Cryptocurrencies are no longer a bubble waiting to burst. Individuals and businesses across the globe have embraced the virtual currencies as a new means of payment. Bitcoin is at the top of the pack. Companies in different sectors now allow their customers to pay for their goods or services via Bitcoin. Such entities include Microsoft, Starbucks, Home Depot, and BMW.
According to Chainalysis, a blockchain research company based in the United States, monthly cryptocurrency transfers between Africa and other parts of the world rose by over 55% per annum to $316 million in June 2020. The figure applies to transactions not exceeding $10,000.
Nigeria, South Africa, and Kenya are some of the African countries that have recorded an increasing acceptance of Bitcoin and other cryptocurrencies. In this article, our focus will be on how small businesses use/can use Bitcoin in Africa using platforms like bitqt.site as well.
Bitcoin as a store of value
The value of most African currencies is often on the decline. One of the underlying factors is low investor confidence. It is common for various countries within the continent to experience political instability, misappropriation of public funds, and ineffective fiscal policies. These aspects, coupled with the relatively low demand of a nation’s goods and services, are responsible for the low value of African currencies.
Based on this status quo, one of the ways that small businesses in Africa can use Bitcoin is as a store of value. For instance, if a small business owner in Nigeria bought and held Bitcoins worth 10,000 Nairas at the beginning of 2019, his investment would have increased by about 85% after one year.
On the other hand, depositing the 10,000 Nairas in a bank account would attract an interest rate of 1.25%. If you further factor in the current 12.8% inflation rate, you are better off saving your funds as a digital currency rather than an unstable African currency.
Using Bitcoin to pay international suppliers
In recent years, small businesses in Africa have embraced imports from China. This is due to their low prices and availability. The purchased goods range from automobile parts to electronics, machinery, furniture, fashion items, and stationery.
Even with the impact of the ongoing coronavirus pandemic on economies, Chinese exports to the African continent rose by 0.6% between January and November 2020. The figure is in comparison to a similar period last year. The increase amounts to $101.47 billion. Based on these figures, small businesses in Africa are constantly importing goods from China.
As part of the ways that the business people in Africa can use Bitcoin, it is possible to pay for the imported products via a digital currency. To begin with, cryptocurrencies lessen the transaction costs. In conventional payment methods, the charges are a percentage of the sent amount. This means that if you intend to transfer a hefty sum to your overseas supplier, the deducted fees will be substantial. The charges of sending Bitcoin are lesser in comparison. With Bitcoin, businesspeople in Africa are also able to bypass bank transfer limits and overcome forex limited liquidity.
Furthermore, the cryptocurrency protects small businesses in Africa from the cost of trading with an unstable currency. As aforementioned, African currencies tend to be unstable in relation to the all-important US dollar.
Besides, depending on the payment method, transferring cash overseas tends to take about 1-2 working days. Fortunately, Bitcoin transfers can be made in minutes. For small businesses in Africa, the fast transactions eliminate payment-related delays of their goods. Moreover, in some African countries such as Nigeria, there’s a limit on outbound transfers, which is generally much less than the amount many businesses need for ordering goods from abroad.
Bitcoin as a payment option for customers
Proper marketing involves the use of a multi-faceted approach. In today’s world, convenience is one of the factors embedded in the promotion of a good or service. In the context of small businesses in Africa, making it convenient for one to pay for a product will attract more clients. Bitcoin is apt in accomplishing this mission.
Betty's Place is a restaurant in rural Kenya owned by Beatrice Wambugu. The restaurant is known for selling "nyama choma" (roast meat) and accepting payment in Bitcoin.
As individuals and enterprises around the world increase their acceptance of Bitcoin, it is time for small businesses in Africa to be part of the system. Come to think of it, mobile wallets seemed impossible a decade ago. Currently, it is one of the main payment methods in Africa. In fact, in 2019, there were 50 million new mobile money accounts on the continent.
Bitcoin and other cryptocurrencies are likely to exhibit a similar wave of acceptance in the coming years. As such, it is important for small businesses in Africa to start using Bitcoin.
Digital currencies are no longer an illusion. Individuals as well as well-established companies across the globe have accepted Bitcoin and other cryptocurrencies overwhelmingly.
It is now time for small businesses in Africa to be part of the wave. Entrepreneurs in the continent can use Bitcoin as a store of their savings. It is also an apt payment option for their clients and to their overseas suppliers.
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