Cryptocurrency transactions in Africa are growing rapidly, mainly in Nigeria, South Africa and Kenya. The virtual currency offers advantages for young entrepreneurs and for remittances from the diaspora. Africa is undergoing an economic revolution that has nothing to do with banks and with no signs of outdated economic policies to be reviewed, for now.
During the past year, monthly cryptocurrency transfers to and from Africa less than $ 10,000 (the equivalent of about 8,500 euros) skyrocketed by more than 55%, reaching a peak of $ 316 million in June. These figures, which are based on data from U.S. blockchain research firm Chainalysis, are likely to continue to rise. And while cryptocurrencies are commonly used by financial investors in other parts of the world, Africa is countering this trend and using it in commerce, with individuals and small businesses in Nigeria, South Africa and Kenya responsible for most of this. activity.
What are cryptocurrencies?
In simplified terms, cryptocurrencies aim to cut out the middleman - such as credit card companies or banks - when it comes to digital transactions. Cryptocurrencies depend on decentralized control and all transactions are stored in a database called blockchain. This protects them, in theory, from any government interference or other types of manipulation. "For most people, when they hear cryptocurrencies, they think it's just money on the Internet," tells DW Elisha Owusu Akyaw, a cryptocurrency trader living in Ghana and founder of the digital publication BlockNewsAfrica. "Cryptocurrencies essentially take what money is for many people and use technology to make it more transparent and less centralized, so that everyone has a place at the table when it comes to the future of finance," he explains.
Bitcoin - the original currency and still by far the most popular cryptocurrency - was created in 2008 by an unknown person or group of people under the pseudonym Satoshi Nakamoto.
Since then, more than six thousand other types of cryptocurrencies have been created, including other popular options like Ethereum and Litecoin.
A risky business?
Of course, Africa's foray into cryptocurrencies is not without risks. The very nature of cryptocurrency means, to begin with, that prices are volatile. Virtual currencies remain unregulated in many African countries and their legal status is often unclear, which means that there is no safety net to compensate for the loss of funds. Short-term investors are more likely to be hit hard by sudden falls. Darko says that anyone who wants to start using cryptocurrencies should be careful and study the subject well, since buying and selling requires technical knowledge.
"Due to a lack of education, people are tricked into some schemes that are not cryptographic,
" he explains. "Therefore, it is advisable to educate yourself on the subject. Cryptography seems a little complex for many people, while in fact cryptography is very simple, if we spend time to understand it", he understands. On a continent where the literacy rate is already low, cryptocurrency traders like Akyaw say that those who are inexperienced with new technologies are at greater risk of falling victim to an increasing number of cryptographic frauds, or of investing in the wrong markets. "Cryptocurrency and blockchain are easier to understand by people who are already educated and who are already exposed to technology", he explains. "It is a little difficult to get older people to understand and overcome the learning curve that comes with technology
