Many questions still beg for answers as regards the fears obtainable in the minds of Africans over the crypto boom. Despite the potentialities associated with digital currencies, governmental institutions in Africa and their central banks do not regard it as a legal tender or a medium of exchange. In view of this, some African countries have however cautioned against the usage and subscription to crypto. In a few other countries on the continent, the usage of the coin remains outrightly banned.
To begin with, digital or cryptocurrencies exist virtually and employ cryptography to cement transactions. Investors, however, stock the coin in wallets and trade it as a medium of digital exchanges. Certainly, crypto coins cannot function effectively without a blockchain. The blockchain is as important to crypto, just as the nucleus is to cells. What it does is help crypto to mine, store, transfer tokens using cryptography.
Crypto boom amidst ban in some African countries
In 2018, the government of Africa’s most populated country, Nigeria, through her central bank announced a ban on the usage of Crypto as a medium of exchange within the country. Also, the CBN directed all banks and other financial institutions in February 2021 to identify and suspend accounts of individuals or enterprises dealing in crypto exchanges. It is however interesting to note that despite the ban on Crypto in the country, many investors still throng and trade with the coin for their financial benefit.
Aside from Nigeria, other African countries like Algeria, Morocco, Kenya, Zimbabwe, and others have also initiated laws to abolish the usage of the coin as a medium of trading in the country. The Central Bank in Zimbabwe, for instance, in 2018 warned citizens against trading with digital currency. The apex bank further directed the financial firms in the country to resist any financial transactions made by all crypto investors.
Why crypto is banned
African governments believe that crypto is one of the easy means of money laundering. Meanwhile, because of frequent terrorist attacks in the country, it is believed that cryptocurrency is a means of its finance. Illicit fund flows and criminal activities are other reasons. Corroborating this position, the CBN said in a report that cryptocurrencies do not have fundamentals and would never have fundamentals. Investors only buy in the hope that its use and acceptability will rise, thereby pushing up its demand and price. But since new versions of cryptocurrencies come on stream with new mathematical models, an infinite supply may someday crash the price to zero.
Fears associated with crypto: Conclusions
Just as scores of Africans are investing their life savings in crypto, several others have shown disinterest in it. This is owing to fears occasioned by doubt. The people in this category are afraid to invest in any risk that may throw their savings into thin air. They remain unconvinced by the prospects and boom of the coin. For example, during the #BinanceStopScamming trend on Twitter, a Nigerian user identified as Daniel Regha said in his tweet that crypto is a global Ponzi scheme. This is probably because a number of them especially Nigerians have been victims of fraud. Irrespective of the odds, they need to be informed that even though crypto remains a risky investment, the risk is worthwhile.
However, on the ban of crypto in African countries, revelations have proved that its enforcement seems grossly impossible. This is because investors in the coin now find alternatives in subscribing to black-market trading to aid their transactions. This however sends a signal that the battle to totally eradicate crypto in Africa remains lost.
Rather than continue to fight a lost battle, African leaders must embrace crypto and initiate informed policies that will regulate. They should embrace innovations occasioned by the crypto boom to transform the financial activities in their respective countries. Hence, Africa should not be behind in this transformative transformation.
