Cryptocurrencies enthusiasts believe that by the year 2030, these digital currencies will make up 25% of the national currencies. I am of the opinion, let us wait-and-see, especially after the publication we posted earlier.
Be that as it may, one can’t deny the obvious benefits the African continent stand to gain. For one, a decentralized currency (read money the corrupt governments can’t get their hands on) will go a long way towards curbing embezzlement of the public coffers by top public servants who channel the funds into their own pockets at the detriment of service delivery to the citizens.
Banking the unbanked in their masses
In most developing countries, including those in Africa, has a huge population that the conventional banking systems cannot reach out to; either out of luck of innovation and/or supporting infrastructure.
Cryptocurrencies have the potential of reaching this market segment faster without much investment into the supportive infrastructure. Well, internet access and internet-enabled devices shall be a must. The crypto might disrupt the finance market in unprecedented ways. Forcing banks to re-think their approach towards debit and credit.
Enthusiasts strongly believe that the cryptocurrency is not a passing wind, but it is here to stay for a long time. What is remaining is its widespread adoption, a matter of time, technicality that it will overcome soon enough.
That view might be true given the number of incubators sprouting around Africa that are driving the blockchain and cryptocurrency agenda. Countries like Nigeria, South Africa, and Kenya on the lead on that front. The work of current financial mediation like banks and debt consolidation companies will likely be disrupted.
We might see a situation in the future where financial and money lending institutions keep just a minimum balance for payment services on their electronic wallets. While the remaining balances are kept in mutual funds or invested into peer-to-peer lending platforms leveraging on big data and artificial intelligence for an automatic credit scoring.
Most individuals turn to debt consolidation techniques because most of their debt come from credit cards. However, with cryptocurrencies, that will be obsolete as there will be no more need for consolidation. Forcing conventional banks to change their way of doing business.
The monopoly of Conventional Banks and Central Government will wither away
In a cryptocurrencies economy, the central government will no longer have a monopoly over a country’s money. Also, the banks will no longer physically hold onto cash, as the economy will be digitalized.
It would eliminate some of the bottlenecks the economies faced such as government prohibiting the moving cash around over a certain amount. The same goes to moving cash across borders. With banks no longer physically holding on people’s cash and central government no longer in control of the currencies. Power will be returned to the people, and no longer wielded by giant corporate organization and governments.
Those in the lead in the new world digital economy will the tech-savvy individuals, who will be downloading their crypto wallets to store their digital funds safely; as well as make transactions online.
In Kenya, there is already some semblance of this digital economy spreading its roots across the economy in the form of mobile P2P lending. Popular financial services like PayPal and Venmo among others, which currently facilitate the P2P payments, might go to the next levels of financial services to include giving credit. Currently, they may not be willing to go that route given the logistics of setting up credit clearing service.