Just like Emeka, millions of people all over Africa are discovering all about cryptocurrencies and the numerous opportunities it presents. Previously just something talked about within the continent as the latest technology fad from overseas, cryptocurrency is here and looks like it’s going to stay for a very long time.

Kigali Convention Centre, Kigali, Rwanda

First things first, what is Cryptocurrency?

Cryptocurrency, in simple terms, is a digital currency designed to be principally used as a medium of transaction, usually encrypted to secure the transactions and regulate the creation of more units. Think money but digital or virtual.

Bitcoin is the most popular of the bunch; the first cryptocurrency to be decentralized. While it is the most popular, there are hundreds of cryptocurrencies out in the world today (Litecoin, Ethereum, Clubcoin, Monero). All of them trading at various values and used to solve a myriad of issues around the world over.

In Africa today, millions of people face problems such as trade limitations and difficulty in movement of money because of long standing issues with economic systems, government policies and the likes. This is where cryptocurrency has come in to be the saving grace; providing access to funds, security and privacy of said funds, and faith in a medium of exchange not regulated by the government like regular fiat currency. All these can aid millions across the continent.

So how is cryptocurrency changing Africa? Here are a few ways:

Disrupting Remittance Services

Cryptocurrency is now seen as a cheaper solution to solving one of Africa’s biggest problem – transferring funds across borders. Traditional remittance companies like Western Union already do this but at a cost. When you transfer funds, it initially goes from your local currency to dollars then to the local currency at the other side. There’s a lot of money lost during that conversion process.

Cryptocurrencies are much cheaper to transfer

There’s no long and sometimes complicated bank confirmations and approvals, making the whole process faster too. This is especially useful in countries where there is a shortage of foreign currency (dollars) or restrictions in accessing such monies as seen in Tunisia and Nigeria. Across the continent, cryptocurrencies such as bitcoin have become a place to store value, buy goods and services online and as a vehicle for remittances outside the continent.

Cryptocurrency remittance services like BitPesa have sprung up all over the continent to help handle the new found applications of bitcoin, substituting bitcoin for dollars in transactions. BitPesa works with numerous banks around all over the continent and offers a multitude of mobile wallets on its platform. There’s a growing market and these companies are here to fill it.

Botswana Innovation Hub, Botswana

As an investment opportunity

Most people entering the world of cryptocurrency come in for the opportunity to make a profit. They do this by either trading in crypto coins or engaging in cryptomining. Cryptocurrency mining is simply earning new cryptocoins. According to recent data, returns on investment in cryptocurrencies for the past year 2017 superseded by a wide margin traditional assets like stocks and bonds and it continues to have an upward trend.

Most people keep the coins in digital wallets and wait for them to increase in value over time. Once the value of the coin is particularly high, they can then sell it for a massive profit, doubling or sometimes tripling their initial investment in buying the coins in the first place. Many young Africans now prefer buying bitcoin rather than the usual traditional assets like property or gold. They see bitcoin as an asset that will grow in valuation in the long term because of its limited supply.

Safety from inflation

African countries have always struggled with inflation. Several countries even struggle with managing the inflation rate on their fiat currencies. Examples are countries like Zimbabwe and South Sudan. Most of this inflation is caused by disastrous economic policies created by their central banks. The result of these policies are an increase in inflation and a weak local currency. Cryptocurrency offers Africans a stable source of value and a hedge against inflation.

Cryptocurrencies offer decentralization and intangibility – in simple terms, the government cannot physically touch or remove the accumulated funds of the citizen in any way; allowing people to have a measure of financial security and freedom.

The penetration and widespread use of mobile technology has accelerated the adoption of cryptocurrency. As long as there’s an internet connection, anyone can check the status of their investment and partake in trades at any time.

The new controllers of the financial infrastructure are the ones who hold cryptocurrency, which is or could be anybody. Its usefulness in fostering cross-border transactions and payment has shifted the paradigm. Cryptocurrencies offer a means for the economic reawakening of countries in Africa.

Cryptocurrency has a lot to offer to Africa, especially as an alternative to weak local currencies and an alternative payment solution. Young Africans are embracing it and using it to improve their lives. Like any other form of investment, it presents risks but its immense potential makes it a worthy investment for millions around the continent and offers hope to people like Emeka on being financially secure.