On December 2 and 3, Senegal will host the first Dakar Bitcoin Days forum entirely dedicated to the invention of Satoshi Nakamoto. Tremplin.io will be the official partner, as we announced. As we recently celebrated the anniversary of the release of the famous White Paper, it is an opportunity to take stock of what Africa can gain with the adoption of bitcoin.
On the continent, the year 2022 will have been marked by the decision of the Central African Republic to legalize the use of bitcoin on its territory. It is the first African country to have crossed the threshold. Which leads us to wonder about this phenomenon, what it can bring and if it is likely to happen again. In this article, we will explore the themes that will be developed during the Dakar Bitcoin Days forum. Namely capital exchange, decentralization, financial inclusion, education and technology.
A situation conducive to the outbreak of bitcoin?
Bitcoin was designed to be an alternative to Fiat currencies issued by central banks. While the latter generally benefit from a broad consensus among the populations, one might wonder why use bitcoin instead… Indeed, what is the point of going to get bitcoin to go shopping when it is so easy to use traditional Fiat currencies?
Let us look at the case of the countries of the CFA zone. They too have been affected by high inflation lately. Could this be a favorable situation for Bitcoin? We know that what counts is not the truth, but rather what is perceived as such. The gap between the two is sometimes significant, even diametrically opposed. Thus, the surge in prices currently observed in the world, despite all the difficulties it implies, is above all understood as a rise in the price of foodstuffs and not as a structural weakening of Fiat currencies. Confidence in them is therefore not (yet) shaken. In the minds of the populations, the use of bitcoin as an alternative is not justified as long as the surge in prices does not exceed a critical threshold. In addition, the recent bear market, due to excessive speculation, has not worked in favor of bitcoin.
(by the way, do you know why our currencies are called Fiat currencies? The answer at the end of the article…)
On the other hand, El Salvador, the first country to have legalized bitcoin, has not even had a national currency for twenty years, following a disastrous internal security situation. Trading was based solely on the US dollar. In the Central African Republic, a country plagued by civil war for a long time and where the situation is still precarious, it is very difficult to exchange foreign currencies. We could also cite the case of the Democratic Republic of Congo, where the Franc Congolais continues to plummet, to the great displeasure of the populations. What prompted the launch of the initiative KivEclairsimilar to Bitcoin Beach in El Salvador.
So, does this mean that we have to wait for a deplorable economic situation before bitcoin can take hold? No, because many use cases are already possible and particularly suited to the needs of the continent.
Unleash e-commerce
It’s a fact, e-commerce is taking off in Africa, but only on the local market. Indeed, payments are made either by mobile money or on delivery for physical goods. However, this is unfortunately not the case internationally. Because, for obscure reasons, it is very difficult for an African merchant to have access to a Visa / Mastercard internet payment processor. Local banks are simply unwilling or unable to offer this service. For card payments, online sales sites then have no choice but to fall back on partners in Europe or the United States who collect payments for them and then transfer the money to them. This of course generates significant costs, delays and tensions on the cash flow. Consequently, access to foreign markets becomes enormously complicated.
On the other hand, if web merchants adopt bitcoin, it is an international opening that is offered to them. A real economic opportunity that should not be overlooked. This is as much for online commerce as for traditional commerce, which also suffers from laborious international exchanges with slow and costly Swifts transfers. There are solutions for this. Like BTCPay Server or Greed, the shop system on Telegram that accepts BTC.
A tool of resistance against international sanctions
The precarious political situations on the continent are often the pretext for the application of economic sanctions against certain countries, as we saw in 2022 in Mali, Burkina or Guinea. By preventing entire countries from trading with their neighbors, the most vulnerable populations are the first victims of this little game. With Bitcoin, no censorship possible, populations can continue to carry out economic transactions regardless of the political situation.
Financial inclusion made easy
This is a leitmotif in Africa, and mobile money, which is booming, plays an important role. But to benefit from it, it is necessary to submit to an identification procedure in good and due form. However, it is necessary to underline the problems of access to civil status for a large part of the population, particularly in rural areas. Many people are therefore deprived of identity documents and therefore excluded from the traditional financial system. On the contrary, with Bitcoin and its wallets protected by private keys, everyone can have access to an anonymous decentralized financial system without needing to prove their identity.
In addition, money sent from abroad to Africa represents a significant share of income for this continent, but the tariffs remain high. On the other hand, bitcoin transfers are very inexpensive, and they are even less so when transiting through the Lightning Network. This is yet another concrete application of the possibilities of Bitcoin.
Bitcoin is also a bulwark against CDBC disasters which have become part of the agenda of many countries or economic zones. Even in Africa, where Nigeria is at the forefront of this issue. The BEAC also saw fit to recall the supposed virtues of CDBCs in the face of the pro-bitcoin approach of the Central African Republic. However, the reality of cash in Africa suggests a more laborious implementation of this kind of initiative…
Education: an absolute necessity
In this context, and as we know, education about Bitcoin and its particularities is imperative. Many initiatives already exist and we had the opportunity to discover some of them such as Africa Blockchain Generation, Ivoire Crypto and Mama Bitcoin. This is also the whole point of the Dakar Bitcoin Days forum: to educate the public and make them aware of the entire bitcoin ecosystem.
The technical challenge of internet connectivity
The obligation to have an internet connection is a challenge for the democratization of bitcoin in Africa. Urban areas are very well served, but rural areas are not. To answer this, bitcoin exchange systems by SMS such as AlloHash (in the meantime renamed Offline.Exchange) or Manchakura are to be promoted. On the other hand, the Lot49 protocol, an open source system allowing access to bitcoin transfers to uncovered areas can also play an important role.
Now here is the answer to our little riddle: the term “Fiat currencies” comes from the Bible. Indeed, Genesis begins with the phrase “Let there be light”, in Latin “Fiat Lux”. It conveys the idea that God was able to produce the world out of nothing, on a simple declaration. Exactly like Fiat currencies, which unlike asset-backed currencies like gold, are produced out of thin air, by simple decision of central bankers. So here is a handful of oligarchs who take themselves for God and who claim to be able to create wealth from nothing or rather, even stronger, from debt! The aberrant decision to resort to negative interest rates (which imply the absurd idea that the future is more certain than the present) risks being a sign of a sudden return to reality.
The unique characteristics of bitcoin should be able to help navigate current and future difficulties and promote a more virtuous financial system. We bet that the African continent will be able to take advantage of it. Recent initiatives such as the Dakar Bitcoin Days forum suggest this.
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