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Cryptocurrency Use Increasing in African Countries
If you think the dollar is unstable, compare it to the Venezuelan bolivar, the Indonesian rupiah or the Turkish lira. You may feel a little better. Around the world, there are countries where the local fiat currency is extremely unstable and hyper-inflation is the norm. In such countries, especially, buying up bitcoin has become an attractive and necessary hedge against inflation.
This is also the case in some African countries, such as Nigeria, but for other reasons as well. Because cryptocurrencies rely on blockchain technology, Nigerian workers in the U.S. could until recently send funds home to their families without having to rely on slow-moving banks and their intermediaries. Such transactions were also cheaper for both the sender who didn’t have to pay banking fees and for the receiver who could convert receipts into the Nigerian naira at market rate instead of the official exchange.
Slapping On Regulations — It Doesn’t Always Work
This is why, in part, the Central Bank of Nigeria in February placed a prohibition on financial institutions from operating crypto exchanges or risk being subject to “severe regulatory sanctions.”
However, it appears cryptocurrency overall was just too popular, as was the lack of confidence in the existing fiat currency. The regulatory move simply generated an increase in peer-to-peer bitcoin trading.
Crypto Can Make Access to the Global Financial System an Inclusionary Process
If you live in the United States, making a trade is simply a matter of picking up the phone and calling your stockbroker. But that’s not so in every part of the world, particularly if your country’s financial system or GDP is not up to par or if you live in a country subject to economic and trade sanctions by the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC).
Zimbabwe is one such country subject to OFAC sanctions. What it means for investors is that they cannot always directly trade stocks or make online purchases in the United States. However, they can do so on certain crypto platforms and that makes it a real game-changer in the world of finance. In short, cryptocurrencies provide people in lesser developed countries better access to global financial markets.
The Need to Wake Up Regulators
People need to work, eat, purchase necessities and live their lives, and if cryptocurrency makes it easier, they’re going to use it. Regulators in developing nations in Africa and other parts of the world may best serve their people by taking heed of such developments and finding solutions that work for everyone.