Several experts on blockchain adoption believe DLT is the solution to resolving the developmental challenges in Africa.
- Blockchain usage in Africa is growing at an unprecedented pace.
- Many people perceive blockchain as a game-changing mechanism capable of bypassing Africa’s numerous systemic flaws.
- Africans like crypto and blockchain because of what they signify and have embraced them more rapidly than anticipated.
Growing blockchain technology usage in Africa
Blockchain usage in Africa is growing at an unprecedented pace. Reports of businesses using decentralized ledger technology (DLT) throughout the continent are surfacing, ranging from transportation to gaming and lottery. Several experts on blockchain adoption believe DLT is the solution to resolving the continent’s developmental challenges. They also feel that technology offers a platform for Africa to have more influence in global affairs.
While governments’ overall interest seems low, certain nations are taking initiatives to encourage broader blockchain usage. In recent months, Nigeria has declared plans to explore regulation and greater collaboration with the private sector to capitalize on the gains accruable from blockchain adoption.
In recent months, Nigeria and have declared plans to explore regulation and greater collaboration with the private sector to capitalize on the gains accruable from blockchain adoption. Cameroon is also contemplating releasing a national stablecoin predicated on the same blockchain network.
Between July 2020 and June 2021, cryptocurrency use in Africa increased by 1200%, making it the fastest-growing region globally. However, the continent is lagging behind other regions in terms of total trade values.
In projections for the fiscal year ending June 2021, Africa acquired $105.6 billion in cryptocurrencies, fueled by peer-to-peer (P2P) transactions in major emerging economies.
Kenya, Nigeria, South Africa, and Tanzania have some of the world’s most significant grass-roots adoption rates, ranking in the top 20 on the Global Crypto Adoption Index. According to data from digital analytics company Chainalysis, the volume of retail-sized transactions in Africa was 7%, compared to the global average of 5.5%.
Blockchain early adopters vs advocates of caution
The blockchain possibilities in developing economies emanate from the quasi-ubiquity of smart devices. Through traceability and transparency, blockchain has sparked a lively debate across Africa. Many people perceive blockchain as a game-changing mechanism capable of bypassing Africa’s numerous systemic flaws.
As usual, the discussion is divided into two camps: those who believe that blockchain, like mobile technology, can enable African economies to stride and enter the digital age with cutting-edge innovations, and those sceptical that establishing a blockchain-enabled society will take energy and time that could prove useful in solving immediate problems.
Blockchain advocates agree that blockchain represents a chance for developing nations to catch up with developed economies by adopting a technology that allows them to leapfrog and resist the development of soon-to-be outdated bodies.
Indeed, one of the reasons for high transaction fees in developing economies is not simply the existence of corrupted intermediaries – though this may be a factor – but the complete lack of a system of checks and balances and institutions seen in developed nations.
Despite their contributions to society’s well-being, institutions are frequently conservative by design, hesitant to accept technological advances and upset the status quo.
Blockchain adoption and the potential for financial inclusion
Crypto’s potential to bridge the economic divide, serving personal and entrepreneurial demands such as remittance, e-commerce, payments, wealth management, and social good, is a significant reason for its growing popularity in Africa.
The capacity of cryptocurrency to deliver financial services to everybody, regardless of socioeconomic level, origin, or financial circumstances, is an answer to Africa’s financial inclusion.
Severe inflation spikes have hit Africa, surges in food prices and the unprecedented effects of the Covid-19 pandemic. These issues have ticked P2P crypto transactions in an unabated acceleration rate driven by convenience, access and speed of smartphone apps compared to the traditional banking systems.
Blockchain technology is finding real-world utility across Africa via public-private partnership agreements in solving some of the continent’s burning issues. The devaluation of local fiat currencies has also driven many to cryptocurrencies as they seek an alternative store of value.
Further, Africa has fewer obstacles to remittance payments across borders. Because crypto is a P2P payment system, users may make and receive payments worldwide. Crypto payments usually do not need external authorization unless sent or received via a regulated exchange or enterprise.
While dealing with fiat money involves expensive transaction costs, brokerage fees, and commissions, crypto eliminates the intermediary and any unnecessary expenses. Transactions are done directly between parties, and transaction accountability makes it easier to trace audit trails, payments, and the transacting parties.
Mobile penetration echoes the high blockchain adoption in Africa
As technology evolves into a tool for crowding out intermediaries, the future of transactions and interactions will follow P2P models rather than the present, dominating centralized structure. In this case, DLTs, like blockchain, will transition into general-purpose technologies that cover a wide range of applications, particularly in politics and business.
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Many people widely acknowledge mobile technology as a platform for innovation throughout Africa. The Global System for Mobile Communications (GSMA) expects that smartphone adoption in Africa will reach 900 million people by 2025. This growth in mobile technology will enable blockchain solutions to flourish. However, technical capability does not equal practicality. As seen by the stringent regulations imposed by certain nations, authorities continue to be a formidable barrier to disruptive solutions and change.
Cryptomania is hitting the continent faster than anywhere in the world, with transaction volumes increasing despite hot-and-cold regulations and laws. Soaring crypto use in sub-Saharan Africa is compelling authorities to reassess the industry.
Cryptocurrency works the same as mobile money. Therefore, it is simpler for Africans to comprehend crypto compared to those in the developed nations, who have more financial inclusion and better access to banking institutions. Africans like crypto and blockchain because of what they signify and have embraced them more rapidly than anticipated.