Cryptocurrencies are helping Africans seeking financial stability and inclusion in a continent plagued by inflation, corruption and weak national currencies.
According to Cointelegraph, cryptocurrencies are assisting Africans seeking financial stability and inclusion in a continent afflicted by inflation and corruption. Government corruption, unstable banking infrastructure, and weak national currencies have all hampered Africa’s economic development and financial inclusion. With alternatives for international payments, quick and easy money transfers, and protection against inflation, cryptocurrencies can help break this cycle of instability.
Due to the limits imposed by traditional banking institutions and native currencies, crypto is enabling Africans to engage in the global economy. While some African nations, like Botswana, have legal frameworks in place and accepted cryptocurrency, other nations have adopted a more limited approach. In Africa, it is customary for banks and other financial institutions to be prohibited from dealing in cryptocurrencies, although these restrictions can be circumvented by using decentralized finance platforms.
2019 saw the return of the Zimbabwean currency, which is pegged to the US dollar at $1. The Zimbabwean dollar has since undergone a considerable devaluation as a result of the frightening rate at which inflation has since returned. At the moment, $1 USD is roughly comparable to 900 Zimbabwean dollars, and in January 2023, inflation alarmingly surpassed 230%.
Thus, many Zimbabwean businesses only accept US currency. Due to this, many utilize chits and informal ledgers to document their purchases. Zimbabweans with digital currency from decentralized financial platforms may find it easier to save in an inflation-hedged currency. Despite regulatory hurdles, Africa is becoming a major crypto market player as bitcoin businesses grow and adoption rises.
Blockchain firms in Africa were able to raise $91 million in the first quarter of 2022, which is a 1,668% year-over-year rise compared to Q1 2021’s growth of 149%, according to a report by Crypto Valley Venture Capital (CV VC) and Standard Bank. According to the report, as more venture capitalists show interest in the area, crypto unicorns could emerge from the area within the next two to three years.
To support their families, companies, and communities, many Africans depend on remittances from outside or from other parts of the continent. Particularly in nations with significant inflation and currency depreciation, cryptocurrencies provide a more affordable, quick, and accessible alternative to transfer and receive money across national boundaries. African cryptocurrency exchanges like Binance, Luno, VALR, Paxful, LocalBitcoins, Quidax, Bundle Africa, and Trust Wallet are some of the top ones. All of elements contribute to a vibrant crypto environment in Africa, one that will probably keep thriving.