The currency is obviously an essential tool of the economic and financial activity of any country. But over two decades ago we witnessed the emergence of a new tool of exchange and value, the cryptocurrency. This type of currency has been gaining prominence for quite a while in developing countries, and some experts believe that it will replace the national currency. Let’s see why ?
I. What is crypto?
Crypto-currency is a digital or virtual currency. It is made by encryption and crypto currency transactions are stored in a kind of database called blockchain.
II. The merits of the crypto-currency
Blockchain technology offers maximum security to cryptocurrencies. So you can invest in the financial markets and make transactions without any intermediate to restrain you or be monitored by a third party who should not. Also they could help to counter inflation. In short, it can stand on its own.
III. Crypto Vs. African National Currencies
There are several reasons for the current desire of some users to use crypto as a substitute for FIAT money.
1. The limitations of traditional currencies
The problem is that in the traditional system the transactions are coordinated by the bankers, they are the masters of our money and can decide in case of simple assumptions to freeze your account. And the credit cards provided supposed to be linked to our bank account in our countries are in fact only charge cards that are subject to a bank ceiling not exceeding 05 million per month which limits us in really important transactions. This is where the solution of the crypto comes, in fact which as we said is autonomous and secure. There you have no more limits. Make transactions as you wish while staying at home and without being accountable to anyone.
2. One reason for the continent’s slower development is our currencies
Most of the currencies that African countries have adopted as their main currencies come from the colonies, especially those of French-speaking countries. A centralized currency, printed in Paris, dependent on the euro and too strong for the economy of former colonies. The balance of payments of these countries, managed by the Central Bank, is in deficit because the currency account of these countries is divided in two. The French Treasury retains 50% and the other half is kept in the country.
So, let’s say that a hundred people back home would like to send money to their relatives in the diaspora. The banks would have to draw on these foreign exchange reserves, which would put the users of this currency further and further into debt. This is where the adoption of a currency such as bitcoin would be beneficial to these countries.
3. Inflation’s risks , Farewell !
Everyone can remember the catastrophic episodes of hyperinflation in the Democratic Republic of Congo in 1994 and in Zimbabwe during the 2000s. And let’s not also forget the South Sudan’s inflation in September 2016. Other countries, such as Egypt, Ghana, Malawi, Mozambique, Nigeria, Zambia and Zimbabwe, have double-digit inflation rates. So it’s not surprising that some of these countries are among the top users of Bitcoin in Africa, which are Botswana, Ghana, Kenya, Nigeria, South Africa and Zimbabwe. Bitcoin is also gaining traction in Uganda, according to the BBC.
When inflation in Zimbabwe exploded again in 2015, forcing authorities to print trillion dollar bills some in the country resorted to Bitcoin.It turns out that cryptocurrency, this new instrument of exchange, is beneficial in many ways. It is more secure, independent, free of geopolitical constraints, decentralized and not subject to the risk of inflation.
Let’s just say that the use of a currency that is autonomous from any Central Bank, like bitcoin, is experienced in some places as an opportunity for people to free themselves from a monetary policy that would be conducted in an irresponsible manner.