The technology behind crypto currencies is ideal for third world countries in places such as Africa where huge percentages of the population don’t even have a bank account. However, what more and more do have, are mobile phones, which would make digital money transfers a perfect alternative. There have already been steps made to bring bitcoin to Africa with one ATM in South Africa and plans to bring more soon. In Ghana and Kenya there are exchange companies that convert bitcoins to local currencies for their customers, this is especially useful because bitcoin can be sent from overseas.
Here are some of the leading arguments for and against bitcoin growing within Africa’s borders.
- For the same reasons anyone uses bitcoin; it’s an Internet based borderless currency with very low fees. The average cost to transfer traditional currency in Africa is 12%, so even with paying anywhere from 0.5% to 3% in a bitcoin exchange, Africans would be saving a lot!
- Speed. Traditional money exchanges can take up to 5 days to be completely processed. A bitcoin transfer can be finished in as little as 20 min.
- As mentioned above, with more and more people owning mobile phones, people are using them to transfer money. Bitcoin would obviously be ideal for such transfers, especially because bitcoin is also designed to be used person to person.
- Bitcoin’s volatility would pose the biggest concern because its prices fluctuate so frequently. There’s a huge drawback in using a currency whose price could significantly rise or drop from transfer to transfer.
- Many merchants in Africa don’t accept bitcoin. Bitcoin is still a new concept and although it’s coming, it’s going to take time to be adopted by African merchants.
- Competition. Huge companies such as Western Union and MoneyGram have been around for many years. Bitcoin is the new kid on the block and Africans trust the bigger traditional banking companies they’ve always used, although it is these companies that have the high remittance fees. Also, Western Union is adapting to Africans and has started featuring mobile money transfers in some countries.
- Not all banks support bitcoin companies yet. So there can be a longer process of receiving bitcoin, for example: A British customer may have to first transfer money from their account into a bitcoin company’s account in a European bank, this includes more transfer fees and more time which isn’t helpful to the customer.