Trading in cryptocurrencies, especially Bitcoin, has gained momentum in commercial transactions throughout Africa, according to a report published by Reuters.
Given the economic conditions imposed by the corona pandemic, Bitcoin has emerged as an alternative to fiat currencies, Reuters reported on Tuesday 8 September.
Four months ago, Abolaji Odunjo made a fundamental change to his business selling mobile phones in a bustling street market in Lagos, Nigeria by starting to pay his suppliers in Bitcoin.
Bitcoin’s rise in Africa
Odunjo’s sources for handsets and accessories are in China and the United Arab Emirates. He said that his Chinese suppliers asked him to pay them in the cryptocurrency for speed and convenience.
This shift has boosted his profits, as he no longer has to buy dollars using the Nigerian naira. He also does not have to shell out fees to money-transfer firms.
This is one example of how, in Africa, Bitcoin is finding a practical use. The cryptocurrency giant has largely failed to so elsewhere.
“Bitcoin helped to protect my business against the currency devaluation, and enabled me to grow at the same time,” Odunjo told Reuters.
“You don’t have to pay charges, you don’t have to buy dollars,” the 30-year-old said.
Odunjo is one of many people at the heart of a quiet Bitcoin boom in Africa driven by payments from small businesses and remittances sent home from migrant workers.
Monthly cryptocurrency transfers to and from Africa of under $10,000 jumped more than 55% in a year to reach $316 million in June, the data from US blockchain research firm Chainalysis shows.
The number of monthly transfers also rose by almost half, surpassing 600,700, according to Chainalysis. The firm noted that the research is the most comprehensive effort yet to map out global crypto use.
Much of this activity took place in Nigeria, the continent’s biggest economy, along with South Africa and Kenya.
Two reasons have motivated the recent rise in crypto on the continent. Weaker local currencies have made it harder to get dollars, the de facto currency of global trade. At the same time, complex bureaucracies tend to complicate money transfers.