Bitcoin has the features and potential to help control and minimize the devaluation of fiat currencies, and serve as a safe and convenient exchange of value in cross-border transactions.
At Bit2Me, we have always extolled and defended the interesting qualities that Bitcoin as a payment cryptocurrency and as a refuge of value. Now, from a busy and bustling market in Africa, a trader reveals the importance and meaning this asset has for him and his business. Although the leading cryptocurrency has been the subject of strong criticism for the risks involved in its use, for many it represents salvation and the path to great business opportunities.
Abolaji Odunjo, a mobile phone trader based in Nigeria, West Africa, says that Bitcoin helped him protect and expand his business. Odunjo no longer has to buy dollars to import his merchandise from China or the United Arab Emirates, nor pay the high interest charged by fiat currency exchange houses, but rather now benefits from the usefulness and practicality that Bitcoin gives him. offers when paying your suppliers with this cryptocurrency.
Before Bitcoin, Odunjo's reality was buying dollars and paying the high fees for exchanging the Nigerian naira (the country's official currency) for US dollars. But now, thanks to a practical use for the market-leading cryptocurrency, this trader saw a light of hope that has helped him significantly improve his profits and income. With Bitcoin, Odunjo can trade directly with its suppliers, and make payments for its merchandise directly and without intermediaries.
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Effectiveness and convenience of Bitcoin as a means of payment
“Bitcoin helped protect my business against currency devaluation and allowed me to grow at the same time.”
These were Odunjo's statements during the interview, where he explained why he chose Bitcoin as a means of payment to carry out his cross-border transactions with suppliers. Through Bitcoin, Odunjo and other merchants can carry out their transactions directly, without the intervention of third parties who profit excessively just by approving transactions between users or making changes between currencies. fiat. Now, paying suppliers with Bitcoin (BTC) allows merchants in this busy market to make their businesses much more agile and profitable, making payments with relative speed and convenience.
But the benefits of Bitcoin as a means of payment can not only be reflected for merchants in Nigeria, but also for merchants around the world, and especially in countries that are facing difficult economic situations, such as Venezuela. Bitcoin, despite the risks involved in using this cryptocurrency, has the potential to help preserve the value and profitability of businesses in places such as Africa, Europe and America, although its use as a means of payment is not as widely available. extended as expected. After 11 years since its launch, Bitcoin continues to be used, by the vast majority, as an investment and speculation asset for trading, instead of having a broader utility as a means of payment and exchange of value in global commerce.
$316 million in Bitcoin transactions in Africa
2020 has been a year of strong changes and countless challenges. The arrival of the COVID-19 pandemic and its subsequent economic crisis forced governments and central banks to take drastic measures to counteract its negative effects. Excessive money printing, zero interest rates and inflation above established percentages are some of the measures implemented in recent months. But something positive has come out of all this: increased adoption and use of cryptocurrencies.
By June 2020, Chainalysis presented a report indicating that monthly transactions worth $10.000 USD or less in cryptocurrencies, to and from Africa, grew by 55%, exceeding $316 million in transactions annually. Monthly transactions also grew exponentially, exceeding $600.700 USD in cryptocurrencies. Transactions for these amounts or less are carried out by merchants and small businesses, according to the American analysis firm. blockchain.
Source: Chainalysis
Even though the use of cryptocurrencies in Africa is not legally defined, many traders, like Odunjo, are at the heart of a Bitcoin boom that is still silent but moving forward in giant steps. Small payments for products or services, sending remittances and now payments to merchandise suppliers with Bitcoin are growing more and more every day in this region of the world, especially in Nigeria, Kenya and South Africa, which concentrate most of the economic activity in West Africa.
The new generation of young people who grow and develop in the current digital and technological era are those who are most inclined to use new technologies and digital payment methods. Likewise, economic problems, such as the constant devaluation of the Nigerian naira, which has been devalued twice by the Central Bank of Nigeria so far this year, drives the rest of the population to seek and adopt better payment alternatives such as Bitcoin, although these alternatives carry their own risks.
Risks associated with Bitcoin
First of all, the legal status of Bitcoin and cryptocurrencies is not defined in most countries in the world, so their use depends solely on the users, who do not have protection against any unfavorable situation that may arise.
The volatility of cryptocurrencies can lead users to obtain large amounts of money or, on the contrary, to lose a significant sum. For sure, no one knows what the price of Bitcoin will be in the future, although the fundamentals that support the technology are sufficient basis to guarantee that the cryptocurrency has a real intrinsic value and not a speculative value as many consider. For this reason, many merchants adopt Bitcoin to make their payments and transactions much faster and cheaper than through the traditional financial system.
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