Despite what some of the critics say, Bitcoin has the ability to make a truly positive impact on the financial industry. A start-up called BitPesa is doing its best to infiltrate this tricky economy and to disrupt the African financial cycle by introducing Bitcoin-based solutions.
The African market is one of the global leaders when it comes to remittance transfers. Many Africans travel abroad for work and send a percentage of their earnings back home. This business has boomed over the last decade and companies such as MoneyGram and Western Union are leading the market across the board.
Remittance providers far from perfect
Despite their incredible popularity and slice of the market share, these remittance providers are far from perfect. More often than not, users need to travel hours to pick up their money and the fees that are associated with transfers can be expensive, especially to those in a third world country. In other words, the price that these people pay for convenience is quite steep and many have an issue with the fact that these firms are profiting from the desperation and poverty of millions.
This is where Bitcoin and other virtual currencies come in. The fact that cryptocurrencies don’t recognise borders and have no requirement for an intermediary means that they are a super cheap and efficient equivalent. Companies such as BitPesa are definitely in the right place at the right time but there are still challenges and setbacks that they will need to overcome before they can compete with the more established players.
Bitcoin paving the way
BitPesa uses Bitcoin as a way of settling between different brokers. Unlike fiat currencies, using Bitcoin can remove friction and offer a much higher degree of liquidity in the African market. By embracing the truly decentralised nature of this new technology, BitPesa is proving just how useful Bitcoin can be in the future.
Whilst the volatility of Bitcoin is something of a thorn in its side, there are certain African currencies that experience similar if not higher levels of volatility. The CEO of BitPesa, Elizabeth Rossiello recently stated how Bitcoin can be easily purchased and sold within a matter of moments and on demand. Due to this, the issue of its volatility is not such a big deal as many make out.
BitPesa aims to help out local individuals and businesses by using Bitcoin. By offering a solution to the friction that is traditionally associated with conducting business on the African continent. BitPesa certainty has their work cut out of them but the potential that Bitcoin and other cryptocurrencies have for Africa are too great to be ignored.