Cryptocurrency is the hottest topic across the globe right now. From Bitcoin’s bullish run to the touchdown of the Dogecoin, the increasing confidence in virtual currencies has fueled the rapid increase in crypto transactions, especially in Africa.
In a chat with TechNext, CTO of Dan Holdings, Tony Lauriola, explained the origin of cryptocurrency and why it has been so popular in Africa. He restated that cryptocurrency is based on a technology called Blockchain and went on to explain how it works.
“Blockchain is a technology which allows for distributed record-keeping, primarily for financial records and transactions. So, people can utilize the blockchain to build web applications and secure financial systems, Tony said.”
He added that blockchain is not owned or operated by any one entity but instead is an open-source technology available for public use.
Although fintech and payments space has seen the biggest utilization of blockchain to date, there are other areas like supply chain where the technology has proven quite effective.
Blockchain Revolution in Africa
Africa accounts for about 17% of the world’s unbanked population. Unlike, other parts of the world, Africa is a diverse continent with many regions that often use outdated and often archaic financial systems that are unable to reach the deep corners of the region.
According to Dan Holdings CTO, blockchain makes it possible for companies to start creating the necessary building blocks for a durable and reliable financial system in Africa.
He explained that this technology has been successful in Africa due to its ability to create a secure, fast, and reliable financial system in a place where one does not already exist.
“This is part of what inspired us to create Coins App. We saw that there was a need for locals to transfer funds, whether it be in crypto or their local currency, in a straightforward manner”Tony Lauriola, CTO Dan Holdings
Why Cryptocurrency is growing rapidly in Africa
Since its inception in 2008, blockchain has brought about huge innovations in different tech sectors especially finance. However, due to the current perception of blockchain technology, the only major application that has seen widespread use is cryptocurrency.
In Africa, the adoption of cryptocurrency is even more rapid. Last year, monthly cryptocurrency transfers to and from Africa which was under $10,000 (€8,500) shot up by 55% to reach a peak of $316 million in June.
Tony explained that the main driving forces behind cryptocurrency adoption in Africa are the ease of use, reliability, and restrictionless payments structure of the technology.
According to him, the native fiat currencies in African regions are much more volatile than cryptocurrency and having access to these various kinds of currencies allows for individuals to hold their value in a more secure way.
Also, borderless payment solutions like cryptocurrencies allow for a frictionless payment method that is free of country-imposed restrictions and other hindrances towards participation in the financial system.
Why young African’s are embracing blockchain
In terms of demography, members of the younger generation are the highest users and strongest advocates for cryptocurrency in Africa. As a digital native population, they have first-hand knowledge of the benefits of blockchain.
Many young African’s are now crypto investors aiming to supplement their salaries, while others are jobless millennials hoping to make a living by trading the cryptocurrency.
Youths account for about 60% of all of Africa’s joblessthe World Bank.
According to Tony, the youths are embracing blockchain because they are seeking solutions to outdated societal roadblocks like financial bureaucracy and cross border payment limitations.
This can be seen in the increasing use of Bitcoin, the most popular virtual currency, despite the warnings of some African governments like Nigeria. According to Statista, Nigeria is the 3rd largest Bitcoin trading country in the world ($400.1 million).
Similarly, Tony revealed that Coins App has seen an uptick in cryptocurrency purchases in Africa and believes that much of this traction can be attributed to younger generations.
What this means is that people, especially youths, are seeing the volatility in crypto as a better risk than the devaluation of the traditional fiat currency.
Future of blockchain in Africa
Africa is well-positioned to take advantage of the cryptocurrency boom. With over 200 million people aged between 15 and 24, Africa has the largest population of young people in the world.
Its has a growing generation of adaptable young professionals and would-be entrepreneurs can leverage blockchain to create new systems and startups.
Tony revealed that blockchain has already started playing a role in the growth of the African financial landscape.
He added that for the coming year, he expects continued adoption of cryptocurrency in the payments space. He also expects more standardization across the board with companies that are offering blockchain-related services.
I believe as we enter into 2021, these trends towards a more global financial system will continue to occur and individuals in regions that are typically left out of global financial discourse will be given a chance to participate.Tony Lauriola, CTO Dan Holdings
When asked if cryptocurrency can ever replace Fiat as the dominant currency in Africa, Tony explained that from what he can see on the Coins App, cryptocurrencies as payments does seem to ring true.
Many people still view Bitcoin as a store of value, similar to gold, and he thinks in order to progress in the direction of a dominant currency, there will have to be further adoption of cryptocurrency first as well as increased regulatory guidelines.
However, he believes that Bitcoin and other cryptocurrencies are heading in the direction of a means of payments with companies like Paypal, Square and Mastercard getting involved.
Aside from that, Tony says he expects to also see crypto companies expand their offerings both from a product standpoint and geographical one as more people begin to understand the benefits of blockchain on a global scale.
What Coins App has to Offer
Bringing African individuals into the world of cryptocurrencies is a major step in boosting blockchain adoption. Dan Holdings has created an easy-to-use social payments application called Coins App. The app allows users to send, receive and generally transfer funds in Bitcoin, Ethereum, Dollar Coin, and NGN Coin.
Tony revealed that the company is working to enhance Coins App with additional features that are user-friendly and hold a level of familiarity with existing financial products in existence this year.
With around 66% of the adult population in Africa unbanked, the emerging blockchain industry has a huge opportunity to drive financial inclusion.
This can be seen in the quiet economic revolution taking place in the continent that has nothing to do with banks and despite little sign of outdated economic policies being overhauled. The recent CBN regulation in Nigeria is a saddening example.
On a continent that already embraces mobile money, virtual currency offers advantages for a young, tech-savvy population to leapfrog the handicaps of the current system to achieve their dreams.
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