The African continent has long struggled with a broken banking system, with high fees, long waiting times, and limited accessibility being 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 biggest and best-known cryptocurrency in the world, has gained popularity in Africa, where many people view it as a viable alternative to conventional financial institutions. This is due to the fact that Bitcoin is decentralized, which means that no single central authority, like a government or bank, controls it.
Recently, foreign media reported that more and more African start-ups have started to use related technologies as the Lightning Network transaction technology drastically lowers Bitcoin transfer fees, which is projected to threaten the $86 billion African banking system.
Revolutionary Alternative to the African Banking System
According to CNBC, the Lightning Network payment service provider Strike and the Nigerian cryptocurrency platform Bitnob recently collaborated to introduce the Global Transfer feature, which enables American 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 into local currency, end users will transact in their home currency. KG, a South African start-up company, has also integrated Lightning Network with its payment platform GSM 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 upheaval-causing alternative to the African financial system. He also anticipates that the government would lose the ability to compel people to comply with their demands if Bitcoin is widely used in Africa.
The expense and labour-intensiveness of money transfers in Africa were noted by CNBC. First, there aren’t many commercial banks in Africa, and residents of isolated rural areas lack access in particular. Moreover, there aren’t many digital banking options, and there’s also a lot of government corruption and excessive inflation. Deposits may not be able to be withdrawn due to corruption and capital constraints. 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 bitcoin quickly all over the world. This technology has allowed Bitcoin transfer fees to nearly nothing, which also implies that Bitcoin Currency now makes it possible for African users to bypass financial obstacles. As long as there is a network, people may use their mobile phones to send money to one another.