It seems like a long time ago since the worldwide web (www) was invented. In fact, the internet is 11664 days old at the time of writing. With the emergence of the internet, a lot of other inventions have followed. One of them being internet banking which includes Bitcoin and other cryptocurrencies. Bitcoin is a fairly new phenomenon in the financial world. However, since its release in 2008, Bitcoin’s popularity has increased exponentially worldwide over the years. The popularity of cryptocurrency, and Bitcoin, in particular, appears to be increasing significantly in Africa.
What is Bitcoin?
So what is Bitcoin exactly? Bitcoin is a virtual currency, a kind of computer code that people attach a certain value to. Bitcoin is decentralized, which means that there is no central bank or country that controls Bitcoin nor a supervisory body that intervenes if the Bitcoin stock market crashes. Every transaction that happens with Bitcoin is tracked in a large virtual book: the blockchain. That blockchain is not kept in one central place but is distributed among thousands of computers worldwide.
In total there are up to 20,999,849.9769 Bitcoins in the world. No more and no less. And those Bitcoins are created or developed by people with powerful computers that do complicated calculations with their computers. This is called mining. These calculations make it possible for users to make transactions with Bitcoins. When solving these complicated calculations the miner gains Bitcoins as a profit. However, mining Bitcoins is becoming more difficult and expensive over time.
Altcoins & Blockchains
On the other hand, Altcoins is a collective name for all cryptocurrencies other than Bitcoin. The name originated from the words “alternative Bitcoin”, or “alternative coin”. There are many differences between all these digital coins but they have one thing in common: they are decentralized. They work on a blockchain, a new kind of database in which transactions can be stored. These can be currency transactions but also transactions of data, contracts, and so on. A blockchain can store important information that is digitally signed by both parties.
Furthermore, all information is stored encrypted in Blockchain using cryptography. Digital payment methods that use Blockchain technology are therefore referred to as “cryptocurrencies”. All transactions are stored in blocks in a large network of computers. A new block always contains information about the previous block, which in turn contains information about the previous block. So as an example, when data changes in one block, it will change from now one in each block. This creates a long and uncrackable information chain.
Why it’s popular in Africa
The popularity of cryptocurrency, and Bitcoin, in particular, appears to be increasing significantly in Africa. A study conducted by Arcane Research (2020) showed that multiple African countries like Nigeria, South Africa, and Uganda are among the top 10 countries that search for Bitcoin on Google. Moreover, it was also found that African countries possess the highest amounts when it comes to cryptocurrency. This means that the African continent is adopting this innovation really well. But why is there so much interest in Bitcoin in Africa?
One possible reason is that digital currency is a great solution to reduce the number of adults who do not have their own bank accounts, as many Africans do not have access to a bank account due to the scarcity of banks in large areas. The study conducted by Arcane Research (2020) also showed that 1 in 5 African adults are already dependent on internet banking, indicating that they are certainly open to this technology.
Akoin the new African currency?
We all have danced and sung along to the songs “Smack That” and “I Wanna Love You” by Akon. But what if I told you that, besides making hits, Akon also has big aspirations for Africa that contain the use of cryptocurrency.
Aliaune Damala Badara Akon Thiam, aka Akon, has Senegalese roots. In 2018, he announced plans to establish his own city on land that was donated to him by Senegalese President Macky Sall.
In this city, you could only pay with the cryptocurrency “Akoin”. With the slogan “One Africa. One Koin”, this coin is already launching in the Mwale Medical Technology City (MMTC), a new 2-billion-dollar metropolis in western Kenya. It is built around a large medical and technological complex and contains retail and residential complexes that mainly run on renewable energy sources. Residents will soon be able to use Akoin as a way of payment in the city. The cryptocurrency could also be converted directly into phone minutes.
A safe haven
Last but not least, Africans are also keener on using cryptocurrency because of the ongoing money crisis and recession. Africa has over 40 currencies that each are struggling with instabilities and levels of inflation, causing a lot of distrust because the national currencies fluctuate a lot in value. The African population is losing confidence in paper money and this is why they look for other stable currencies. African people nowadays don’t use fiat currencies anymore and instead of that, they use phone minutes and credits as a way to trade produce fish, and more basic commodities.
It looks like cryptocurrency will become the new way to pay the bills in Africa.
So it seems like cryptocurrency is thriving in Africa because it serves as a safe haven for their money right now. As long as the national currencies don’t catch up, it looks like cryptocurrency will become the new way to pay the bills in Africa.
Cover: André François McKenzie on Unsplash