CRYPTOS IN AFRICA
Africa has started to be seen and heard in the global cryptocurrency market. The continent has been absent in the crypto market but this is now changing. In 2017, there was a surge in popularity of cryptocurrencies around the globe. During this year, several trading venues emerged in Africa. This significantly increased cryptocurrency activity, especially Bitcoin throughout the continent.
Read part 1 of the article series here
WHAT IS CRYPTOCURRENCY?
To create the much needed sensitization of the new digital age in Africa, it is important to start with the definition of some concepts.
According to an article on Howwemadeitinafrica.com, Cryptocurrency can be defined as a digital asset that has been developed and designed to work as a medium of exchange. Cryptocurrencies use cryptography to secure transactions, control the creation of additional units, and to verify the transfer of assets.
The cryptography security feature makes it difficult to create counterfeits of the digital currency. The advantage that cryptocurrency has over the usual fiat currency is that it is decentralized. This means that it is not issued by a specific central bank, and therefore, governments cannot interfere. The first cryptocurrency to be launched was Bitcoin, which was launched back in 2009.
WHAT IS BLOCKCHAIN?
The blockchain is a continuously growing list of records, known as blocks. Cryptography is used is used to secure and to link the blocks. Each block contains a cryptographic hash pointer as a link to a previous block, a timestamp and transaction data. By design, a blockchain is inherently resistant to modification of the data (Wikipedia.org).
STATE OF CRYPTOS IN AFRICA
Cryptocurrencies have taken root in some African countries, including Zimbabwe, Nigeria, Kenya, Ghana, South Africa, and Botswana. In Zimbabwe, citizens turned to Bitcoin as a medium of exchange and a saving mechanism, after the country’s financial system collapsed. In Nigeria, the traders and activists believe that cryptocurrencies can offer a solution to their economic crisis as the conventional currency has repeatedly failed them.
Over the past 16 months, the African crypto market has seen some significant changes: Over 15 Bitcoin exchanges have been set up to provide cheap, convenient and efficient trading services for Africans. BitPesa, start-up in Kenya, is a cryptocurrency system aimed at supporting cross-border transactions and improving African trade.
Most African countries have acknowledged both the potential and the risks associated with the use of blockchain technology and cryptocurrencies. However, rather than attempting to adopt the use of these technologies, these governments and central banks choose to wait and see where the crypto wave will take them. Some African countries have declared that they cannot stop Bitcoin and other cryptocurrencies. Instead, these countries are exploring options on how they can regulate the use of cryptocurrencies in their economies.
The “unknown” state of cryptocurrency as declared by these African governments has contributed to the low adoption of cryptos in Africa. However, some individuals realized the potential of this new technology, and are now reaping the benefits.
This article series explores the current state of cryptocurrency in Africa, and what to expect in the future. With the current developments and growth pace, Africa will become one of the largest cryptocurrency markets in the world in a few years to come.
If you missed part one of this series, you can read it here.
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