The ongoing dollar crisis in the United States is forcing African countries to adopt different alternatives. They are looking towards Bitcoin as a suitable alternative to the United States dollar (USD).
African countries have taken several steps to side themselves from the use of USD. In December 2022, the Africa Bitcoin Conference concluded in Accra. The leaders and related experts have discussed how bitcoin can help African countries in the adoption of a digital economy.
At the conference, issues like financial inclusion and currency instability were discussed. Kenyan President William Ruto has revealed a detailed proposal to deal with the dollar crisis. He unveiled the plan to buy fuel for the local economy in Kenyan Shillings instead of using US dollars. According to reports the deal is a government-to-government relationship with Saudi Arabian Abu Dhabi National Oil Company. This step will release currency pressure from Kenya.
Apart from using their currency in foreign transactions, African nations are looking forward to the digitization of the economy. A digital wallet, Mobile money that is linked with phone numbers saw rapid growth in Africa. According to reports it grew 39% to over $700 billion in 2021 but users are still not able to perform activities like access to credit and protection of their money.
Bitcoin adoption seems a better alternative to the problem of the United States dollar crisis and protection. It will also help in eliminating intermediaries and direct payments between individuals. With the emergence of Machankura, a platform at which a person can perform transactions without the internet, no smartphone, or computer it is now easier to adopt this technology and will help in the bitcoin adoption.
However, there are many concerns about the adoption of bitcoin as a medium of transaction in Africa. According to reports, only 25% of sub-Saharan African countries have regulations to manage cryptocurrency use which places these countries susceptible to cyber fraud.
After the collapse of one of the biggest crypto exchanges FTX, the International Monetary Fund (IMF) has warned the sub-Saharan African countries about cryptocurrency regulations. The report from the In IMF stated that Africa needs a comprehensive crypto regulation framework to manage the fast expansion of the cryptocurrency market. Only one-quarter of countries formally regulate crypto and two-thirds imposed some restrictions. According to the IMF, the volatility and opaqueness in the system make them risky investments.
Several prominent companies like Yellow Cards are trying to facilitate users by bringing more sophisticated technologies to reduce transaction costs and build a seamless payment system. The collapse of two major crypto-friendly banks in the United States, the Silicon Valley Bank, and the Signature bank, and the crisis of the US dollar forced countries to adopt other alternatives. For Africa, Bitcoin seems a perfect match for the economy.