While lay citizens are gradually shifting to cryptocurrency, policymakers are still at large over what decision to take with the influx of cryptocurrencies into the economy since the government has little or no control over cryptocurrencies. Countries like Botswana, Zimbabwe Ghana, South Africa, Kenya, and Nigeria have been very swift to follow the Cryptocurrency trend while other countries are gradually adopting the digital wallet. A closer look at market access and the high-interest potential, it can be noted that Africa has considerable growth potential for the cryptocurrency markets.
Cryptocurrency is a digital asset which works as a medium of exchange, it is internet based and transactions are stored in a database known as blockchain. The crypto brand includes Litecoin, XRP, Dash, Lisk and, Monero, but Bitcoin is the leading brand in the pack in Africa.
The thousands of messages making round on social media promoting and inviting others to join the cryptocurrency world indicates the rapid penetration into the economy. The digital wallet has seemly drawn the attention of many as some in this case mostly the youth have seen it as an opportunity to make money.
The high popularity of the use of digital currency was confirmed by the 2018 report from Citibank which indicated that South Africa was ranked at the sixth position globally for the highest amount of bitcoin holders while Kenya came in the fifth and Nigeria third.
GOVERNMENT’S INDECISION LEAVES CRYPTO USERS WORRIED
The large excite in the use and adoption of the digital currency is watered down by the fact that governments are unsure of what to do and make of the new technology and how to regulate it. Cryptocurrency is currently being cautious as the total adoption of this means of transaction is yet to be recognized.
For instance, the massive swift to cryptocurrency in Zimbabwe due to political unrest and inflation which rendered the Zimbabwean dollar defunct forced Zimbabweans to turn to BitCoin in order to invest and protect their assets value, but this was met with a contrary reaction from the government which prohibited the use of the digital currency. In the continents largest economy, Kenya, the central bank had warned local banks on against carrying out transactions with digital currencies.
Governments fear that with the high rate of anonymity involved in the use of cryptocurrencies, there could be higher chances for money laundering and tax evasion.
While some governments are calling on financial institutions to exercise restraint as far as the digital currency is concerned, Namibia, Algeria, Egypt, and Morrocco have instituted an official ban in their economies.
THE FATE ON CRYPTOCURRENCY AMIDST POOR CONNECTIVITY IN AFRICA
A report by ITU revealed that 52% of the global population in Africa still have no access to reliable and fast internet connectivity. Despite the fact that cryptocurrencies pose as a solution to some of the problems Africa is facing, the low internet access to the population is a hindrance to the smooth functioning. A large part of the continent still lacks connectivity while other areas are faced with very slow connections. Aside from that, the high prices to internet bundles cannot be underrated as a large number of internet users are unable to afford sufficient connection.
On the world average of 48%, it is reported that Africa at 22% has the lowest rate of Internet usage of any region and the digital currency can only thrive with the availability of fast internet.
With the exception of Rwanda where 90% of the people have access to the internet, other African countries still have a lot of work to do as far as providing internet connectivity is concerned.
On the other hand, African leaders are making continuous efforts to regulate the internet. The government of Cameroon in January 2017 cut internet connections for almost two months in the North West and South West regions of the country. It is common place for leaders to deprive the country of internet connectivity especially when they consider it a possible threat to them. These does not leave any favourable grounds for the smooth functioning of digital currency because without the internet all transactions are stalled.
If virtual currency will have to serve as an engine for African growth African governments will have to ensure that the adequate infrastructure necessary for cryptocurrencies and block chain technology is put in place.
Article from the editorial of AFRIC