The Future of Payments in Africa Is Crypto

As we observe the current method of paying out money today, we realise that the world is evolving at a very rapid pace. Previously individuals would use only the cash and then the bank accounts to receive and send money. However, that is changing now with cryptocurrency being touted by many as the way of the future in Africa. Crypto is no longer a trend, and it is a new financial structure that is altering the ways of people to save, invest, and spend. As a Nigerian, I would affirm that the indicators of what the future of payments in Africa shall become lies in crypto.

The third explanation of why crypto is significant in Africa is due to the fact that, a good number of individuals on the continent lack access to adequate banking services. Currently, there are reports that millions of Africans lack a bank account, and even when they have a bank account, they have trouble with slower services, high EBs and limited access to international payments.

As an example, in the case of Nigeria, it is at times stressful, costly and even prohibited to transfer money to a foreign country by way of the bank. Crypto enables you to transfer your money to another person in Nigeria, Ghana, Kenya or even America in a few minutes without going to a bank. This is an easy way that the youths in Africa are turning to using crypto as a method of payment.

The other factor that makes the future of payments in Africa to be crypto is because of inflation and instability of the currency in the African continent. Serious problems of inflation have affected countries in Africa such as; Nigeria, Zimbabwe and Sudan. The value of local currencies keeps on declining, and this makes it hard to save or engage in business.

Another point that we should discuss is the role of technology and youth. Africa is a region with one of the youngest populations worldwide and most of such individuals are very tech-savvy. The use of mobile phones and the internet is rapidly increasing and this presents a large crypto adoption opportunity. Today there are many young Nigerians who have crypto wallets such as Binance, Trust wallet and Coinbase.

They are trading on these wallets and sending and receiving payments as well as purchasing goods and services. Indeed, most freelancers across the continent of Africa would rather be paid using crypto instead of the conventional bank transfer which is more cost-effective, faster, and reliable. This is evidence that we are past the futuristic status of crypto and it is well in progress.

Besides this, remittances cannot also be sidelined. There are millions of Africans living in other countries and they remit money to their home lands annually. The country of Nigeria alone gets billions of dollars of remittance through sources outside the country but sending money using normal means like Western Union or moneyGram etc. can be costly.

Costs have always been excessive and time consuming. In case of crypto, remittances take place at a reduced cost and can occur anytime. Money can be delivered quicker to families and this makes life easier for all. Since remittances are part of the core business of Africa, it is evident that crypto will remain the superior one in the future.

Even the African business world is changing due to crypto. The crypto is also being used in many small businesses and they accept payments made by their customers in cryptocurrencies. Indicatively, online shops and service providers are incorporating the use of crypto as one of the payment options. That is useful in ensuring that they are able to attract customers beyond their borders, which crypto is not restricted by.

A Nigerian fashion designer who wholesales clothing online can accept Bitcoin or USDT in order to receive money against clothes sold to a customer in South Africa or even in Europe. This presents a new scope of opportunities to the businesses and promotes growth. It also lowers the risks of being reliant on unreliable banking systems that at times disappoint entrepreneurs.

The problem of trust and security also must be discussed. The issue of mistrust with the conventional payment systems in Africa is one of the problems. Most of them have encountered cases of failed transactions, delays and even fraud in the banks and mobile money services.

Crypto is powered by blockchain that is highly transparent and secure. The transactions can also not be easily edited or recalled without a grant of permission This increases the trust in the system. Naturally, crypto does not lack risks, but the technology it is based upon makes payments more transparent and trustworthy than most of the systems we use now.

The other factor that will decide the future of crypto payments in Africa is government policies. The tendency of some African governments to slowly adopt crypto is prompted by their fear of being unable to control money. To give an example, in recent years, banks in Nigeria could not collaborate with cryptocurrency exchanges, and this did not prevent citizens of this country from transacting with crypto. This instead fueled the interest of young people to venture in peer-to-peer (P2P) platforms where they could still be able to buy and sell crypto.

Image Source

This demonstrates that despite the opposition by the governments the demand of the people into using crypto is on the increase. However, there are governments which are changing their minds. They are also considering digital currencies issued by the banks, namely central bank digital currencies (CBDCs), in order to keep up with the trend. Although CBDCs are not equivalent to cryptocurrencies, it is clear that the digitalization of payments is going to happen in the future.

Another thing that is important on this trip is education. Not every person in Africa is conversant with crypto and this can make them fearful to use crypto. All this is expected to change as education is disseminated to the masses and people learn how to use the digital wallets, lock away their private keys and keep off the scammers.

We are seeing universities, online outlets and influencers already educating people in the realm of crypto. In Nigeria, groups on Twitter spaces and WhatsApp are abuzz with messages about crypto trading and blockchain projects as well as investment opportunities. This culture of learning is gearing Africa to a future whereby, crypto payments will be the standard.

We also cannot overlook the difficulties crypto has to contend with. There are problems such as price volatility, internet connectivity set back in rural locations and even scam possibility. With stablecoins, the development of the internet, and increased regulation, all this can be repaired. Any technology that is new has issues at the onset, but as it progresses it gets better. Crypto will also become part and parcel of life just as mobile phones were once a rare and expensive commodity in Africa but are now a common thing.

Summing all these up, it is obvious that crypto will not only become an alternative payment system in Africa but the primary one in the future. Whether it is the challenge of financial inclusion, insurance against inflation, sustaining businesses, or easing remittances, crypto has the answers that Africa seeks. This change is being led by the youth with their energy and creativity and Technology is enabling it to happen.

To summarize, crypto payment in Africa is the future since it represents solutions to the currency problems in Africa. It offers mobility, faster speed, freedom, global access that could not be offered fully on traditional systems. Although a lot of challenges still remain the light is shining. As a Nigerian, I think in the next few years it will be as normal to pay using crypto just as cash or mobile money are the norms today. The future of Africa is near and, it is crypto that will unlock the door.