From research, it was found that the Cryptocurrency helped to speed up the business and could get more profits in countries from Nigeria to Botswana. Abolaji Odunjo who used to sell mobile phones in the street markets located in Lagos, four months ago sold bitcoins for the exchange of mobile phones from his supplier. Odunjo bought headsets and other mobile accessories from China and UAE. For a speedy process, he told him he would pay the supplier with a Bitcoin. His initiative became successful and profitable, as there is no need to buy dollars with Naira or pay transaction fees to the financial institutions. This is how the Bitcoins took its stand in Africa, where you can find many Cryptocurrency based transactions, especially Bitcoins.
How Bitcoin is successful in Africa
Odunjo said, even with currency inflation and a decline in the currency value, he can make profits while using Bitcoin as the payment method. The 30-year old Odunjo expressed his joy on the Cryptocurrency transaction, as he does not have any dollars to pay the transaction fee for making the transaction.
It was found that small commercials and individuals in Africa make under $10,000 for transferring cryptocurrencies to and fro Africa. In June, the rate rose by 55%, making $316. From the Chinalysis; it was found that the monthly transaction has also risen almost by half. Most of the Cryptocurrency transactions took place in Africa, Kenya, and South Africa.
This gave a different image to the Bitcoins, which initially was used for payments, but at present conditions, they are being used for trading. As in Africa, it is a big process to buy Dollars using Naira, the Bitcoin transaction which is quick and imposes no transaction has attracted many people in Africa like Odunjo to opt for Bitcoin transactions.
Risky transaction
Even though the Cryptocurrency attracted Africans, the Central Nigerian government warned the citizens that the Bitcoin transaction is not legal and the investors might lose money, due to frequent money value fluctuations. Hence more complexities arise in the buying and selling of Cryptocurrencies.
Shanghai and Bitcoins
The place where Odunjo sells his products and accepts payment as Bitcoins is called a computer village. As Odunjo gets all the mobile accessories and headsets from Shanghai and Zhengzhou, Odunjo makes three Bitcoin transactions, ranging from 0.5-0.7 Bitcoin, which is approximate, ($5900-$8300). East Asia is one of the topmost Bitcoin traders in Africa. In June, a small Cryptocurrency transfer was about $56 Million. The total number of transactions hiked above 55% to 120,000. It is not easy to determine how the Cryptocurrency transaction is done in different regions. The Bitcoin transaction occurs using the Blockchain technology, where the only the value of the Bitcoins are visible, and cannot find the identity of who did the Bitcoin transaction. With Chainalysis, it can track the web traffic and trading patterns, that help to track crypto transactions for the finance companies, and it alienates transactions of around $10,000 from huge capitals general among the skilled investors.
The decline in Naira and gain in Bitcoins
As we all know, Nigeria’s economy is oil-based, and due to the COVID 19 impact, there was a fall in the prices of crude oils, which laid to Naira currency deflation. As a result, the Nigerians are pushed to pay more Naira to buy only a few dollars. This inflation made the Africans purchase goods with Bitcoins, where they no need to pay money for making transactions or any other government agencies. A clothing starch maker in Eastern Nigeria, Uyo, buys the supplies needed for the starch preparation from Istanbul and Shenzhen using Bitcoins. When there is a severe drop in the prices of oil, the currency value inflated to a greater extent. But starch maker told, his 2 Bitcoins worth $20,000 were used for a transaction, where he does not need to pay any money for buying Dollars, and he told he didn’t have to pay any transaction fee also, for making Bitcoin transaction. Hence, the Bitcoin is a great Boom for Africans. The monthly Crypto volumes for five countries bearing Yellow Card Had risen to five-fold to $25 million in August. From a report, it was seen that the bitcoin trading collaboration of South Africa and Nigeria, has increased by half, resulting in more than $536 million in August.
Risks associated with Bitcoin transaction
Even though many people who are working in various continents and people in Africa are finding Bitcoin as a Boon, as they can quickly and easily transact money to their home, without any transaction fee, the most attractive feature of Bitcoins is, they have fewer fees when compared to the transaction fee utilizing traditional financial institutions. For example, a Nigerian worker at London needs to transfer 100 pounds to Lagos, through traditional financial institutions, he would have to pay a transaction fee of 5%. But if he transfers the Bitcoin for making the payments, they have to pay only between 2% to 2.5 % for transacting 100 pounds.
Though the Bitcoin transaction is handy for making transactions, few people do not accept Bitcoins for accepting as an exchange of goods. The reason for this is, if you send Bitcoins, to your family, on the other hand, they need to convert the Bitcoins to their country-specific currency, which causes additional risk.
The African government has laid various rules and regulations, on the traditional financial system, but with Bitcoins, they can be overcome, and hence they have become a boon to the African people.
Pros of bitcoins
The following are the advantages of Bitcoins.
Autonomous
The most attractive feature of the Bitcoins are, they function autonomously, as they are digital currency and do not involve any intermediaries like Banks or any other financial institutions.
Peer-peer
The Bitcoins have the feature of functioning in peer-peer nature. Therefore, the Bitcoin users will be able to transfer Bitcoins or buy Bitcoins directly from sellers and buyers, and they are not controlled by any other intermediaries.
Diplomacy
The Bitcoin transactions are stored as blocks in a blockchain. Every block will be having a hash code and then added to the blockchain. Even though the value of the Bitcoin is transparent, the user identity can never be predicted, and hence there will not be any tethering of information and hence bitcoin transaction, paving the way for a secured transaction.
No transaction fee
With the traditional banking system, the users have to pay a minimal amount for initiating a transaction, and it will take 2-3 working days. If you transact on Friday eve, you will have to wait till Monday. But with Bitcoin, they will function 24 * 7, and there is no transaction fee for national payments. The transaction will also happen quickly within 24 hours of the transaction. There is no need to maintain a minimum balance or any limits in the transaction or number of transactions. The International transaction fee will be very minimal, whereas the normal banking system will impose heavy international transaction charges. They also operate 24 * 7 and can be accessed via mobile phones also.
These are the various reasons why the Africans consider Bitcoins as a Boon. In this current COVID pandemic, the Africans are very much benefited with Bitcoin payment!