With El Salvador becoming the first country to give legal tender status to bitcoin, it begs the question: should African countries follow suit?
After June 8, we can say that the world entered the “nation state game theory” phase of Bitcoin adoption. Latin American neighbors to El Salvador, such as Panama, have started mulling over the prospects of passing similar legislation, as they don’t want their nations to be left behind. Latin American countries are not the only nations feeling pressure to move forward with bitcoin-friendly legislation. Kal Kassa wrote a fantastic piece about Ethiopia and bitcoin. In addition, American football player of Nigerian descent, Russell Okung, wrote a compelling open letter to the president of Nigeria imploring him to embrace a bitcoin standard.
Now, I by no means have the same level of clout as Mr. Okung, but I am of Ghanaian descent, as my family immigrated to the U.S. in hopes of a better life, and I'd like to make the case for an African nation to embrace bitcoin by the end of the year.
According to data from usefultulips.org, sub-Saharan Africa leads the world in peer-to-peer bitcoin transactions in 2021.
Sub-Saharan Africa also has a history that one might think would lead to favorable conditions for a non-global-power-aligned monetary option.
Due to the lasting legacy of imperialism and colonialism in Africa, the French-backed and controlled CFA Franc, created in 1945, is a colonial relic in 15 African countries. One CFA Franc was equivalent to 1.70 Francs in 1945. Over half a century later the CFA Franc was equal to 0.01 Francs in 2002 as France ditched the Franc for the Euro. How did this happen? Devaluation of the CFA Franc by the French government. The CFA Franc lost 17,000% of its value in the span of 52 years.
Bitcoin, created in 2009, solves this problem of control and manipulation of money from the outside.
There are approximately 40 different currencies within the continent of Africa alone. This is a headache considering the geography of the continent. Boarding a flight from Accra to Lagos is about the same distance as from New York to Philadelphia, yet the barriers and hurdles you’ll face before, during and after traveling, such as with visas and foreign exchange, are frustrating. This has presented challenges in cross-border payments, business and economic development, currency instability, devaluation and inflation for many decades.
Bitcoin means different things to different people. I say this to explain that when trying to explain the “store of value” component of bitcoin to Americans and Europeans, it usually falls on deaf ears due the quality of life that most have been accustomed to. You haven't grown up in an emerging market. You haven't lived under authoritarian regimes who can restrict how and what you do with your money. You haven't experienced inflation wiping out your savings, killing your currency. Like the old saying goes, “I don't understand how this is useful to me therefore, it's useless."
The list of nations racing to adopt bitcoin as legal tender is growing and it is only a matter of time before another country becomes the second to do so after El Salvador. I hope it will be an African country although it is more likely that a Latin American country does, given their proximity to El Salvador.
It is in the best interest not only for Bitcoin entrepreneurs, business types and governments, but for the ordinary people of the continent. Bitcoin’s unique properties make it a digital store of value, a savings technology, a quasi bank account for the unbanked, a bank account in cyberspace and an alternative to Western Union for remittance payments to friends and family around the world (Sub-Saharan Africa remains the most expensive region to send money to, where sending $200 costs an average of 8.2% percent as of the fourth quarter of 2020).
The rise of China has meant an increase in their economic influence and ambition on the continent. Look at what institutions such as the IMF and China have done and are doing to African countries. They load African countries with debt and make sure they can’t spend money on things like health, education and overall development.
With bitcoin, Africa will be able to wield control of its own development with permissionless, decentralized money and without the foreign intervention and manipulation of money. Bitcoin is 1,000 times better than the IMF, World Bank, China and the Bank of International Settlements because it is a digital bearer asset.
The implications of such a move will be massive. With China currently clamping down on bitcoin miners, imagine those miners migrating west to the motherland, setting up mining hubs in rural and remote places in Ghana, Nigeria, Kenya, Botswana. That could transform whole economies and change hundreds of millions of lives! Bitcoin could break decade — even centuries — long woes of underdevelopment.
This is a guest post by Paul Opoku. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.