It’s OK to admit that you still don’t know what bitcoin is — but you may now officially be behind the curve. Because all of Africa could soon be getting onboard.
The virtual currency — straight up: computer money — created by an anonymous hacker in 2009 has captured hard-core geeks’ hearts. Its appeal? It enables bank-free (aka middleman-free) anonymous purchasing and, crucially, it’s a global currency that’s not tied to any central bank and not much different than a dollar or a euro. The key characteristics of this digital cash also happen to make it a great fit for people who aren’t so down with advanced digital technology: the 326 million Africans who lack access to basic banking services.
This isn’t such a crazy idea. Mobile payments that work on standard-feature phones have already made strong inroads in Africa, with 16 percent of Africans using the services. The largest provider of such payments, M-Pesa, already operates in Kenya, Tanzania and South Africa, as well as India and Afghanistan.
But if you were a member of the large and expanding African diaspora, and you wanted to send money home to grandma or the hubby left behind, you couldn’t count on mobile payments. M-Pesa, for instance, lets foreign-dwelling folk send money through a partnership with Western Union — but the latter tends to charge onerous fees. Which makes bitcoin super-appealing, if you can get past the expensive exchange rate — as of publication, one bitcoin was worth nearly US$500.
It’d be a huge loss for Western Union if bitcoin cut into its business: Africans throughout the diaspora send home $32 billion a year, according to the World Bank. Right now, they pay dearly for the privilege: 12 percent of each transaction, on average. Mobile money also doesn’t much address larger economic woes back home, such as inflation and scarcity.
According to bitcoin advocates, the cryptocurrency could help solve both problems.
Companies like Kipochi and BitPesa have already begun to use bitcoin for those home-to-grandma payments, known as remittances. For now, bitcoin users need an Internet connection, but these companies are developing platforms for the standard-feature phones commonly used in Africa (rather than building apps for smartphones, which are more rare).
So far, bitcoin activity in Africa has picked up most among young tech-savvy men in urban centers such as Nairobi, says Pelle Braendgaard, the CEO of Kipochi. But it could be spreading. Lately, Braendgaard has seen an increase in exchanges among friends and family members.
SOURCE: April Joyner
Ozy.com / via USA Today