How Bitcoin can revolutionize Africa’s banking system
The African continent has long struggled with a broken banking system, with high fees, long waiting times and limited availability the norm. But there is hope that a new era of financial inclusion may be upon us with the rise of Bitcoin and other cryptocurrencies.
In recent years, Bitcoin, the largest and best-known cryptocurrency in the world, has gained popularity in Africa, where many see it as a viable alternative to conventional financial institutions. This is due to the fact that Bitcoin is decentralized, meaning that no single central authority, such as a government or bank, controls it.
Recently, foreign media reported that more and more African startups have started using related technologies as the Lightning Network transaction technology drastically lowers Bitcoin transfer fees, which are estimated to threaten the $86 billion African banking system.
Revolutionary alternative to the African banking system
According to CNBC, Lightning Network’s payment service provider Strike and Nigerian cryptocurrency platform Bitnob recently partnered to introduce the Global Transfer feature, which allows US users to send money to anyone in Nigeria, Ghana and Kenya with ease.
While Bitnob uses bitcoin as an international transfer medium and then converts it to local currency, end users will trade in their home currency. KG, a South African startup, has also integrated the Lightning Network with its GSM payment platform to make it easier for users to send and receive bitcoin.
According to Twitter and Block co-founder Jack Dorsey, Bitcoin is the most innovative and disruptive alternative to the African financial system. He also expects that the government will lose the ability to force people to comply with their demands if Bitcoin becomes widely used in Africa.
The expense and labor intensity of remittances in Africa was noted by CNBC. First, there are not many commercial banks in Africa, and residents of isolated rural areas particularly lack access. Also, there are not many digital banking options, and there is also a lot of government corruption and excessive inflation. Deposits may not be able to be withdrawn due to corruption and capital restrictions. Making a bank deposit is not a good idea.
On top of Bitcoin, there is a second layer payment mechanism called the Lightning Network that enables users to send and receive bitcoins quickly around the world. This technology has allowed Bitcoin transfer fees to be almost nothing, which also means that Bitcoin Currency now enables African users to bypass financial obstacles. As long as there is a network, people can use their mobile phones to send money to each other.
