Cryptocurrencies, It Benefits And Challenges For Ghana & Africa.

Africa, and the world as a whole, is experiencing a gradual transition towards cashlessness. This quite evident by the upshot of mobile money transactions in Africa and Ghana.

In 2002, only 3 percent of people in the entire continent had mobile phones; by 2010, that had increased to 48 percent. By 2014, 70 percent of the continent’s population had a mobile phone and the number is still climbing.

However the rise in mobile phone usage isn’t in the use of smart phones; these phones do not have the bells and whistles that accompany a smartphone. What they do have is access to goods and services without the need for cash, credit cards, or a checking or savings account.

Mobile-payment platforms have answered the needs of mobile phone users, as well as those of the operator companies. Thanks to mobile payments, profits have launched into the stratosphere for mobile network operators. Mobile money is evolving Africa into a cashless society.

image source: businessworldghana.com

I do, however believe that the next step in evolving into a cashless society is the adoption and understanding of cryptocurrency. The rise of cryptocurrencies, in a lot of ways, reminds me of the rise of mobile money across Africa. As the years go by, mobile money and cryptocurrency would be used hand in hand across the continent to manage the financial transactions of citizens.

Cryptocurrencies are a non-regulated digital currency. They offer economic flexibility and the opportunity to execute transactions with various financial markets across the world. This highly secure currency offers an alternative to traditional banking and cash-based transactions, creating a host of added benefits to individuals, companies, and even African economies.

The decentralised nature of cryptocurrencies means they are not subject government regulations and citizens have full private autonomy over whatever cryptocurrency they acquire. Given Africa’s history of economic and political dysfunction, this offers a layer security since cryptocurrency are not subject to government interference and inadequacies. Giving access to the unbanked population of the continent to have control of their finances without being subject to the government, thereby giving them the freedom mobile money does.

The World Bank has stated that it believes that trade between African countries can serve as a catalyst for economic growth. Cryptocurrencies support cross-border and international trade and local businesses in Ghana and Africa need to understand the significance of this currency as a means for accepting cross-border payments, such as for African products or for hospitality and services within the growing African tourism market. Access to a larger customer base via cryptocurrency acceptance offers a potential for increased sales and growth within the country and the continent.

Large scale adoption in Africa, however, is still slow. Awareness, education and user experience are some reasons why the take-up of cryptocurrency is taking time. Cryptocurrency has to be understood by its users so the continent can sufficiently participate in the global market. The challenge with cryptocurrencies is that, it is such a new and rapidly changing field that it is almost impossible to have access to good books or adequate materials on the subject. It is gaining grounds in the world currently and Ghana is not an exception, yet understanding it, in the first place to administer regulation is a huge challenge.

image sourcehttps://www.financemagnates.com

The current unregulated state of cryptocurrency is unlikely to last forever. Making it paradoxical in the sense of security it gives you and the instability it gains form macroeconomic changes. Currently, news substantially affects the cryptocurrency sphere. The rumours of China banning Bitcoin exchanges wiped 15-20% off the whole market value. This could cause problems for countries where currencies would be widely adopted, making them highly susceptible to macroeconomic events which would lead to constantly evolving prices.

An additional problem lies in the cost of exchanging cryptocurrency into local currency, and the lack of an ecosystem to support such exchanges. Because merchants do not universally accept Bitcoin as a means of payment, recipients of cryptocurrency must deal with the issue of converting into local currency. With low demand for bitcoin in sub-Saharan Africa, the ecosystem to support cryptocurrency is currently not robust enough to make the exchange market liquid.

New cryptocurrency platforms in Africa also face strong competition from existing fintech companies such as M-Pesa, the infamous mobile money in Kenya. M-Pesa is supported by Safaricom with more than 70 percent of the market share. In 2015, Safaricom stopped its business with other Bitcoin payment processing companies, further limiting the ability of new cryptocurrency companies to break into the Kenyan market. Kenya’s high court has held that Safaricom is not legally required to conduct business with such companies, giving the telecommunications company a semi-monopoly and adding further obstacles to the advancement of cryptocurrency technologies in Kenya.

As cryptocurrency and blockchain technology mature, and transaction costs are reduced, using cryptocurrency as a means of remittance may become a reality for many in Sub-Saharan Africa. Cryptocurrency and blockchain technology are gaining acceptance among African millennials who desire to not only use the technology but find ways to learn and innovate upon it. I do believe instead of mobile money and cryptocurrency fighting for supremacy within the continent and Ghana, they should be used together to reach further within the continent, the way mobile money has done on its own. It is foreseeable that in the near future, cryptocurrency could very well be a solution for the unBanked in Sub-Saharan Africa.

post by : Sally

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