still in the trial stage. African crowdfunding platforms such as Bankymoon and Usuzi both accept Bitcoin and call for global support for this activity because crowdfunding has a wide audience in Africa.

South African startups such as Sun Exchange, a small solar energy business, are looking to expand their market share through Bitcoin crowdfunding.

International remittances and crowdfunding seem to be the most widespread use cases for Bitcoin in Africa. Bitcoin’s unparalleled features of freedom, openness, and convenience are unlikely to become a passing fad.

Therefore, it shows that Bitcoin is gaining more acceptance among the African people who are dominated by mobile phones.

3. Technology startups

In the tech sector in Kenya, which is East Africa’s economic powerhouse and has developed the region’s ICT hub, digital currency startup BitPesa has cashed in on the country’s booming mobile phone sector.

M-pesa has been a huge success, and has gone far beyond Africa. It is important to emphasize that it was M-pesa that created an opportunity for Bitpesa to become the first Bitcoin startup in Africa to accept virtual funds. Other Bitcoin enthusiasts are also promoting the use of Bitcoin, working to increase public awareness of digital currencies, and hoping that the government will introduce policies around digital currencies.

Then there’s Bitsoko’s Android-based mobile wallet, which reflects the exponential growth of startups across Africa integrating bitcoin payments into online marketplaces to avoid compromising financial security.

E-commerce platforms need to store personal sensitive financial data on local servers. The use of Bitcoin eliminates this burden for e-commerce platforms, while also reducing the risk of data leakage and protecting user personal information.

4. Improve financial education

In some parts of Africa, learning how to buy and sell Bitcoin is nothing new.

More and more people are understanding concepts such as the potential for making money and the freedom to issue currency in their own way by trading Bitcoin.

Platforms such as localbitcoins.com, altcointrader.co.za, bitpesa trade, etc., provide traders, including those from Africa, with the opportunity to trade Bitcoin using local currencies.

ICE3X has launched bitcoin trading in Nigeria, which was the largest recipient of remittances ($21 billion) in 2015, according to the World Bank.

Premise, a San Francisco-based data analytics company that tracks macroeconomic trends in real time for the World Bank, the United Nations and other organizations, tracked down people using BitPesa to frequently send large amounts of mobile payments to Tanzanian mobile wallets.

Bitcoin has attracted the interest of many people, and people's understanding of Bitcoin and the currency market is becoming deeper and deeper. Bitcoin academies will be established in the future.