Bitcoin Soars To An All-Time High: What It Means For Africa
Bitcoin surged today above $1,400 to an all-time high, more than tripling in value over the past year with its most recent rise attributed to strong demand in Japan, where the digital currency is designated a legal means of payment, Reuters reported.
On the Europe-based Bitstamp exchange where trading is dollar-denominated, Bitcoin hit $1,437, its highest since its 2008 launch. That marked 200 percent-plus increase from a year ago.
This puts the total value of all bitcoins in circulation – the so-called “market cap” – close to $25 billion — on a par with a large-cap company, according to Reuters.
Eighty percent of all global money transfers are still conducted via banks and conventional money transfer channels, Coin Telegraph reported. Most African banks charge 10-to-19 percent on transfers to, from and within African countries.
Bitcoin has started taking a bite out of the roughly $4 billion-per-year that banks and other institutions earn from international transfers to Africa, but it’s still moving slowly.
African countries have some of the most expensive transfer rates in the world and bureaucratic processes that can make sending and receiving money a challenge.
Bitwala, a global blockchain-based payment service provider based in Berlin, recently launched in Africa to compete for market share with other companies such as BitPesa, BITSSA and Luno.
Developing countries make up about 30 percent of Bitwala’s new signups globally. Signups from developing countries are almost as many as those in the U.S. and the European Union.
North Africa is the most popular region for new signups and website visits, Bitwala CEO Jörg von Minckwitz told Bitcoin Magazine. However, the Bitcoin startup is also seeing growing popularity in sub-Saharan and East Africa where it fills a need in underbanked communities and places where there’s a shortage of currency, Minckwitz said.
In Nigeria, bitcoin is being used to provide bank-like services such as offering loans.
And bitcoin is growing more popular as a store of value. “Most countries in Africa have really unstable currencies, so sometimes they lose almost everything overnight,” he said. “We see Bitcoin as the first solution where they are in charge themselves.”
Twelve of the world’s 25 fastest-growing economies are in Africa, according to the International Monetary Fund’s October 2016 World Economic Outlook.
Africa’s growing internet connection rate is expected to add to the growing interest in Bitcoin.
Still, bitcoin can be more expensive in Africa than elsewhere, according to Werner van Rooyen, head of business development and growth at Luno, the biggest Bitcoin exchange in Africa.
“Bitcoin is a very liquid instrument. It’s easy to move around the world,” van Rooyen said in a Cryptocoin News interview. “This, in theory, means that it can and will trade at roughly the same exchange rate wherever it is available … but since the price is determined by supply and demand, it means that in some places where the demand is low, it may trade at a lower price (and vice versa).”
Connectivity in Africa is another issue for bitcoin.
“To transact in Bitcoin, you need an internet connection and ideally a smartphone,” van Rooyen said. “Many places are still underserved by the telcos, but this is changing fast. The price of smartphones is also getting cheaper.”
Bitcoin analysts said the price of bitcoin was boosted thanks to a request by the Bats exchange — the largest U.S. equities market operator — asking the U.S. Securities and Exchange Commission to reconsider approving a proposed bitcoin-tracking exchange-traded fund.
The SEC denied an application by Cameron and Tyler Winklevoss — disputed founders of Facebook — to list the ETF. Listing would have made it the first product of its kind in the U.S. for bitcoin, CNBC reported. The proposal involves listing the ETF on the Bats BZX exchange.
An announcement that the SEC is reviewing its decision produced optimism that is credited with helping boost the value of bitcoin.
In 2004, the Winklevoss brothers sued Facebook founder Mark Zuckerberg, claiming he stole their ConnectU idea to create the popular social networking site. They received $65 million.
The brothers are venture capitalists and led a seed funding round for bitcoin payment processor BitInstant. In April 2013, they claimed they owned nearly 1 percent of all bitcoin in existence at the time, Telecrunch reported.
Africans are finally embracing Bitcoin, van Rooyen said. “We are seeing fantastic adoption in places like South Africa and Nigeria and I’m sure it will ripple to other African nations too.”
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