Cryptocurrencies, particularly bitcoin, have been one of the most prominent topics of conversation in the financial world since their inception over a decade ago. The internet and social media have been flooded with discussions about how crypto has revolutionized the financial sector and enabled financial inclusion. Businesses in Africa are beginning to accept bitcoin as payment as the crypto gospel expands throughout the globe. In Nigeria for example, schools such as New Oxford Science Academy are accepting crypto payments for school fees. Bitcoin has even become legal tender in several nations and the most recent has been the Central African Republic.
This prompts the question, “why is crypto adoption spreading, and why are more people investing in the crypto space”. The answer is quite simple. Cryptocurrencies have proven to be a medium to easy access to financial services providing financial inclusion for the underbanked and the unbanked.
Mobile banking, ATM transactions, and other financial services appear to be readily available, but this is not the reality. Many people lack access to basic financial services such as a bank account, which prohibits them from readily sending and receiving money and limits their credit and insurance possibilities. In fact, according to the World Bank, 1.7 billion people lack access to these basic financial services.
Perhaps this was ignored in the past, but the Covid pandemic highlighted the traditional banking system’s inadequacies. The pandemic had an economic impact and caused local currencies to devalue. The blockade made it difficult for people to visit local banks and use Point of Sale systems, encouraging most Africans to turn to cryptocurrency as a better alternative. Most people can now access banking services more quickly, cheaply, and easily from the comfort of their own homes thanks to crypto.
Here is how crypto is aiding Financial Inclusion in Africa.
- There is easy access to financial services.
Opening a typical bank account involves a lot of paperwork, which may be stressful and takes a lot of time. With crypto, you can easily open a digital wallet in minutes without needing to go to the bank, queuing, and complete rigorous documentation. You can do this all in the comfort of your home in minutes.
- Transactions are cheaper and faster.
While dealing with cross-border transactions, transaction costs that appear acceptable when dealing with local transactions can be excessive. Sending money home and abroad is expensive, but it can also take hours, days, or weeks in some situations. You may simply complete local and cross-border transactions in seconds with crypto at the lowest possible transaction costs.
- You have complete control over your finances.
Bitcoin is decentralized, which means it is governed by its users rather than central authorities or governments. This implies that you have financial control. You won’t have to cope with transaction restrictions imposed by traditional banks.
- Crypto’s blockchain technology, on the other hand, helps to protect your cash from security breaches and it prevents fraudulent transfers.
Platforms such as Binance, Yellow Card, Luna among others recognized the limitations in traditional banking and provided better alternatives that supported financial Inclusion amidst the regulations and policy limitations in some African nations.